Transactional leadership, also known as managerial leadership, focuses on the role of supervision, organization and group performance. This theory of leadership was first described in by sociologist Max Weber, and further explored by Bernard M. Bass in the early 1980s.
Basic Assumptions of Transactional Leadership:
-People perform their best when the chain of command is definite and clear.
-Workers are motivated by rewards and punishments.
-Obeying the instructions and commands of the leader is the primary goal of the followers.
-Subordinates need to be carefully monitored to ensure that expectations are met.
This theory bases leadership on a system of rewards and punishments. Transactional leadership is often used in business; when employees are successful, they are rewarded; when they fail, they are reprimanded or punished.
How Transactional Leadership Works
In transactional leadership, rewards and punishments are contingent upon the performance of the followers. The leader views the relationship between managers and subordinates as an exchange – you give me something for something in return. When subordinates perform well, they receive some type of reward. When they perform poorly, they will be punished in some way.
Rules, procedures and standards are essential in transactional leadership. Followers are not encouraged to be creative or to find new solutions to problems. Research has found that transactional leadership tends to be most effective in situations where problems are simple and clearly-defined.
While transactional leadership can be effective in some situations, it is generally considered an insufficient and may prevent both leaders and followers from achieving their full potential.
Bass, B. M,(1985), Leadership and Performance, N.Y. Free Press.
Burns, J.M. (1978) Leadership. New York. Harper & Row