Transactional Leadership – Theory, Advantage, Disadvantage – How to Implement it?

Transactional leadership is considered a form of leadership that values structure and order at intervals in every relationship. It can be used in massive company environments, international agreements, and military operations.

Transactional leadership needs specific rules or laws to be followed to complete explicit objectives. It is a leadership that needs folks to be self-motivated to the slightest degree. Team members with a transactional leader should be ready to work at intervals directed around that are highly structured.

It focuses on manufacturing results higher than the rest and motivates folks to realize them by giving clear rewards or consequences.


The roots of transactional leadership return from a study conducted by German social scientist scoop Weber in 1947 exploring different leadership designs; Weber knew three different classes, victimizing the term “legal-rational authority” as a backup man for what would eventually become transactional leadership.

The term “transformational leadership” was coined by social scientist James V. Downton in 1973. Leadership professional James Burns outlined transformational leaders as people who ask to vary existing thoughts, techniques, and goals for higher results and the larger sensor.


  • Transactional leadership refers to a constructive formation, so it helps to maximize the productivity
  • A systematic process of formation develops overall progress toward their goals. Moreover, as it includes a particular formation, every individual has a particular role.
  • This type of leadership depends on a systematic practice, so regular practice increases the confidence of individual workers.
  • This process of leadership mainly focuses on the changes in the changing progress, so the leadership approach requires changes that eliminate confusion at intervals in the chain of command
  • In order to encourage the employees, varied rewards also are designed into the system to encourage prime performers to continue engaging at their peak output levels. Moreover, it is considered to be an easy-to-understand system; a rewards-and-punishment system is simple to grasp and is not open to interpretation
  • To permit staff to settle on the reward and team leaders ought to permit staff to own some reasonable management over the rewards they’re ready to learn
  • This leadership brings to create a way of fairness. In any cluster setting, there square measure usually accusations of favoritism. Such a fair approach creates a clean environment within the work process, and it also motivates employees to perform.
  • The constructive nature of this leadership creates fair dealing, which delivers tremendous clarity to workers’ minds because they know how to motivate the workers, in return, profit the company


  • This leadership eliminates individuals directly from the assembly for not performing up to the mark, so it is pretty strict in nature. It signifies that transactional leaders are rigid and unyielding.
  • Transactional leadership depends upon the exceptional performance of individuals. To limit the number of innovations that are realizable,
  • In order to create more followers than leaders, Companies will struggle once they concentrate on transactional leadership on top of anything. If the leader leaves the corporate, the remainder of the team might not know how to finish their next assignment.
  • It is the duty of a leader to provide a particular task for the team. Sometimes, the leader is not able to identify the creativity of an employee.
  • To place zero worth on sympathy, transactional leaders also operate underneath rules and laws that can’t be modified, which means their emotions don’t seem to be considered essential to the assembly method.
  • This leadership style requires performance according to the direction of a leader. Therefore, employees mainly have limited scope to perform. Most importantly, it affected routines for the production strategy of the organization
  • The reward-giving policy affected the creative space for employees. If the leader provides a quality reward to their employees, it will affect their natural talent. Therefore, it creates problems in long-term business operations.
  • In order to make leadership incompetence troublesome to counter, firms place a lot of worth on the employee’s productivity rather than the leader’s effectiveness. Due to this issue, high-skill staff typically shuns the transactional surroundings, as their supervisor’s ability ultimately determines their success.


Transactional leadership, additionally referred to as social control leadership, is a leadership vogue wherever leaders deem rewards and punishments to realize optimum job performance from their subordinates.

Step 1: Produce clear expectations and rules for operation

Transactional leaders crave structure and leave little room for misunderstanding or ambiguity by making clear expectations and rules. To confirm your standard rules for operation are straightforward.

1. Expressly communicate the foundations to your followers

2. Have followers sign an announcement indicating that they perceive

Step 2: Style-associated degree exchange system of external rewards and punishments

If followers are getting to complete tasks for you, as a transactional leader, you need to offer them one thing reciprocally. Therefore, it’s necessary to style an associate degree exchange system based primarily on external rewards and punishments. Here are two things to contemplate before making your exchange system:

1. Watch for rewarding results solely and ignore laborious, brilliant work.

2. Certify that the reward or penalization matches the follower’s action. Your prize should match the follower’s contribution, and your penalization should match the follower’s transgression. Apart from that, it is to be remembered that to create a good reward system, first determine the contributions and achievements that can be recognized. Then return with specific rewards.



Transactional leadership can often be observed in sports. These leaders encourage their followers by promoting the reward of winning the sport. In the case of the Great Australian leg Spinner Shane Warne, at the time of Coaching and Captaining during the IPL season, this great brought of the scheme of a memento should be delivered to the best player of a particular match. This idea of motivating players by rewarding mementos can be an example of transactional leadership.


The advantages and drawbacks of transactional leadership show that this management vogue will produce quick results that square measure prognosticative. It may create low morale inside groups, limit ability, and ultimately place a corporation at a drawback that bound leaders to leave. In most things, a hybrid variety of leadership is the best approach. Employees grasp precisely what their leader expects from them.

As a result, they feel productive in reaching clearly outlined goals and objectives, resulting in effective leadership wherever cluster performance matters. Last, transactional leadership that focuses on contingent rewards is an efficient variety of leadership vogue for managers to harness employees’ capabilities.


Khan, N., 2017. Adaptive or transactional leadership in current higher education: A brief comparison. International Review of Research in Open and Distributed Learning, 18(3), pp.178-183.

Avolio, B.J., Bass, B.M. and Jung, D.I., 1999. Re‐examining the components of transformational and transactional leadership using Multifactor Leadership. Journal of occupational and organizational psychology, 72(4), pp.441-462.

McCleskey, J.A., 2014. Situational, transformational, and transactional leadership and leadership development. Journal of business studies quarterly, 5(4), p.117.

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