Leadership styles: transactional versus transformational approaches

Transactional style of leadership is effective in some organizational contexts however; there are other organizational contexts in which the Transactional style of leadership is very limited and very ineffective.

The 'Transactional' leadership style is one which motivates followers through an appeal to the self-interest of those followers. The principles of transactional leadership include the principles of motivation through an exchange process and have as its focus the accomplishments of workers and the resulting desirable rewards employees receive for these accomplishments. (Thomas, 2003)

The work of Wanjiru (2009) entitled: "The Benefits of Transactional Leadership" states that leadership style "...plays a crucial role in the development of an organization. Transactional leadership is of the leadership style that is often used by many companies. Transactional leadership believes that punishment and reward motivate people. This leadership also assumes that when people agree to do a particular assignment, a part of that agreement is that they give up all authority to their boss. The leader holds control and power over the subordinate" (Wanjiru, 2009)

The primary goal of the employee in the organization with transactional leaders is to "obey the order of their managers. The idea is that when a subordinate takes up a job, he or she agrees to obey their manager totally. The 'transaction' is the money or any other award that the company pays to its subordinates for their compliance and effort. The relationship between the subordinate and the leader becomes transactional. In transactional leadership the leader has the right to punish his or her subordinates if their performance is not according to the predetermined standard." (Wanjiru, 2009)

Transactional leadership is the style used most often in today's companies. Transactional leadership is a style of leadership that makes it perfectly clear what the company expects from the employees. The focus of the transactional leadership style is goals that are short-term in nature.

II. Communication Style of Transactional Leaders

The communication style of the transactional leader is one that is characterized by the leader 'telling' information to followers. Wanjiru (2009) states that transactional leadership "...makes clear that what is required and expected from their subordinates. It also mentions that subordinates will get award if they follow the orders seriously. Sometimes punishments are not mentioned but they are understood."

Incentives are used by some organizations for providing encouragement for greater productivity. Wanjiru (2009) states that transactional leadership "...is a way of increasing the performance of its subordinates by giving them rewards. Transactional leadership is also called as 'true leadership style as it focuses on short-term goals instead of long-term goals." Wanjiru additionally relates that the transactional style leadership "...has more of a 'telling style'." (2009)

Transactional leadership is based on the fact that reward or punishment is dependent on the performance. Even though researchers have highlighted its limitations, transactional leadership is still used by many employers. More and more companies are adopting transactional leadership to increase the performance of its employees." (Wanjiru, 2009)

III. Pros and Cons of Transactional Leadership Style

The transactional leadership style is control and power-based and is of the nature that provides instructions that are both specific and detailed. Specific characteristics of the transactional leadership style include those as follows:

(1) controlled

(2) detailed;

(3) planned;

(4) sequential

(5) conservative

(6) organized;

(7) dominant;

(8) highly structured

(9) high task; and (10) formal. (Allen, nd)

The work of Lussier and Achua (2009) entitled: "Leadership: Theory, Application & Skill Development" states that transactional leadership tends to "be transitory, in that once a transaction is completed the relationship between the parties may end or be redefined." (Lussier and Achua, 2009) Transactional leadership is more effective at exploiting knowledge at the organizational level.

Wanjiru (2009) states that the primary limitation of the transactional style of leadership is "that is assumes that people are largely motivated by simple rewards." Additionally, this style of leadership in the organization makes it impossible for employees to take actions to improve job satisfaction. (Wanjiru, 2009, paraphrased)

Furthermore, transactional leadership '...has been ineffective in providing skilled employees to their organization. This style of leadership is least interested in changing the work environment. Experts do not recommend this approach. Transactional leadership focuses more on management of punishments and rewards.

IV. Examples of Work Environment in Which Transactional Leadership Style is Effective

The work of Paul Gerhardt (2004) entitled: "Transformational and Transactional Leadership in Retail: Customer Service, Training and Evaluation" states that the transactional leader operates "...within existing systems, they believe in delivering penalties for noncompliance of requests. Another example of transactional leadership may be an elected official who promises to make a requested change or changes to certain policies if elected. Transactions are clearly being made as aspects of leadership styles." (Gerhardt, 2004)

Gerhardt (2004) additionally states that transactional leaders use "...strategy, structure and culture to strengthen the organization. Transactional leadership can be illustrated primarily through a system of contingent-reward exchanges and active management-by-exceptions. This style of leadership is generally characterized through a process of goal setting, setting of expectations, defining how followers will be rewarded, and finalized constructive feedback." (Gerhardt, 2004)

From this information it can be understood that the transactional leadership style is more likely to be effective in the organization where employees are not autonomous and in which they are not intrinsically motivated as these employees require motivation from outside or external sources and this is where the transactional leadership is effective in motivating employees through making expectations clear and through informing employees of the rewards that can be expected for high productivity. The transactional leadership style alternatively, is less likely to be effective in the work environment with employees who are autonomous and self-motivated and is more likely to be less effective in the organizational environment where employees need little information from leadership to complete their tasks.