Transactional leadership is often practiced by entrepreneurs in tough situations. As a leader of a growing business, one of your prime concerns is how to balance organizational goals along with managing and motivating your employees. As the ranks grow, this question becomes all the more important. There are different types of leadership styles, some more appropriate in certain situations.
If you’ve worked for another company before you turned entrepreneur, chances are that you would have experienced some form of leadership at some stage. If the lasting image of one of your ex-bosses is that of a militaristic figure who liberally employed the carrot and stick approach, you know what we’re talking about!
The essence of a transactional leader is that people are motivated by reward and punishment.
Leaders who favor this style create defined structures including a clear chain of command. They work on the assumption that once a deal is struck between boss and subordinate, all authority passes on to the former, while responsibility rests with the latter. What rubbish, you say! Before you decide to skip the rest of this piece, let us caution you against skepticism. Despite extensive research highlighting the drawbacks of this sort of leadership, it’s still in frequent use. Sometimes when you need quick results, its the best tactic to use. Although it should not be used too frequently
So, what makes this sort of leader tick? What are their tools of trade? Take a look.
Transactional leadership involves the use of external motivators. A leader is quite likely to say things like “do this or else…”. Not surprisingly, this leader is often dominating. They are also the type that believes in taking swift action. Some of the tricks they employ could be:
Enjoyment: Convince the subordinate about how he or she will enjoy complying with a certain instruction. Yeah, right!
Coercion: That’s more like it. Why bother with pretences, when you can use outright force.
Reward: A less evil approach no doubt, but is fundamentally flawed in the assumption that people are only motivated by tangible benefits.
Legitimacy: Establish “divine right” to enforce a decision by stressing on the correctness or legality of the same. Who are we kidding?
Reciprocity: Call in a favor, remind them of past kindnesses, if nothing else works.
Transactional leaders work within existing boundaries. They are not effective change agents, because the very essence of this style is quiet acceptance of a situation by the followers.
This sort of leader has a short term view. He’s most likely caught in day to day affairs with no thought for the bigger picture. Being a tactician by nature, he or she is likely to fire fight symptoms instead of looking to solve the underlying problem. Followers are understandably very concerned with position and power play.
And finally, they are completely focused on the bottom line!
This may be hard to swallow, but it’s a fact that every leader uses transactional leadership to a greater or lesser degree. That’s only natural because an “exchange process” is a very fundamental part of any employee employer relationship. As a leader, you have to be careful about employing such tactics all of the time, because quite clearly that won’t work in your organization’s long term interest.
However, its a great weapon in small doses!