Transactional leadership is characterized by contingent reinforcement (Starratt, 1993). This means that followers are moved to action due to the promises, rewards and threats of punishment of the leader. Basically, the transactional activity is in the form of bargaining, the leader bargains with the follower to get things done, although it is not explicitly evident. Both the leader and follower however engage in this bargaining because of personal interests, to get things done and to be rewarded. In this form of leadership, the follower accomplishes tasks and responsibilities assigned by the leader and the leader’s behavior is dependent on how effective the followers carry out what they have agreed to do.
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The basic premise in transactional leadership is the presence of a contract wherein the leader and the follower are bounded by the specifications in the contract, hence the leader designates a particular task, and the follower accomplishes it to his/her best and if it is what the leader expected then the follower will be rewarded, if it fails to satisfy the leader, then the follower will be reprimanded or punished. There are two forms of transactions that the leader may engage in motivating their followers. In constructive transactions, the leaders assign tasks, projects, negotiate and consult with followers on issues and concerns pertaining to the group for implicit or explicit rewards. In corrective transactions, the leader may use active-management-by-exception where the leader monitor the performance of his/her members and act on their mistakes as it occurs. While, the leader may also use passive- management-by-exception wherein he/she passively waits for the followers mistakes to be reported to them before doing anything with it and giving reprimands or punishments to followers. Within the transactional leadership framework, it is assumed that the leader is governed by fairness, honesty, loyalty and integrity, and that his/her actions are always rational and considers the rights and needs of his/her followers. Transactional leadership has been thought to be the opposite of transformational leadership (Storey, 2004).
Transformational leadership desires to unite the group in pursuit of the interests and goals of the group beyond the personal interests of the members (Avolio & Bass, 1988). In this form of leadership, the leader is able to bring the members to an awareness of the basic purpose of the organization, inspires the members to move beyond their own goals and interests and challenges members to change their perceptions, values and attitudes an hence work effectively together. Transformational leaders provide their members with the opportunity to find fulfillment in working towards common goals.
Transactional leadership differs from transformational leadership in several key points. First, transactional leadership is based on the rewards and punishment given to followers upon the completion of tasks, while transformational leadership is based on the leaders ability to inspire, motivate and challenge its members to work for common goals. Second, transactional leaders are focused with short terms goals and hard data while transformational leaders work towards long-term goals and mission and vision of the group and how to achieve them. Third, transactional leadership finds meaning in getting the job done and making a living while transformational leaders build on the need for meaning in their work. And finally, transactional leadership is preoccupied with politics, power and position when transformational leadership is concerned with purpose, values, meaning and morals.
Avolio, B. and B. Bass (1988). Transformational leadership, charisma and beyond, in J.
Hunt, H. Baliga and C. Dachler (eds) Emerging Leadership , Massachusetts: Lexington Books.
Starratt, R. (1993). The Drama of Leadership . London; Falmer Press
Storey, J. (2004). Leadership in Organizations: Current Issues and Key Trends . New