The Industrial Revolution is credited with the development of the transactional leadership style. At that time, it was thought that this leadership style would create a competitive advantage. An exploration of this style through today’s lens may challenge this concept.

The emphasis for transactional leaders is efficiency and productivity with fast results. The focus is on what can be achieved in the short term. Short-term goals guide and direct this style of leadership. Visionary concepts and out-of-the-box thinking are NOT tenets of this leadership style.

Rules, policies, and procedures are the lifeblood of the transactional leader. For this type of leader, following the processes efficiently and correctly is the predominant consideration. These leaders are very analytical and methodical in their strategies and planning. Once an item is set in a specific direction, it is hard to sway this leader. Change is not a welcomed concept.

While not all transactional leaders are micromanagers, many favor the concept of overseeing every little detail. These leaders believe in extensive oversight of each part of the process. Additionally, transactional leaders do not have a proactive approach to management. Rather than planning for potential issues, they tend to react to situations and concerns. 

The tendency is to lean into rules and structure, so hierarchy is favored. There is a firm belief in the chain of command and the idea that everyone has a specific role to follow and adhere to in the organization. Stepping outside of this area is not valued. There is also a heavy reliance on the concept of rewards and rebukes. Those who meet goals are celebrated, and those who do not follow the process or step outside the parameters are subject to disciplinary action.

Transactional leaders often find building relationships with team members challenging when focused on short-term goals and strict adherence to policy and procedures. This lack of a personal connection limits the ability to identify key motivators of the individual team members. The rigidity of this style stifles creativity and innovation. Without room for innovation, the organization may suffer from a lack of growth and development opportunities.

Transactional leadership advantages

However, there are some advantages to this leadership style. The transactional leadership style can:

• assist when the objective is short-term goals – When the objective is speed and not innovation, this style can provide timely ways to achieve goals.
• be helpful with automated or repetitive process environments – When the work environment is largely repetitive, this style will support production demands.
• reward those who are self-motivated to succeed – This style provides a system to reward those who achieve goals while providing consequences for those who step out of the system. 
• work well in a crisis environment – Having solid rules and hierarchy when dealing with a crisis situation can provide clarity and direction in the midst of chaos.
• provide stability –  When the emphasis is on maintaining rather than innovating, a transactional style can help keep the status quo.

Examples of successful transactional leaders include Coach Vince Lombard, Bill Gates, and Howard Schultz of Starbucks. These individuals were able to utilize this style with great success in their respective fields. While this style may not be your go-to leadership methodology in all circumstances, there are times when elements of this style would suit your objectives well.

Take Action

What elements of a transactional leadership style align with your personal values and goals? Can you use this approach in your current role? What impact do you see it having on your team’s performance? As always, we invite you to jump in and be a part of the conversation and movement to impact how leaders lead positively! To learn more about how we can create a learning experience for your organization, email us at ala@deneenattard.com.

Learning on a Dime is a collaboration between DeNeen K. Attard and Jeni McIntosh-Elkins.  

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