Transactional Leadership Style

By Your Query Staff

Published on January 20, 2022
Updated on January 27, 2022

Do you believe that most leaders in today's world should have a transactional leadership style? Here, you may explore the significant signs of this leadership to justify your beliefs. You know what; it emphasizes clear goals, the delegation of authority, and measurable results. Well, you may compare this leadership style with transformational leadership.

Truly, the key difference between these two is a sequential process to achieve an end goal. You know what; transactional leadership is more fast and effective. Therefore, we may emphasize transactional leadership formation to grab a better solution. In this article, we will pursue all the aspects of this leadership style. So, let's have a look at the next phases.

Transactional Leadership Definition

At first, we may start our tour by learning the clear definition of transactional leadership. Truly, it is a leadership style where the leader only focuses on results and provides clear directions to their team. By aiming at the concrete and quantifiable process, transactional leaders are able to generate results. Consequently, they are often held in high esteem by their employees.
In addition, this approach is really ideal for short-term organizational growth. It is because; it does not give employees the time they need to develop as individuals. That is why; the organization eyeing long-term achievement usually does not follow this leadership style. Here, the essence of transactional leadership is to build a reputation for creating clarity about how people can complete their tasks.

However, it is a form of management that drives the people in an organization to achieve organizational goals quickly. In fact, this formation is really solid, clear, and directive. Therefore, the employees always remain certain about what to do and how to do it. In addition, this leadership style increases productivity and efficacy to confirm success.


Transactional Leadership Style

Impact of Transactional Leadership Style

Transactional leadership highlights bottom-line outcomes. However, some may debate that transactional leaders are undesirable. It is because; they do not form long-term associations with their employees. But, this leadership style can be handy for any organization. You know what; it has a giant impact on the organization and its employees.

Moreover, the current academic research shows that transactional leadership impacts the psychological empowerment and creative performance of subordinates. In fact, the human resource department of a company is the seat of transactional leadership. Most of the time, it runs as an organization that makes decisions based on what is best for the company. Therefore, it is exigent to explore the real impacts of transactional leadership affects enablement and creative act of subordinates.

You know what; it is a type of leadership style that relies on the exchange of rewards and punishments. It typically involves a supervisor who offers rewards for good performance, such as raises, bonuses, or promotions. If a subordinate fails to perform well, the supervisor may reprimand or punish him or her. That is why; the impact of this leadership style is deep and directive on the organizations.  

Transactional Leadership Characteristics

In this phase, we will present the core characteristics of the transactional leadership style. After that, you can comprehend this leadership style accurately. You know what; it is a management style that holds deep control over an organization. This style is based on the belief that employees are motivated by rewards such as recognition and fear of punishment.

Here, this leadership style focuses on the bottom line. In addition, its communication style is direct and focused on results. You know what; the short-term goal is the main eyeing point of this leadership. Therefore, it is really unwilling to adapt to the changes. Well, we may explore more traits of this style. Let's have a look at the following lines.

•    Fixated on Short-Term Goals:

This leadership involves the management of an organization's affairs in the short term. Here, the leader is driven by achieving short-term results, which typically involve either short-term financial gains or business growth. In fact, the main objective of it is to meet specific, tangible goals. Basically, those goals are expected to be achieved in a relatively short period of time (typically within 12 months).

You know what; the results are generally valued more than long-term strategies. However, this can lead to companies where the executive team does not have a common vision for the company's future. Thus, it may fail to set long-term strategic objectives. In this way, it is the core characteristic of this leadership style.

•    Exploration of Efficacy:

It is an iconic characteristic of transactional leadership. In fact, it refers to the ability to capitalize on opportunities by understanding the relationships between actions and their outcomes. You know what; it is a set of values that organizations can use to develop a clear understanding. Thus, the organization cognizes what people want and how they want it.

However, it tends to produce low employee engagement and lower levels of performance. It is because; transactional leaders do not reward employees for long-term value creation. Conversely, this style produces higher employee engagement. Besides, it will ensure more positive organizational outcomes such as innovation, diversity creativity, creativity, morale, and productivity.

•    Conventional Decision Making:

Now, we can name this point as one of the characteristics of this leadership style. When companies are led by conventional decision-makers, their leaders tend to think in terms of "how" and "what." Here, the leaders are driven by the need to ensure that things happen according to plan. To them, decisions are made to make sure everything runs smoothly.

You know what; these leaders want to get their team members to take action. Most importantly, their goal is for them to solve problems and achieve results. Besides, their way of encouraging and motivating their teams is by giving them clear instructions and directions.

•    Opposed to Change:

It is an undeniable fact that the more disruptive a company becomes, the greater changes it needs to address. Conversely, the leaders who are not concerned with change and disruption tend to have trouble gaining and keeping talent. Therefore, the leaders must fixate on the latter group of people. Besides, they should have clear insights into the employee's behaviors.

In order to lead and manage the change in their organizations, they need to first have a clear idea of changes. For some people, change can be a welcome opportunity for improvement. But, transactional leaders are not willing to greet the changes warm

•    Favor Controlled Rules and Procedures:

This leadership style is a specific leadership style that emphasizes the importance of consistency, rules, and processes. Here, we must look at how transactional leaders set up structured policies and procedures in order to achieve their goals. You know what; it is the most common leadership style in organizations.

It means that leaders focus on specific tasks and tasks, often without thinking about big-picture challenges. In addition, the idea behind transactional leadership is that it is a way to react to current problems and situations quickly. Even, they do not neglect the larger mission or strategy of the organization. Thus, a leader is able to achieve goals through clearly defined policies and procedures.

Transactional Leadership Advantages and Disadvantages

In the last few years, a new term has emerged in the business world: transactional leadership. Traditionally, leaders were held responsible for performance. But now, leaders are accountable for results. Besides, they have to manage through complex change processes and lead people through them. Here, the leaders set goals, set deadlines, and deliver results to the team.

Most importantly, they are responsible for the progress of their work, hold people accountable for their actions, and provide clear instructions. In addition, you may explore certain pros and cons of this transactional leadership style. Here, we will elaborate on the core advantages of this leadership along with a few disadvantages as well.


•    Rewards for Performance:

Transactional leadership encourages employees to take personal responsibility for the success of their organization. A transactional leader doesn’t make demands on his or her employees. Instead, he or she relies on individuals taking the initiative and being accountable for their work. As transactional leaders, they are always looking for ways to improve their team’s performance.

In addition, they want them to take ownership of their roles and perform at their best every day. However, they also need the right employees who can actually drive change in the organization and make it happen. One way to get there is through transactional leadership rewards.

•    Quick Outcomes:

Now, we must highlight the core advantage of transactional leadership. You know what; it can bring faster decision-making and fast outcomes. Besides, It also explains why transactional leaders focus on individual results rather than organizational outcomes. In fact, many leaders try to implement change by converting individual performance into team formation.  

But, this approach has proven to be effective in a digital world where speed is certain and high. Here, the fast-paced pace of digital business demands quick outcomes and measurable results. In this case, this leadership style can help companies get to the right decisions faster. Therefore, they can take immediate action.

•    Sense Of Fairness:

When faced with a problem or a decision, people tend to prefer the decision that is fairest. Certainly, fairer decisions may seem more ethical and just, which is why they are often preferred by people. However, being fair can have advantages in this leadership style. In fact, it advocates a fairer world where everybody gets what they deserve, but not necessarily what they want.
You know what; leaders cannot expect everyone to go along with their ideas. Sometimes, it is best to develop the sensibility of the employees to make clear and effective decisions. Here, their sense of fairness can be effective. That is why; it is a huge advantage of this leadership style.


•    Weak in Creating and Maintaining Relationships:

Firstly, this leadership style emphasizes results and efficiency over relationships. It is not a good fit for teams who have been together for a long time. Therefore, this style can be detrimental to long-term relationships. You know what; building strong relationships with employees and customers will help you become a more effective leader.

However, organizations that are built on transactional leadership styles tend to be less effective in creating bonding. In fact, lack of focus on building relationships is one of the biggest challenges of these types of leaders. If you are a leader in this type of organization, it is high time you start focusing on building relationships instead.

•    Discouraging Creativity:

Many leaders put up a strong defense when it comes to their creative side. In fact, they carry the thought that creativity is not something fruitful. Even they usually find this fact as much valuable. That is why; many leaders would argue that the need for creativity should be discouraged.

On the other hand, it is workable to keep a business running as smoothly as possible. However, this attitude can actually turn into a disadvantage. Most importantly, this thing happens in transactional leadership. In this way, discouraging creativity is a real disadvantage of this leadership formation.

•    Lack of Long-Term Vision:

The leadership style of transactional leaders works well in the short term. But, they tend to lack long-term vision. These leaders are good at implementing immediate plans and providing resources for immediate goals. However, they fail to set more meaningful long-term goals. Besides, they fail to foresee the effect of their actions on future generations. Thus, the organizations deprive of the apt outcomes.

When people talk about the power of leadership, they usually refer to the qualities that create long-term sustainable business results. You know what; long-term vision is always directly allied with business performance or even success. But, transactional leadership does not entertain long-term vision. Therefore, it may not achieve ultimate success in the future.

Transactional Leadership Examples

Transactional leadership is a leadership style that eyes on the end result, not the process. It is based on taking action to accomplish a set of goals and objectives. This style of leadership has been implied by various leaders in different situations, with varying success. Here, in this phase, we can name some instances where this leadership style worked well.

First, we can utter the present day’s big name, Elon Musk. He is the founder and CEO of SpaceX. Besides, he is the early-stage stockholder, CEO, and Product Engineer of Tesla. You know what; Tesla and SpaceX are two of the most iconic American companies. They have disrupted the car and space industries, respectively. In these organizations, we can observe the implementation and practice of transactional leadership.

The second name that comes here is Vince Lombardi. He is the coach of the Green Bay Packers. Under his leadership, the team never had a losing session. In this club, Vince Lombardi has implemented transactional leadership formation. After that, the team has earned huge appreciation for great performances.


Well, every organization is keen on getting things done. In this case, the transactional leadership style can bring quick outcomes for them. You know what; one of the greatest challenges for all managers is to choose a leadership style that works best for their company. Different leadership styles work in different circumstances and with different people. But, you can implement this leadership style if you want the results as fast as possible.