1.

Transactional leadership also known as managerial leadership,

focuses on the role of supervision, organization, and group
performance.
2. Transactional leadership is a style of leadership in which the leader
promotes compliance of his/her followers through both rewards
and punishments.
3. Unlike transformational leaders using the transactional approach
are not looking to change the future, they are looking to merely
keep things the same.
4. Leaders using transactional leadership as a model pay attention to
followers' work in order to find faults and deviations.
5. This type of leadership is effective in crisis and emergency
situations, as well as for projects that need to be carried out in a
specific way.
1

6. Adhering to the path-goal theory, transactional leaders are

expected to do the following:
7. "Set goals, articulate explicit agreements regarding what the leader
expects from organizational members and how they will be
rewarded for their efforts and commitment, and provide
constructive feedback to keep everybody on task" .
8. Transactional leaders focus on increasing the efficiency of
established routines and procedures and are more concerned with
following existing rules than with making changes to the structure
of the organization.
9. Thus, they operate most effectively in organizations that have
evolved beyond the chaotic, no-rules stage of entrepreneurial
development that characterizes so many new companies.
10. Transactional leadership establishes and standardizes practices that
will help the organization reach maturity, emphasizing setting of
goals, efficiency of operation, and increase of productivity

11. Within the context of Maslows hierarchy of needs, transactional

leadership works at the basic levels of need satisfaction, where
transactional leaders focus on the lower levels of the hierarchy.
12. Transactional leaders are concerned with processes rather than
forward-thinking ideas.
13. These types of leaders focus on contingent reward (also known as
contingent positive reinforcement) or contingent penalization (also
known as contingent negative reinforcement).
14. With transactional leadership being applied to the lower-level
needs and being more managerial in style, it is a foundation for
Transformational leadership which applies to higher-level needs.

I.

Transactional leaders use reward and punishments to gain compliance

from their followers. They are extrinsic motivators that bring minimal
compliance from followers. Transactional leaders tend to be directive
and action-oriented.
II. Transactional leaders are willing to work within existing systems and
negotiate to attain goals of the organization. They tend to think inside the
box when solving problems.
III. Transactional leadership is primarily passive. The behaviors most
associated with this type of leadership are establishing the criteria for
rewarding followers and maintaining the status quo. [4]
IV. Within transactional leadership, there are two factors, contingent reward
and management-by-exception. Contingent reward provides rewards for
effort and recognizes good performance. Management-by-exception
maintains the status quo, intervenes when subordinates do not meet
acceptable performance levels, and initiates corrective action to improve
performance
4

a)
b)
c)
d)
e)

The most challenging times for leaders are when they are leading
a group "into the unknown."
When leaders communicate a vision and give direction to their
followers that involve pushing them out of their comfort zones
and taking risks, it's natural for the followers to resist the change.
Managers find that it's far more difficult to lead change than it is
to continue business as usual. Nonetheless, managers are
increasingly responsible for leading change.
With the rapid pace of innovation and growth of international
competition, managers who simply maintain the status quo are an
endangered species.
Transformational leaders are able to persuade their followers to
step out of their comfort zones, take a leap of faith and follow
their leaders into the unknown.
5

e)
f)
g)
h)
i)
j)
k)

In other words, transformational leaders build trust. Trust is a

willingness to take a risk and make oneself vulnerable.
We are more inclined to trust people when we understand their values
and observe that their actions are congruent with those values because
we can reliably predict how they will act.
Leaders of high character instill trust.
Not all charismatic leadership is authentic transformational leadership.
Pseudo-transformational leaders are also persuasive.
Leaders such as Adolph Hitler and Osama bin Laden have been able to
inspire their followers. However, they violate trust and ultimately
bring harm to their followers. They lack character and act immorally.
While not morally equivalent to bin Laden, the business leaders who
are responsible for the collapse of investors' confidence are commonly
identified as charismatic or visionary, but their lack of morality has led
to destruction of wealth and harm to their employees' careers.
6

Leadership is responsive / Leadership is proactive.

Works within the organizational culture / Works to change the
organizational culture by implementing new ideas.
Employees achieve objectives through rewards and punishments
set by leader / Employees achieve objectives through higher ideals
and moral values.
Motivates followers by appealing to their own self-interest /
Motivates followers by encouraging them to put group interests
first.
Management-by-exception: maintain the status quo; stress correct
actions to improve performance. / Individualized consideration:
Each behavior is directed to each individual to express
consideration and support. Intellectual stimulation: Promote
creative and innovative ideas to solve problems.
7