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Transactional leadership is based on the concept that the leader provides incentives when workers do what is required. When employees perform as desired, they get rewarded; and if they don’t, they get punished, or the reward is withheld. The relationship that exists between leader and employee is a transactional one. Apart from contingent rewards, transactional leaders manage by exception. They have a disinterest in making changes to transform the work environment, preferring to keep things as they are.
Transactional leadership is based on the exchange between leader and employee. Rewards are contingent upon performing as expected. When the employee does what is expected, the act is rewarded. For example, meeting a specific goal or performance criteria earns the employee a reward. One of the characteristics of the leader is practicality. Rewards, through positive reinforcement, are given for doing what is required; rewards are withheld when the employee does not reach the expected level of performance.
Transactional leaders tend to dislike change. A transactional leader wants things to remain as they are and does not believe in transforming the work environment to make things better. These leaders believe things are good the way they are and should not be changed. Employees are not expected to think for themselves or act innovatively. The leader does not encourage this kind of behavior, and this stems from the leader’s dislike of change. Transactional leaders use predetermined criteria to monitor performance, and there is no room for change.
Recognizes and Rewards Performance
Transactional leaders, because of their dislike for change in the work environment, are constantly monitoring performance based on specific targets and objects. They are quick to spot performance, recognize and reward it. This also means that they are quick to spot non-performance on predetermined targets and will withhold the reward. Poor transactional leaders are less likely to spot problems and take charge to prevent a disaster. Again this leads back to the characteristic of disliking change. They expect things to happen as predetermined.
A transactional leader believes in making all the decisions and expecting employees to simply follow instructions. There is no scope for employee innovation under this kind of leadership. A transactional leader has tunnel vision and believes that what has been instituted is for the best. Employees are expected to perform to preset standards, and thinking outside the box is not encouraged. Corrective action quickly follows if there is deviation from set rules and may even include punishment.