Transactional leadership style has been explained by Krogh et al (2011) as a type of transaction between employees and management where the total obedience of employees is exchanged for the pay they receives for their work.
According to Fitzsimons (2011) reward and punishment are the main tools that are used in transactional leadership in an intensive manner. Specifically, transactional leaders tend to punish low performance with specific measures, whereas exceptional performance usually gets rewarded. Transactional leaders usually perceive their main role to consist of clarifying role and task requirements for employees and demanding results regardless of the quality of resources provided to them.
Moreover, there are set of other serious shortcomings that are associated with transactional leadership style. First of all, according to transactional leadership theory employees need to be closely monitored in order to perform their job responsibilities in a desired level. Lindebaum and Cartwright (2010) argue that close monitoring of employees may negatively affect the level of their motivation in certain job positions that require creativeness and ‘thinking outside of box’.
Besides, Pieterse et al (2010) convincingly argue that transactional leadership limits the level of employee innovative behaviour due to its increased focus on in-role performance, rather than the motivation of the workforce. Furthermore, according to the transactional leadership theory obeying the instructions and commands of people in leadership positions is perceived to be the primary task of employees. While such a principle might be highly effective for certain types of organisations such as military where the orders of leadership cannot be questioned; for business entities the adoption of transactional leadership style might compromise the level of competitiveness of the organisation, because the potential of employees of contributing to the level of competitive edge through the expression of personal initiatives would be suppressed.
It has been stated that “until 1980s, most experimental research focused on transactional leadership, whereas the movers and shakers of the world are transformational leaders” (Bass and Bass, 2008, p.41). Transactional leadership “emphasises the transaction or exchange that takes place among leaders, colleagues, and followers” (Bass and Riggio, 2006, p.4).
Moreover, to distinguish between these two leadership theories it can be stated that “transactional leaders monitor people so that they do the expected, according to plan. In contrast, transformational leaders inspire people to do the unexpected, above and beyond the plan” (Kreitner and Cassidy, 2012, p.401).
- Fitzsimons, D, James, KT & Denyer, D. (2011) “Alternative Approaches for Studying Shared and Distributed Leadership” International Journal of Management Studies, Academy of Management Perspectives (13), pp. 313-328
- Krogh, GV, Nonaka, I & Rechsteiner, L. (2011) “Leadership in Organisational Knowledge Creation: A Review and Framework. Journal of Management Studies
- Pieterse, AN, Knippenberg, DV, Schippers, M & Stam, D. (2010) “Transformational and Transactional Leadership and Innovative Behaviour: The Moderating Role of Psychological Empowerment. Journal of Organisational Behaviour, (31), Issue 4, pp. 609-623