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Transactional Leadership

Key Idea

Transactional leaders can be found in every organization, large or small. The transactional leader mostly emphasizes the “carrot and stick” approach by establishing clear expectations on what must be done, as well as what one can expect if the performance goal is achieved. Some researchers argue that this extrinsic, inducement-based motivational style is not leadership, but rather a style of management.

Book to Read

Full Range Leadership Development
by Bruce Avolio (2011, 2ndedition)

Quick Take from the Book

There are three types of transactional leadership:

  1. Contingent Rewards (a mutual agreement on what needs to be done and the promise or reward for a satisfying outcome).
  2. Management-by-Exception (occurs when the leader is focused almost exclusively on deviations from agreed-upon standards, mistakes or egregious errors).
  3. Laissez-Faire (almost nothing is “transacted” between a leader and follower, with the leader taking an extreme “hands-off” approach that borders on negligence.

Quote of Note

"There are situations where being transactional will achieve exactly the performance you expect, and that may be high performance. Yet, if you continue to be purely transactional in the way we define this leadership style…you would never inspire followers, never fully develop them, never challenge them to come up with breakthrough insights, and never embed your highest moral values and standards in their behavior and actions."  – Bruce Avolio

Related Styles: Directive Leadership, Transformational Leadership

Return to List of Leadership Styles