What is Transactional Leadership
Transactional Leadership - Outdated?
The core of transactional leadership lies in the notion that the leader, who holds power and control over his or her employees or followers, provides incentives for followers to do what the leader wants. Hence, the notion, that if an employee does what is desired, a reward will follow, and if an employee does not, a punishment or with holding of the reward will occur.
The relationship between leader and employee becomes "transactional" -- I will give you this if you give me that, where the leader controls the rewards, or contingencies.
In addition to contingent rewards, transactional leaders are said to "manage by exception", which refers to the idea that they are less interested in changing, or transforming the work environment, or employees, but seek to keep everything constant EXCEPT where problems occur (e.g. lack of goal attainment).
It's exceedingly unlikely that any leader, expert or theorist would recommend this approach to leadership, but there's a paradox here. The transactional approach to leadership is still probably quite prevalent in the "real workplace".
While common, transactional leadership relies on a set of assumptions about human beings, what motivates them, and how organizations work that today, are seen as demonstrably incorrect, inaccurate or false. For example, we know that the effects of rewards and punishments result in high "costs" because the use of rewards tends to require bigger and bigger value rewards over time, to remain effective. We also know that the building of loyalty (to a leader) requires more than dispensing rewards.
If one was to characterize transactional leadership, one could link it to the behaviorist approach to human functioning, an approach not without value, but horribly incomplete. Also, transactional "leadership" really focuses less on what we'd usually refer to as leadership, and more on "management" -- in particular the management of rewards and punishments.
The antithesis, or opposite to transactional leadership is called "transformational leadership".