Transactional leadership is a style of leadership where the leader promotes compliance through rewards and punishments. It was first described by Max Weber in 1947 and further developed by Bernard Bass in 1981. Under transactional leadership, employees are motivated by rewards and punishments from their leaders in exchange for meeting set goals. While it can be effective for motivating workers and achieving short-term goals, it is limited in fostering creativity and initiative. Transactional leadership works best for structured tasks but does not develop the full leadership potential of subordinates.

1. Group 7
Astin Utari
Zelvia Liska Afriani

2. DEFINITION
 Transaction is the act of transacting within or between groups (as
carrying on commerical activities) – (Business dictionary, 2016)
 Transactional leadership is a style of leadership in which the
leader promotes compliance of his followers through both rewards
and punishments. Also known as “Management theories” (Odumeru
& Ifeanyi, 2013)

3. HISTORY
 First described by Max Weber in
1947.
 Further developed by Bernard
M. Bass in 1981.
• This style is most often used by the managers.
• It focuses on the basic management process of controlling,
organizing, and short-term planning.

4. Some Assumptions Related to Transactional Leadership
 Employees are motivated by reward and punishment.
 The subordinates have to obey the orders of the superior.
 The subordinates are not self-motivated.
 The main goal of the follower is to obey the instructions of the leader. The style can
also be mentioned as a ‘telling style’.

5. Here, the exchange between leader and follower takes place to
achieve routine performance goal.
These exchanges involve four dimensions:
Contingent Rewards
Active Management
by Exception
Passive Management
by Exception
Leissez-Faire

6. Examples of Transactional
Leaders
 Norman Schwarzkopf
 Vince Lombardi
 Bill Gates
 Howard Schultz
Here are some of the
characteristics of transactional
leaders:
Focused on short-term goals
Favor structured policies and
procedures
Thrive on following rules and
doing things correctly
Revel in efficiency
Very left-brained
Tend to be inflexible
Opposed to change

7. The advantages and disadvantages
of transactional leadership
THE ADVANTAGES AND DISADVANTAGES OF
TRANSACTIONAL LEADERSHIP

8. ADVANTAGES
 It can be very effective for motivating subordinates and eliciting
productivity.
 Clear structured
 Achieves short-term goals quickly
 Rewards and penalties are clearly defined for workers

9. DISADVANTAGES
 This type of leadership is flawed since it motivates
people only on the base level
 Creativity is limited since the goals and objectives are
already set
 Ego states are difficult to difine
 Does not reward personal initiative

10. BENEFITS
• It is easy for workers to complete tasks successfully. This works
because transactional leadership is simple to learn and does not
require extensive training.
• It is also easier to apply in a crisis situation, where everyone must
know exactly what is required of them and how a task is to be done
under pressure.

11. CONCLUSION
 The transactional style of leadership is viewed as insufficient, but
not bad, in developing the maximum leadership potential. It forms
as the basis for more mature interactions but care should be taken
by leaders not to practice it exclusively, otherwise it will lead to the
creation of an environment permeated by position, power, perks,
and politics.

12. References
Business Dictionary. (2016). Retrieved from
http://www.businessdictionary.com/definition/transactional-
leadership.html#ixzz40afhsheR
Maier, C. (n.d). The advantages of transactional leadership. Retrieved from
http://www.ehow.com/info_8460959_advantages-
transactionalleadership.html
Odumeru, J.A., & Ifeanyi, G.O. (2013). Transformational vs transactional leadership
theories: Evidence in literature. International Review of Management of
Business Research, 2(2), 355-361.