Transactional Leadership.

 

Transactional leadership is based on the concept of exchange between leaders and followers. The leader provides followers with resources and rewards in exchange for motivation, production, and effective task accomplishment. This exchange and the concept of providing contingent rewards are at the heart of motivation, leadership, and management theory and practice.

 

Contingent Reward

Through the use of contingent reward, leaders provide followers with promised rewards when followers fulfill their agreed-upon goals. some research indicates that transactional leadership can provide structure and lead to positive outcomes and that individualistic cultures may react more positively to transactional leadership than collectivistic cultures. Other studies indicate that transactional leadership may provide impede innovation. Contingent reward is part of most leadership training whereby leaders are taught to reinforce appropriate behaviors, discourage inappropriate ones, and provide rewards for achieved goals.

 

Management by Exception

Management by Exception (MBE) is a leadership style whereby the leader interacts little with followers, provides limited or no direction, and only intervenes when things go wrong. In one type of MBE, labelled “active MBE”, leaders monitor follower activities and correct mistakes as they happen.

 

Some managers confuse using MBE with empowering followers. After all, it does appear that followers have freedom to do as they please, as long as they do not make a mistake. Such comparisons, however, are not warranted. Encouragement and creating a supportive and positive environment in which rich taking is encouraged, which are at the heart of empowerment, are clearly absent when a manager relies on MBE.

 

Despite the success of some transactional relationships in achieving performance, an exclusive focus on such exchanges and transactions with followers is blamed for low expectations of followers and minimal performance in organizations.