In recent years, the transactional leadership style has lost favor as inspirational leadership methods have risen in popularity. However, it can be powerful if implemented correctly.
What is Transactional Leadership ?
If you’re not familiar, the transactional leadership style follows these basic steps:
- Leaders set goals for their teams.
- They give employees orders and process documents to achieve the goals.
- If employees perform well, their leaders reward them.
- If employees perform poorly, their leaders punish them.
- These steps repeat in a continuous cycle.
It’s a simple, no-fuss leadership style that many now argue is inadequate to keep today’s purpose-driven employees motivated.
However, transactional leaders are effective at setting clear expectations and rewarding individuals for meeting them, building a culture of continuous improvement. In many results-driven organizations, this approach is ideal for holding teams accountable for reaching their goals.
With some minor adaptations, leaders can apply this style to keep simplicity and clarity in their organization’s management practices, while also addressing employees’ emotional needs, much like inspirational leaders do.
Here's how:
Invite Employees to Participate in Goal Setting
Transactional leaders typically do not involve employees in setting high-level goals, which is a notable drawback of this leadership style. Managers set goals and expect employees to follow them without question. While teams should align with organizational objectives, employees may struggle to stay motivated when they don’t feel connected to their goals.
A straightforward solution is to invite employees to participate in goal setting. Research indicates that goal commitment increases when managers solicit employee input. Before launching new performance objectives, hold a meeting with your employees to discuss what you want them to achieve and provide an opportunity for them to share their ideas. While you may not shift the end outcomes you expect from your employees, at least consider their thoughts regarding the milestones and methods it’ll take to get there.
By having these conversations with your employees, you can set objectives that everyone on your team agrees on.
Add Purpose to Your Orders
Once you’ve set team goals, the next step is to give orders. Typically, transactional leaders inform their direct reports of the tasks to be accomplished and, if relevant, provide them with a process document. Lists of assignments give employees a clear understanding of your expectations. However, they can feel impersonal and rarely inspire enthusiasm.
To address this, provide your instructions alongside clear reasons why the assigned work is important. According to Wharton professor Adam Grant, reminding employees of the greater purpose of their work is the key to keeping them engaged.
For example, here at Prialto, we manage a team of virtual assistants who provide administrative support to high-level professionals across the U.S., Canada, and the UK. One way we keep them motivated is by reminding them that their work plays a crucial role in helping our clients grow their businesses.
Personalize Employee Rewards
Transactional leaders motivate their employees by promising rewards upon goal completion. Typically, they provide bonuses, promotions, and other common incentives that may or may not be meaningful.
Leaders must realize that there is no one-size-fits-all approach to incentivizing performance. Research indicates that financial rewards are less motivating to employees who earn comfortable wages. Some employees don’t want promotions because they’d rather be doers than leaders. Others are so intrinsically motivated that common rewards fail to hold their interest.
Instead, offer employees several options to choose from or, particularly with highly valuable employees, ask individuals to share their wish list of rewards and see if you can accommodate it.
Here are some examples of alternative rewards to offer employees:
- PTO to volunteer
- Administrative support services
- A physical token of recognition
- Charity donation matching
- Professional and educational development programs
- Off-site team bonding activities
- & many others
Talk with your team to develop a personalized rewards program.
Read More: How to Capitalize on the 4 Types of Employee Motivation
Transactional Leaders Replace Punishments with Constructive Criticism
When employees fail to reach their goals, transactional leaders often respond with punishments such as public ridicule, threats of demotion and/or firing, and harsh private conversations. The problem with this approach is that it causes employees to react defensively and/or withdraw from the situation.
Unless your employees make lazy, careless mistakes, respond to their failures with constructive criticism instead of anger. Engaging employees in a discussion about what went wrong is an effective way to reprimand those who failed due to miscommunications, a lack of skills, or other issues that can be resolved through coaching.
During your discussion, develop an improvement plan with new milestones for completing their project. Frequently check in with employees during this time to hold them accountable for changing their behaviors.
By following the tips in this article, you can effectively utilize the transactional leadership style to keep your employees on track, avoiding the lack of connection and motivation that employees often experience with this type of leadership.
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