Transactional Leadership

Transactional leadership is based on reward and punishment to motivate and direct the behaviour. These managers set specific rules and standards, and they closely monitor their employees’ performance.

They tell employees they can expect rewards if a goal is met. However, they may require more 1:1s or check-ins if people aren’t meeting goals.

This leadership style is concerned with maintaining the status quo and ensuring that predetermined goals and standards are met.

It also assumes that teams need structure and monitoring to meet business goals and that they are reward motivated.

Why This Leadership Style Works

This style is popular in enterprise companies as it focuses on results, existing structures, and set systems of rewards or penalties. This leadership style also recognizes and rewards commitment.

Transactional leaders can offer helpful clarity and structure of expectations, which can help employees feel safe because they understand expectations. Employees also have a clear view of what they get in return for meeting business goals.

Potential Challenges

This style is more about using rewards to motivate and less about building relationships with employees, coaching, and developing team morale.

Keeping a diverse team engaged can be hard if only some are reward-motivated, and it can lead to low creativity and fear of punishment.