Transactional Leadership Theory

In science, it is said that for every action that happens, there is an equal and opposite reaction. That’s the concept that the transactional leadership theory promotes when it comes to the actions of a leader and their team, but with one small twist. Instead of an equal and opposite reaction, there is an equal positive or negative response. In other words, every choice a leader makes will leave a positive or negative impression.

It’s All About What Motivates a Person

In order for an employee to do a job, they must feel like there is a tangible gain that they receive in completing the task. This is where the transactional component of this leadership theory takes place. Some employees work for the tangible gain of providing money for their family. Others do it for the joy of a job well done. Some might seek power or career stability. That, however, is just the first line of motivation.

People must also be motivated to do a high quality job. This is where the transactions that a manager has with their team become a second foundation of this theory. If an employee goes above and beyond the line of duty one day, then there will be an expectation to have a point of sale transaction at the manager’s cash register. A simple “Thank you” is sometimes a good enough transaction, but sometimes tangible rewards are desired as well.

The same is true for a job that has not been well done. Negative transactions occur through discipline and this is also part of the leadership theory. If a job is done incompetently, it doesn’t make sense to tell that person that they’ve done great. It makes more sense to put a plan of action into place to correct the problem.

It’s Behavior Modification, Through and Through

When someone is rewarded for doing a good job, they are motivated to do a good job once again. If someone is disciplined for not doing a good job, then the transactional theory of leadership states that they will be more motivated to do a good job in the future. If others are getting rewards, then the goal is to work hard enough and good enough to get the same reward the next time.

The place of failure for this theory is where the employee feels like they’ve done an excellent job, but their manager disagrees with the assessment. A negative transaction from the manager to the employee could create a demotivational effect that could downgrade the morale of the entire team.

When done correctly, the transactional theory of leadership plays on the basic human need of earning something good for a job well done. It lifts spirits, helps to promote a higher quality performance, and is easily implemented. That’s why many organizations utilize these managerial cash registers for their teams.

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