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How a Transactional Leadership Style Works

Kendra Cherry, MS, is a psychosocial rehabilitation specialist, psychology educator, and author of the "Everything Psychology Book."

Sean is a fact-checker and researcher with experience in sociology, field research, and data analytics.

Paul Bradbury / Getty Images

Transactional leadership is a leadership style that utilizes rewards and punishments to motivate and direct followers. This approach to leadership, also sometimes referred to as managerial leadership, emphasizes the importance of structure, organization, supervision, performance, and outcomes. The goals and tasks for the group are highly structured, and members are rewarded when they achieve these goals and reprimanded if they miss deadlines.

This theory of leadership was first described in by sociologist Max Weber and further explored by Bernard M. Bass in the early 1980s. Take a closer look at how the transactional style works as well as some of the potential benefits and downsides of this style.

Basic Assumptions of Transactional Leadership

• People perform their best when the chain of command is definite and clear.
• Rewards and punishments motivate workers.
• Obeying the instructions and commands of the leader is the primary goal of the followers.
• Subordinates need to be carefully monitored to ensure that expectations are met.  

This theory takes a behavioral approach to leadership by basing it on a system of rewards and punishments.

Transactional leadership is often used in business; when employees are successful, they are rewarded; when they fail, they are reprimanded or punished.

Athletic teams also rely heavily on transactional leadership. Players are expected to conform to the team’s rules and expectations and are rewarded or punished based on their performance. Winning a game might mean accolades and bonuses while losing might lead to rejection and verbal castigation. Players often become highly motivated to do well, even if it means suffering pain and injury.

Unlike transformational leaders who tend to be forward-looking, transactional leaders are interested in merely maintaining the status quo.   Transformational leaders try to sell their ideas and vision to followers. Transactional leaders, on the other hand, tell group members what to do and when to do it.

How Transactional Leadership Works

In transactional leadership, rewards and punishments are contingent upon the performance of the followers. The leader views the relationship between managers and subordinates as an exchange – you give me something for something in return. When subordinates perform well, they receive a reward. When they perform poorly, they will be punished in some way. Rules, procedures, and standards are essential in transactional leadership.

Transactional leaders monitor followers carefully to enforce rules, reward success, and punish failure.

They do not, however, act as catalysts for growth and change within an organization. Instead, they are focused on maintaining this as they are and enforcing current rules and expectations.

These leaders do tend to be good at setting expectations and standards that maximize the efficiency and productivity of an organization. They tend to give constructive feedback regarding follower performance that allows group members to improve their output to obtain better feedback and reinforcement .

When Is Transactional Leadership the Most Effective?

Followers are not encouraged to be creative or to find new solutions to problems. Research has found that transactional leadership tends to be most effective in situations where problems are simple and clearly defined.  

It can also work well in crisis situations where the focus needs to be on accomplishing certain tasks. By assigning clearly defined duties to particular individuals, leaders can ensure that those things get done.

In times of crisis, transactional leaders can help maintain the status quo and “keep the ship afloat,” so to speak.

Transactional leaders focus on the maintenance of the structure of the group.   They are tasked with letting group members know exactly what is expected, articulating the rewards of performing tasks well, explaining the consequences of failure, and offering feedback designed to keep workers on task.

While transactional leadership can be useful in some situations, it is considered insufficient in many cases and may prevent both leaders and followers from achieving their full potential.

Xenikou A. Transformational leadership, transactional contingent reward, and organizational identification: The mediating effect of perceived innovation and goal culture orientations .  Front Psychol . 2017;8:1754. doi:10.3389/fpsyg.2017.01754

Sultana U, Darun M, Yao L. Transactional or transformational leadership: which works best for now? .  International Journal of Industrial Management (IJIM) . 2015;June.

St. Thomas University. What is transactional leadership? Structure leads to results .

Wongyanon S, Wijaya A, Mardiyono, Soeaidy M. Analysis of the influence of leadership styles of chief executives to organizational performance of local organization in Thailand (A case study of transformational, transactional and laissez-faire styles of leadership in Pattaya City, Laemchabang city municipality and chonburi provincial organization) . International Journal of Applied Sociology. 2015.5(2):76-83. doi:10.5923/j.ijas.20150502.02

Bass, B. M,  Leadership and Performance , N.Y. Free Press; 1985.

Burns, J.M. Leadership . New York. Harper & Row; 1978.

By Kendra Cherry, MSEd Kendra Cherry, MS, is a psychosocial rehabilitation specialist, psychology educator, and author of the "Everything Psychology Book."

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The transactional leadership style still has a place

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The different styles of leadership

What is transactional leadership definition and history.

5 transactional leadership characteristics

Pros and cons of transactional leadership

How to know if transactional leadership is for you, become a noteworthy leader using transactional leadership.

You’ve just gotten promoted and are now leading a team. You're intent on being the best leader you can be, and you’re trying to discover what that means for you.

The truth is that there isn’t a “one-size-fits-all” leadership style.

You’re going to have to determine what your natural abilities are. 

You'll also need to figure out what your organization requires of you and what you want the people you lead to believe about you as a leader.

It’s as much about asking questions as finding answers. Asking the right questions will empower your journey toward leadership excellence .

Let’s discuss the concept of transactional leadership. You’ll learn its definition, who it works best for, and how you can apply it to your leadership style.

Harvard Business Review contributor Jon Maner writes that there are two basic directions that leaders choose to take. These styles are selling and telling.

Each direction contains its own set of traits or leadership styles . With every leadership style comes different advantages and disadvantages.

Leadership experts agree that the best leaders can use elements of both. 

Let’s take a look at these two types of leadership styles:

Selling styles

First, there are the “selling” styles. These include coaching , democratic , servant and coach, and transformational leadership styles .

Many leaders with these styles have compelling visions. They also foster collaboration and innovation and create learning organizations.

This is especially true of transformational leaders.

They value developing people over upholding fixed rules and regulations. These leaders influence people rather than command them.

But, transformational leaders may fail to pay enough attention to short-term objectives. They can also struggle with the policies and procedures necessary to make the organization efficient. And they may hesitate to take control in a crisis. 

In this case, they would do best to adopt behaviors consistent with telling styles, which we will cover next.

Today, most leadership development experts advocate selling styles over telling styles. They put a premium on transformational leadership.

After all, where would we be without the Elon Musks or the Jeff Bezos of the world? They’ve radically transformed the way we live.

Let’s be clear, though — transformational leadership is a style.

And it’s not the only option out there. There are plenty of leadership theories , and plenty of telling-style leaders who have also radically transformed businesses and even the world.

Telling styles

“Telling” leaders also offer great value. For many organizations, times will come when circumstances and context call for leaders with this style. 

These leaders will be able to offer grounded stability when the organization needs it most.

Leaders with these styles embrace a fixed hierarchical structure. They give mandates from the top of the organization and hand out firm directives to subordinates.

Rules trump innovation. There is a clear chain of command.

Telling styles of leadership, with various ranges of effectiveness, include the following four styles: 

These are charismatic leaders who rely on a personal appeal to motivate followers. Visionary “selling leaders” influence people to join in. Pacesetters inspire people to walk behind.

An autocratic leader relies on their own decisions. They expect their people to follow through. Followers execute. Their mindset is fixed on their own goals for the company.

• Bureaucratic

Bureaucratic leaders believe that organizations operate best within:

• Formal developed structures
• Strict procedures
• Transactional

Managers with this style motivate employees through offers of punishment and reward. 

If you give them what they want, they’ll give you what you want. 

These transactions lead to the running of a tight smooth-sailing ship. Everyone is crystal clear on the goals and objectives of leadership. 

They also understand what responsibilities they have to achieve their goals and objectives.

Let’s take a deeper dive into this leadership style and how it came about.

Transactional leadership origins

Max Weber developed the transactional leadership framework. He was an eminent 20th-century sociologist studying how people lead.

In his seminal book, Economy and Society , he said that there are three distinct leadership categories:

• Charismatic authority, based on the personal appeal of the leader
• Traditional authority
• Legal-rational (now known as transactional leadership)

His premise was, “The exercise of control on the basis of knowledge."

Transactional leadership gained prominence in the 1950s following World War II, a time when political and social stability was of utmost importance.

Its darker side emerged with the rise of anti-communist Senator Joe McCarthy.

But its brighter side came out with General and President Dwight Eisenhower. He was who led the U.S. into peace and prosperity.

Political scientist and historian James McGregor Burns promoted Weber’s theory in his 1978 book, Leadership . He said that great transactional leaders show high moral principles. They're honest and fair.

Responsibility and honoring their commitments are paramount.

Transactional leadership at work

Transactional leadership is often seen in companies that want or need to operate swiftly. To succeed as quickly as possible, their leaders implement standardized regulations and similar, if not identical, protocols at every organizational level.

The transactional leadership style appears most often in mid-to-large-sized organizations. It's often used in manufacturing or in other highly regulated industries.

Transactional leadership can keep everyone operating with fixed ways of working. Policies and procedures dominate these methods. This is most true in global organizations.

That's because leaders must manage people from different cultures with different languages. 

The sales industry also has its share of transactional leaders. 

This is especially true in organizations where employees need to meet aggressive quotas. If you meet your quota, you get a bonus or raise. If you don't, forget the bonus, and in many cases, your job, too. 

Sounds harsh, but to a transactional leader, results come first.

A transactional approach assumes that all employees value external rewards. An example would be monetary compensation. It works on the belief that people are not self-motivated .

Many emerging leaders feel motivated by intrinsic rewards. This is especially true for younger generations, who are less likely to be loyal to a company and thus are less likely to stay.

Here's an example: 65% of millennials want their employer to support their development through training and mentors.

They want their higher-level needs addressed, such as belonging , esteem, and self-actualization. Rewards come in the form of opportunities for growth , meaningful work, and increased opportunity.

The future of transactional leadership

According to a recent Deloitte study , there are three stages of leadership emerging from the COVID-19 crisis. All stages reflect elements of transactional leadership blending with emerging transformational leadership.

Let’s take a look at the three stages:

This is the first crisis-management stage. It requires a leader who can stabilize things quickly and lead through unprecedented times with no clear answers. 

They express confidence, transparent communication, and empathy . This leader is pragmatic and lead-taking.

During the first stage of the COVID-19 pandemic, General Motors Chairman and CEO Mary Barra found an opportunity. She demonstrated transactional leader characteristics.

This leader co-authored a playbook on health and safety protocols for reopening GM’s factories. She also sent back-to-work packages describing ways in which people could safely return.

She also acknowledged people’s fear and was empathetic in her execution. Barra is well-known for her transformational leadership style.

As things stabilize in the next stage, people need a leader who is careful and risk-reducing.

Imagine how tough it must be for a transactional leader to have their people work remotely. Dropping by to see how things are going is challenging, if not impossible, in such a scenario.

Still, their blended style gives people a vision for the future. This leader moves the organization toward innovation and more long-term strategies.

This style calls for:

• Moderate flexibility
• A long-term strategy
• Intentionality
• Attending to development in emerging leaders

This is the area where transformational leaders shine.

5 transactional leadership characteristics:

Here are five traits of transactional leadership:

1. Act with urgency

Transactional leaders can act with urgency. At their best, they are effective executors. They take charge. They turn ships around.

They're especially skilled in times of crisis. That's because they use their authority to take decisive steps , even in ambiguity.

2. Communicate their expectations clearly

Transactional leaders have a high degree of clarity. Employees know exactly what their leader expects from them. 

As a result, they feel productive in reaching clearly defined goals and objectives.

This leads to effective leadership where group performance matters.

Vince Lombardi, former coach of the Green Bay Packers, is hailed as one of the best football coaches of all time. He was a master at training his teams through rigorous, methodical practice with step-by-step instructions. As such, his team was virtually unstoppable.

3. Direct communication style

Transactional leaders have a direct and transparent communication style.

People follow them because they know they can trust them. This leader knows that loyalty follows trust .

4. Opposed to change

Transactional leaders have their own approach to how their subordinates must execute a task.

As such, employee performance can suffer if a given task could benefit from a new approach.

5. Focused on short-term goals

A transactional leader will know the goals they're trying to achieve. Usually, these goals are short-term and don't take long-term organizational goals into account.

This means a team working under a transactional leader will excel at short-term goals such as monthly sales volume. On the other hand, they may not be as effective regarding leadership development for various members of a team.

A great example of this kind of leader is Gen. Norman H. Schwarzkopf, former commander of U.S. Central Command. 

A master organizer of human resources, he handled tens of thousands of U.S. troops in Operation Desert Storm in 1990. 

Schwarzkopf led the NATO coalition to a decisive victory over Iraq and Kuwait. With his leadership, he saved thousands of lives.

At their best, transactional leaders are effective executors. They establish processes, rules, and protocols and expect that people will adhere to them.

Many transactional leaders can be “hands-off” in the way that they manage. As long as things are running smoothly, managers don’t interfere. Instead, they closely track work to identify problems as they emerge.

Let’s take a look at Bill Gates, who is a transactional leader. Gates frequently makes the rounds to check in on operations and ensure that things are going as planned.

He wants to see that efficiencies are met and that nothing is falling through the cracks. Under his leadership, Microsoft has literally changed the world.

"The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” - Bill Gates

However, there are disadvantages to the transactional leadership style.

Valuing stability over innovation may result in a reactive, rather than proactive, mindset.

Many transactional leaders do not value divergent thinking and behaving. They're less likely to solicit ideas from their people. Innovative ideas at lower levels go up a strict chain of command which may or may not reach the top.

Conformity and status quo are organizing principles for transactional leaders.

They can put the professional and personal development of the individual on the back burner. When leaders focus only on short-term goals, they jeopardize the organization's sustainability.

If left unchecked, their dominant style could show up as inflexibility and bullying.

However, great transactional leaders are empathetic , like any effective leader.

Though their style may seem impersonal, people know their leader cares about them. This is true even when they have to make hard decisions that may negatively impact others.

Let’s consider Jacinda Ardern, New Zealand’s prime minister.

She took swift and courageous action to lock down the country in the first months of the pandemic. Still, she communicated transparency and empathy . She fostered trust through frequent Facebook Live chats — in her sweats!

That brings us to the current leadership disruption — the COVID-19 pandemic. 

This has the potential of transforming the way we look at leadership styles. It gives a different view of how a leader can blend styles using their own approach while adapting to changing times and circumstances.

You’ll begin to discover your own leadership style as you build your emotional intelligence . This involves asking some critical questions.

What are my strengths? What do I value? 

Not all leader types value the same things. For example, if you value extrinsic motivation, you most likely would thrive as a transactional leader.

The VIA Institute on Character is a great resource that offers a free survey that determines your character strengths.

How would others describe my leadership?

It takes a degree of vulnerability to ask people about your style, but it's an important step.

Ask specific questions that you may be curious about. Then, listen and say thank you.

What does my organization need from me?

Different circumstances, times, and events may require different styles.

Your organization may currently need someone who can improve short-term employee engagement . Perhaps it needs to improve performance for the next few months. If this is the case, transactional leadership may be for you.

How willing am I to grow?

You may not be exactly where you need to be to become the best leader you can be. 

But if you have a will to grow and improve yourself , you're one step ahead of those who don't.

Leadership is a journey, not a destination.

If you are going to be an effective leader, you have to be willing to acknowledge that as the world shifts, so does the landscape.

Great leaders navigating dynamic organizational environments are on a trek to self-awareness . They keep questions as trail markers along the way.

You can learn how to become a better leader, whether you use the transactional approach or not, with BetterUp.

Try a demo to see how you can improve your leadership skills today .

Lead with confidence and authenticity

Develop your leadership and strategic management skills with the help of an expert Coach.

Meredith Betz, M.S.Ed, M.S.O.D.

Meredith Betz is a Betterup Fellow Coach. As an organizational consultant and Executive Coach, Meredith's work focuses on leaders, teams, and the dynamics in the systems in which they live and work. She helps people become more influential and exhibit executive presence. Meredith is a certified Conscious Business Coach who helps leaders to exercise empathy and lead in a way that is consistent with their values. She gives them the tools to communicate and negotiate effectively with their stakeholders. Meredith recently co-wrote a memoir with a 103-year-old Estonian man who lived through the Nazi and Soviet occupations of Estonia in the 1940s. It was a profound experience. A seminal book for her is Man's Search for Meaning by Viktor Frankl, an Austrian Holocaust survivor and psychiatrist.

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2020 Theses Doctoral

A Case Study Exploring Application and Development of Transformational Leadership in Chief Executive Officers of Professional Services Businesses

Bharwaney, Roshan

Transformational leaders in professional services businesses can help develop and inspire people and organizations to overcome disruption and succeed. At the same time, numerous pressures on leaders, such as quarterly financial reporting and the shift from long-term engagements to project-based work, may cause leaders to focus on the transactional and short term. Transformational leadership in this study is defined as leadership that goes beyond exchange of rewards for achieved goals and places an emphasis on the needs and values of followers, thereby fostering transformation in people and organizations (Northouse, 2018). This study addresses how CEOs of professional services businesses are transformational with their clients and teams in a complex and challenging business environment that is steeped in transactional activities. The purpose of this research was to study CEOs of professional services businesses whose leadership styles have been identified by company executives as transformational. This study was carried out in order to understand if and how the nominated CEOs perceived that they demonstrated transformational leadership in complex and challenging work environments. This case study encompassed 10 CEOs of professional services businesses and 18 team members. Client satisfaction survey data were also analyzed to incorporate client perspectives. A major finding of this study was that a strong majority (82%) of CEOs and their team members reported that the most predominant transformational leadership activities in which the CEOs engaged were idealized influence, which consists of building trust and acting with integrity, and individualized consideration, which consists of listening carefully to individual needs, acting as coach or advisor, and treating others in unique and caring ways (Bass & Avolio, 1997). All CEOs (100%) learned to be transformational largely through informal means by drawing on past experiences. A majority (64%) of participants indicated that team members facilitated their transformational work, while 50% described lack of teamwork and organizational processes as impeding their transformational work. A key recommendation emanating from this study is that CEOs and those aspiring to become CEOs of professional services businesses engage in idealized influence and individualized consideration activities if they seek to be transformational.

• Adult education
• Transformational leadership
• Chief executive officers
• Professional corporations

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Transformational and Transactional Leadership: Association With Attitudes Toward Evidence-Based Practice

Leadership in organizations is important in shaping workers’ perceptions, responses to organizational change, and acceptance of innovations, such as evidence-based practices. Transformational leadership inspires and motivates followers, whereas transactional leadership is based more on reinforcement and exchanges. Studies have shown that in youth and family service organizations, mental health providers’ attitudes toward adopting an evidence-based practice are associated with organizational context and individual provider differences. The purpose of this study was to expand these findings by examining the association between leadership and mental health providers’ attitudes toward adopting evidence-based practice.

Participants were 303 public-sector mental health service clinicians and case managers from 49 programs who were providing mental health services to children, adolescents, and their families. Data were gathered on providers’ characteristics, attitudes toward evidence-based practices, and perceptions of their supervisors’ leadership behaviors. Zero-order correlations and multilevel regression analyses were conducted that controlled for effects of service providers’ characteristics.

Both transformational and transactional leadership were positively associated with providers’ having more positive attitudes toward adoption of evidence-based practice, and transformational leadership was negatively associated with providers’ perception of difference between the providers’ current practice and evidence-based practice.

Conclusions

Mental health service organizations may benefit from improving transformational and transactional supervisory leadership skills in preparation for implementing evidence-based practices.

There is growing momentum and pressure to move evidence-based mental health interventions into real-world practice settings ( 1 – 5 ). Most of these practice settings involve a relationship between a clinical or case management supervisor and practitioners who provide services. Often in community settings the clinical supervisor also supervises work activities, including conducting performance appraisals and other human resource functions. Leadership is important in these activities. Recent work has also demonstrated that mental health service providers’ attitudes toward adopting evidence-based practice are associated with organizational context (for example, structure and policies) and individual provider differences (for example, education and experience) ( 6 , 7 ). Yet, although leadership is held to influence the adoption of innovations, such as evidence-based practices ( 8 ), there has been little research on the association between leadership of the mental health supervisor and staff attitudes toward adopting evidence-based practice. However, some more general leadership studies have been conducted.

Leadership research is pervasive in the organizational literature, and studies in mental health services suggest that leadership is important for both for the organizational process and for consumer satisfaction and outcomes ( 9 – 11 ). Glisson and Durick ( 11 ) found that higher levels of positive leadership in human service organizations were associated with higher levels of organizational commitment. In a study on mental health services for youths, organizational climate mediated the association of leadership and working alliance ( 12 ). Higher levels of positive leadership were associated with a more positive organizational climate, which was in turn associated with higher positive clinician ratings of working alliance. Thus there are links between leadership, organizational and clinical process, and consumer satisfaction and outcome. However, research is needed that examines the effect of leadership on attitudes toward adopting evidence-based practices in mental health service settings.

Transformational and transactional leadership are two well-studied leadership styles that have been assessed by the Multifactor Leadership Questionnaire (MLQ) ( 9 , 13 , 14 ). Transformational and transactional leadership span both cultural and organizational boundaries ( 15 ) and have been assessed and validated in numerous studies ( 16 – 26 ). Leadership studies with the MLQ have also been conducted in mental health and other public-sector organizations ( 9 , 14 , 27 – 29 ), health care settings ( 30 ), and service settings. A given leader may exhibit varying degrees of both transformational and transactional leadership. The styles are not mutually exclusive, and some combination of both may enhance effective leadership.

Transformational leadership is akin to charismatic or visionary leadership ( 31 ). Transformational leaders inspire and motivate followers ( 32 , 33 ) in ways that go beyond exchanges and rewards. Transformational leadership operates especially well in close supervisory relationships, compared with more distant relationships ( 23 ), and closer supervision is often more typical in mental health settings. This close relationship may be typical of a supervisor-supervisee relationship and is also captured in the notion of “first-level leaders” ( 34 ), who are thought to be important because of their functional proximity to supervisees in an organizational setting. Transformational leadership is thought to increase the follower’s intrinsic motivation ( 35 ) through the expression of the value and importance of the leader’s goals ( 31 , 36 ).

In contrast, transactional leadership is based more on “exchanges” between the leader and follower, in which followers are rewarded for meeting specific goals or performance criteria ( 37 – 40 ). Rewards and positive reinforcement are provided or mediated by the leader. Thus transactional leadership is more practical in nature because of its emphasis on meeting specific targets or objectives ( 41 – 43 ). An effective transactional leader is able to recognize and reward followers’ accomplishments in a timely way. However, subordinates of transactional leaders are not necessarily expected to think innovatively and may be monitored on the basis of predetermined criteria. Poor transactional leaders may be less likely to anticipate problems and to intervene before problems come to the fore, whereas more effective transactional leaders take appropriate action in a timely manner ( 39 ).

A transactional leadership style is appropriate in many settings and may support adherence to practice standards but not necessarily openness to innovation. A transformational leadership style creates a vision and inspires subordinates to strive beyond required expectations, whereas transactional leadership focuses more on extrinsic motivation for the performance of job tasks ( 39 , 44 ). Thus it is likely that transformational leadership would influence attitudes by inspiring acceptance of innovation through the development of enthusiasm, trust, and openness, whereas transactional leadership would lead to acceptance of innovation through reinforcement and reward.

In summary, leadership is important to consider in relation to acceptance of innovations and to work attitudes, perceptions, behavior, service quality, and client outcomes. Because leadership is associated with organizational and staff performance, we propose that it is likely to influence mental health providers’ attitudes toward adoption of evidence-based practices. Although leadership is prominent in our model of implementation of evidence-based practices ( 7 ), few studies have examined transformational and transactional leadership and mental health providers’ attitudes. Finally, no studies have examined leadership and attitudes toward adopting evidence-based practices in mental health services for youths.

In understanding organizational predictors of attitudes toward evidence-based practices, it is also important to consider and control for individual-level variables, such as providers’ demographic characteristics. A recent review suggests that demographic characteristics and attitudes can be influential in the willingness to adopt and implement an innovation ( 45 ). For example, receptivity to change can be an important determinant of innovation success ( 46 , 47 ). Rogers ( 8 ) asserted that having more formal education, as well as favorable attitudes toward change and science, are associated with increased adoption of an innovation. Educational attainment is positively associated with endorsement of evidence-based treatment services, adoption of innovations, and attitudes toward adoption of evidence-based practices ( 6 , 48 – 50 ). In specialty mental health clinics, compared with professional providers, interns report having a more positive attitude toward using evidence-based assessment protocols ( 51 ) and toward adopting evidence-based practices ( 6 ). Because there is a link between organizational characteristics, individual differences, and attitudes toward work, these factors should be included in studies of attitudes toward evidence-based practice.

The purpose of the study presented here was to examine the association of transformational and transactional supervisor leadership with service providers’ attitudes toward evidence-based practices. We hypothesized that more positive transformational leadership would be associated with more positive attitudes toward implementing evidence-based practices, as evidenced by greater openness, greater sense of appeal of evidence-based practices, and lower perceived divergence of usual practice with evidence-based practices. We also hypothesized that transactional leadership would be associated with more positive attitudes toward adopting evidence-based practice, given requirements to do so.

Participants

Participants were providers of mental health clinical and case management services who took part in a larger study of organizational issues affecting the provision of mental health services to children, adolescents, and their families in San Diego County, California ( 6 ). Organizational and individual participation rates were high (94 and 96 percent, respectively). Data were collected between November 21, 2000, and September 19, 2001. Of the 322 providers in the larger study, 19 participants (5.9 percent) were missing data on at least one of the variables in the set of analyses used in this study, resulting in a final sample of 303 providers working in 49 publicly funded mental health programs for youths.

Table 1 shows demographic characteristics for individual-level nominal and continuous variables in the study. A total of 245 respondents (81 percent) were full-time employees. Primary disciplines included marriage and family therapy (103 participants, or 34 percent), social work (99 participants, or 33 percent), psychology (65 participants, or 21 percent), psychiatry (five participants, or 2 percent), and “other” (for example, criminology, drug rehabilitation, education, or public health; 31 participants, or 10 percent). There were fewer interns than professional staff in the service system (26 percent compared with 74 percent). The mean±SD age of respondents was 35.7±10.5 years. Seventy-six percent were female. Sixty-five percent were Caucasian, 15 percent were Hispanic, 7 percent were African American, 6 percent were Asian or Pacific Islander, 1 percent were Native American, and 7 percent were another race or ethnicity. (Percentages total more than 100 percent because of rounding.)

Characteristics of 303 providers working in 49 publicly funded mental health programs for youths

Provider survey

The provider survey incorporated questions about providers’ demographic characteristics, including age, sex, education level, professional status (intern or professional), and job tenure (time working in the present employment setting) ( 6 ). Providers’ education level was assessed with ordered categories from low to high: attainment of some college, college graduate, some graduate work, master’s degree, and doctoral degree (Ph.D., M.D., or equivalent). Intern status indicated whether the respondent was an intern or an employed professional. Professional status was coded as 0 for staff and as 1 for interns.

Attitudes toward evidence-based practice

The Evidence-Based Practice Attitude Scale (EBPAS) ( 6 ) was used to assess mental health providers’ attitudes toward evidence-based practice. The EBPAS is a brief, 15-item measure with four subscales assessing attitudes toward adoption of evidence-based practices. The four EBPAS sub-scales represent four theoretically derived dimensions of attitudes toward adoption of evidence-based practices: appeal, requirements, openness, and divergence. Total scores on the EBPAS were also calculated.

The score on the appeal subscale represents the extent to which the provider would adopt an evidence-based practice if it were intuitively appealing, could be used correctly, or was being used by colleagues who were happy with it. The score on the requirements subscale assesses the extent to which the provider would adopt an evidence-based practice if it was required by an agency, supervisor, or state. The score on the openness subscale assesses the extent to which the provider is generally open to trying new interventions and would be willing to try or use evidence-based practices. The score on the divergence subscale assesses the extent to which the provider perceives evidence-based practices as not clinically useful and less important than clinical experience. The total score on the EBPAS represents one’s global attitude toward adoption of evidence-based practices. The overall Cronbach’s alpha reliability for the EBPAS was good (α=.77), and subscale alphas ranged from.90 to.59. The EBPAS validity is supported by associations of EBPAS scales with both individual provider-level attributes and organizational characteristics ( 6 , 48 ). All responses for the EBPAS were scored on a 5-point scale, ranging from 0, not at all, to 4, to a very great extent.

The MLQ 45-item Form 5X was used to assess the providers’ perceptions of supervisors’ transformational and transactional leadership behaviors ( 52 ). Transformational leadership was assessed with four subscales of idealized influence (eight items, α=.87), inspirational motivation (four items, α=.91), intellectual stimulation (four items, α=.90), and individual consideration (four items, α=.90). Transactional leadership was assessed with four subscales detailing leadership styles, including contingent reward (four items, α=.87), laissez-faire (four items, α=.83), active management by exception (four items, α=.74), and passive management by exception (four items, α=.82). Providers were asked to judge the extent to which their immediate supervisor engaged in specific behaviors measured by the MLQ. Each behavior was rated on a 5-point scale ranging from 0, not at all, to 4, to a very great extent.

Survey procedure

A program manager was contacted at each program, and the study was described to him or her in detail. Permission was sought to survey service providers who worked directly with youths and families. For participating programs, providers’ survey sessions were scheduled at the program site at a time designated by the program manager. Surveys were administered to groups of providers. The project coordinator or a trained research assistant administered providers’ surveys and was available during the survey session to answer any questions that arose. A few surveys were left for completion for providers who did not attend the survey sessions. Such surveys were either mailed back in a prepaid envelope or picked up by a research assistant. Participants received a verbal and written description of the study, and informed consent was obtained before the survey. Participation in the study was voluntary, and all participant responses were confidential. This study was approved by the appropriate institutional review boards.

Pearson product-moment correlation analyses were first conducted to examine associations of transformational and transactional leadership and individual-level covariates with the dependent variables—that is, EBPAS scores representing attitudes toward evidence-based practices. Next, regression analyses were conducted in order to examine the associations of leadership with scores on each of the four EBPAS subscales and total scores on the scale while the analyses controlled for the effects of individual provider characteristics. Because providers were nested within mental health programs, resulting in potential dependency of responses within program, multilevel analyses were conducted to control for the effects of the nested data structure ( 53 – 55 ). All regression analyses were conducted by using the Mplus analytic software, which accounted for the nested data structure ( 56 ). Because hypotheses were directional, one-tailed significance tests were used.

As shown in Table 2 , correlation analyses showed a pattern of results supporting the hypothesis that ratings of higher levels of positive leadership would be associated with more positive attitudes toward evidence-based practice. Specifically, transformational leadership was significantly positively associated with scores on the EBPAS subscales of appeal, openness, and requirements and EBPAS total scores. Transactional leadership was significantly positively associated with scores on the EBPAS subscales of openness and requirements and EBPAS total scores. Next, a regression analysis was performed for each EBPAS subscale and one for the overall scale.

Correlation matrix of demographic characteristic covariates, leadership, and scores on the Evidence-Based Practice Attitude Scale (EBPAS) of 303 providers working in 49 publicly funded mental health programs for youths

All regression analysis results are shown in Table 3 . Neither a transformational nor a transactional leadership style was significantly associated with scores on the EBPAS appeal subscale. In regard to provider characteristics, higher scores on the appeal subscale were associated with being female, having a higher educational attainment, and being an intern. Predictors accounted for 7.4 percent of the variance in scores on the appeal subscale.

Multilevel regression analysis of the association of transformational and transactional leadership with the subscales of the Evidence-Based Practice Attitude Scale among 303 providers working in 49 publicly funded mental health programs for youths

Transactional leadership was significantly positively associated with scores on the EBPAS openness subscale. This indicates that providers who reported that immediate supervisors exhibited more transactional leadership behaviors endorsed greater general openness toward adoption of evidence-based practices. Job tenure was significantly negatively associated with scores on the openness subscale, indicating that providers who worked at their program for longer periods scored lower on the openness subscale. Predictors accounted for 14.0 percent of the variance in scores on the openness subscale.

Transformational leadership was significantly positively associated with scores on the requirements subscale. This finding indicates that providers who worked with supervisors who they rated higher on transformational leadership were more willing to adopt evidence-based practices if required to do so. There was also a marginal effect (p=.081) suggesting that transactional leadership was associated higher scores on the requirements sub-scale. Predictors accounted for 7.7 percent of the variance in EBPAS total scores.

As hypothesized, transformational leadership was negatively associated with the scores on the EBPAS divergence subscale. This finding indicates that providers who worked with supervisors who exhibited more transformational leadership behaviors were less likely to perceive a gap between their current practices and evidence-based practices. Predictors accounted for 5.1 percent of the variance in scores on the divergence subscale.

Finally, both transformational and transactional leadership were positively associated with total scores on the EBPAS. This finding supports the proposed hypothesis and indicates that providers who rated their supervisor higher on transformational and transactional leadership were more open to adopting evidence-based practices. In regard to demographic variables, being an intern was positively associated and job tenure was negatively associated with more positive attitudes toward evidence-based practices. Predictors accounted for 13.4 percent of the variance in total scores on the EBPAS.

The main finding of this study is that more positive leadership ratings were associated with more positive attitudes toward adopting evidence-based practice. This is congruent with the notion that leadership is important in the adoption of innovations across a range of organizational contexts and technologies ( 8 , 57 , 58 ). However, across all EBPAS sub-scales and the total scale on the EBPAS, predictors accounted for about 5 to 14 percent of variance in subscale and total scores. This suggests that although leadership is associated with providers’ attitudes toward evidence-based practices, additional factors should be considered. In the study presented here both transformational and transactional leadership were associated with attitudes toward adoption of evidence-based practices.

Transformational leadership was positively associated with scores on the requirement subscale and total scores on the EBPAS scale and negatively associated with scores on the divergence subscale. It is likely that supervisors who exhibit more positive transformational leadership behaviors engender attitudes in subordinates that would lead subordinates to greater openness to adopting new technologies or practices. This finding is clearly in keeping with the definition of transformational leadership as inspiring commitment to and enthusiasm for the leader and willingness to follow the leader’s vision. Consistent with this definition is the finding that transformational leadership was associated with the total EBPAS score, indicating that inspirational and motivational leadership may engender open attitudes.

Also of interest is the finding that higher transformational leadership was associated with lower perceived divergence of evidence-based practices and usual practices. It is likely that this finding indicates a general distrust of change and practices that are perceived as different from usual care where leadership is suboptimal. These findings suggest that having a positively perceived local opinion leader to introduce and guide change in practice may facilitate receptivity to change in providers’ behavior ( 59 ). Consistent with the above findings, transactional leadership was positively associated with scores on both the openness subscale and the total EBPAS scale. This suggests that leadership styles that appropriately reinforce positive work behaviors may lead to a greater sense of trust in the supervisor-supervisee relationship and lead to greater openness toward adopting evidence-based practices.

Some limitations of this work should be noted. First, this study assessed providers’ attitudes rather than actual uptake of evidence-based practices. There are a number of factors likely to influence not only attitudes toward evidence-based practices but also actual implementation. Indeed, a leader’s attitude toward evidence-based practice may influence staff attitudes, and leaders’ attitudes were not assessed in this study—instead, providers rated their perception of their supervisors’ leadership behaviors. Second, this is a cohort study, and although it is intuitively appealing to suggest that supervisor leadership precedes staff attitudes, such an inference is not warranted on the basis of the correlational nature of this study.

Third, this study involved public-sector mental health providers, and results may not generalize to other contexts or provider groups. However, this concern is somewhat mitigated to the extent that the findings presented here are consistent with the literature on leadership and organizational change. Fourth, five regression models were estimated, and thus inflation of type I error rates could be a factor in this set of analyses. Fifth, providers’ ratings of their supervisors’ leadership was assessed in the study presented here. However, other organizational variables may also be related to providers’ attitudes toward evidence-based practices ( 48 ). Finally, the focus of leadership was not assessed. That is, it is unknown in the study presented here the degree to which supervisors promoted the use of evidence-based practices. This leaves us with findings regarding general, rather than specific, effects of transformational leadership.

Further studies are needed to examine the extent to which supervisors’ transformational and transactional leadership that was focused specifically on improving attitudes and implementation of evidence-based practices would lead to greater, lesser, or different associations with providers’ attitudes and ultimately, with evidence-based practice implementation fidelity and client outcomes.

One of the strengths of the study presented here is that it focused on real-world mental health service providers working in community-based, publicly funded mental health programs. In that respect, this work differs from studies of manualized interventions focusing on more traditional psychotherapy practices with doctoral-level clinicians ( 60 , 61 ). In the public behavioral health care system, a majority of providers in the workforce in community settings across the United States do not have doctoral-level educations, and these essential providers will likely be agents of widespread delivery of evidence-based interventions. Thus, although this study took place in one large county, the results are likely to generalize to other similar settings. Additional research is needed in order to determine if these findings can be replicated.

This study also adds to the evidence base for the construct validity of the EBPAS. Previous work provided preliminary validation of the EBPAS; our findings support the notion that attitudes may be affected not only by the context within which providers deliver mental health services but also by the leader-staff interactions and exchanges in the workplace that can affect job performance and organizational citizenship ( 62 – 64 ). This suggests that leadership development targeted at improving the organizational change process could be considered before or concurrent with evidence-based practice implementation.

Providers in the study presented here were predominantly female, and a majority of public-sector providers of youth mental health services are female. Leadership and subordinate perceptions and relationships may be affected by the sex of the leader or follower. For example, gender affects leadership style, and effective leadership involves a balance of positive feminine and masculine characteristics ( 65 ). Female leaders may also be rated higher on interpersonal aspects of transformational leadership ( 66 ). It appears that in understanding leadership effects, gender of the leader and follower should be considered, but the extent to which these factors are at play in mental health services and evidence-based practice implementation requires further study.

As with providers in other types of services, those who provide youth and family services are often highly committed to their work and clients. Leadership is important in work interactions and in shaping organizational culture to support change and innovation ( 67 ). Attitudes toward adopting evidence-based practice may be influenced to the extent that leaders are effective in communicating and getting support for a vision that includes the adoption and use of evidence-based practices. Transactional leadership may also help in rewarding and reinforcing behaviors that support the vision.

Working in the public sector brings special challenges for organizations implementing evidence-based practices. For example, the need for obtaining or renewing contracts and securing funding is an ongoing concern. At the local level, implementing evidence-based practices within an existing contract may mean renegotiating statements of work and defining what services can be reimbursed. National reimbursement policies may not be aligned with the provision of some evidence-based practices. These and other related concerns can lead to challenges for leaders in communicating how a vision of improved or changed services fits, or does not fit, with the day-to-day roles, duties, and tasks fulfilled by providers. Stronger leadership should help to mitigate some of the stresses of day-to-day operation of services and improve managers’ ability to lead change.

Particular attention should be paid to the perceptions and attitudes of public-sector providers and their supervisors. There have been recent calls for renewed attention to workforce development ( 68 , 69 ). More effective leadership is one mechanism by which first-level leaders ( 34 ), such as program managers, can work with their staff to improve the workplace and the ability of programs to respond to the need for change in perspective and process that accompanies implementation of evidence-based practices. It is these first-level leaders who generally have the responsibility for managing and monitoring change. Attention to the relationships between the managers and their staff in public-sector mental health programs will be necessary to address the challenges of workforce development and evidence-based practice implementation.

Although leadership functions may vary by organizational level or discipline ( 70 , 71 ), the study presented here suggests that the supervisor-supervisee dyad is a potentially important point of influence in affecting attitudes toward adopting evidence-based practice. However, in order to change attitudes and practice, leaders must persevere in the change process, and multiple hurdles to change should be expected and allowed for ( 72 – 76 ).

Behavioral health services organizations often deal with change as a function of internal initiatives or in response to external demands. Leaders at different organizational levels often spearhead or manage such changes. Although this study deals with attitudes toward evidence-based practice, it also relates to organizational change in general. Organizational context, individual provider differences, and type and complexity of the evidence-based practice to be implemented must all be considered ( 77 ). Leadership at the supervisor-supervisee level is important in management of change, as this is a frequent point of contact, influence, and shared meaning in organizations. Because of the complexity of organizations, providers, and clients, there is no single factor or correct approach for implementation of evidence-based practices in behavioral health service organizations. However, the study presented here provides some guidance in improving our understanding of how leadership may influence providers’ attitudes. The link between attitudes and actual implementation of evidence-based practices has yet to be confirmed, however.

This study adds to the evidence that leadership is one factor that can affect the implementation of evidence-based practices in behavioral health services. This study provides additional evidence that multiple factors in the service context are important in understanding attitudes toward evidence-based practice ( 4 , 6 , 7 , 75 , 78 ). Leadership geared toward promoting adoption of innovation and change is critical to the success of implementing evidence-based practices. Further work is needed to identify who will benefit from improved leadership skills, how best to train and apply leadership skills, and when in the process of evidence-based practice implementation to provide training and development for effective leadership.

Acknowledgments

This work was supported by grant MH-001695 from the National Institute of Mental Health. The author thanks the program managers, supervisors, clinicians, and case managers who participated in this study.

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• Leadership |
• Before you try transactional leadership ...

Before you try transactional leadership, read this.

Transactional leaders tell their team exactly what to do and motivate employees via perks or rewards. While this leadership style is useful for short-term pushes or emergency situations, transactional leadership should be used with caution. Read on to learn about the pros and cons of transactional leadership, when to use it, and some alternative styles to consider.

There is no one right way to lead—and the best leaders use multiple leadership styles. Transactional leadership is one style of leadership that, when used intentionally, can help your team members excel at specific tasks or specific situations. In this article, we’ll cover what transactional leadership is and when you can use it—as well as when to avoid it and use other types of leadership styles instead. 

What is transactional leadership—and where does it fit into all of this?

Transactional leadership is a style of leadership that focuses on order, structure, and goal-oriented planning. A transactional leader will directly tell their team what to do—as a result, this leadership style prioritizes maintaining the status quo, rather than challenging it.

With this type of leadership, leaders often operate from a system of rewards to motivate their team. Transactional leadership appeals to the self-interest of each team member, encouraging them to do a good job in order to receive perks or incentives. In some cases, transactional leadership theory involves a laissez-faire style, in which a team lead will be hands-off until they’re needed.

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When should I use transactional leadership?

At Asana, one of our company values is, “Be real (with yourself and others),” so we’ll be real with you—you shouldn’t use transactional leadership frequently. Transactional leaders use extrinsic motivation and contingent rewards (i.e. rewards that are dependent on behavior or achievement). The advantage of this type of leadership is that you’re initially motivating people with things that might matter to them, like money or recognition. However, the disadvantage of transactional leadership is that team members tend to focus on achieving short-term goals in order to get those rewards. 

As a result, transactional leadership works in concentrated moments or emergency situations. With transactional leadership, there is only one decision-maker, which can be beneficial if you and your team need to solve a short-term goal with a tight turnaround time. However, it’s important to temper the structured environment of transactional leadership with other leadership styles that recognize employee performance more holistically to ensure you’re creating an open and collaborative work environment. 

What is an example of transactional leadership?

Teams that use transactional leadership:

Sales teams that have commissions are using a form of transactional leadership. When a member of the sales team hits their quota they receive a reward—but on the inverse, corrective action may be taken if they don’t hit their goals for the quarter.

Sports teams often use a form of transactional leadership to convince team members to do something unpleasant, like training, in order to hit a personal reward—in this case, doing well in a competition.

Emergency or crisis situations can benefit from transactional leadership if everyone needs to band together and get a short-term goal done quickly. This form of managerial leadership works best if a team needs to execute on a problem, rather than iterate on possible solutions.

Advantages and disadvantages of transactional leadership

Should you use transactional leadership? Like any leadership style, there are pros and cons to transactional leadership. Here are a few reasons to use transactional leadership—sparingly—and a few tips on when to avoid it. 

Pro: Teams are laser-focused on goals

Transactional leaders execute on specific (usually short-term) goals. Because of this, the teams they lead tend to be laser-focused on those goals. The clarity and short-term focus means team members know how to prioritize in order to get where they need to go.

In short bursts, this level of clarity can help your team members focus on particular tasks. In our research, we found that 29% of employees who felt burnout in the last year reported feeling overworked from a lack of clarity on tasks and roles. By giving your team a clear goal and telling them what to do through a transactional leadership style, you can remove those doubts and help them focus on the right priorities. For example, a transactional leader might set a goal to publish a certain number of articles this month or connect with a certain number of customers in a week. 

Con: Goals are usually short term

When you use transactional leadership, you should communicate clear goals that your team should aim for. But, in order for those goals to feel achievable, they tend to be short-term goals .

That’s why you should practice different types of leadership at different times. Transactional leadership can help your team think short-term, but you also need to help your team build long-term goals as well. A key way to do that is to think of yourself not just as a leader, but as a coach. Supporting team members not just as a manager but also as a coach can help your team set concrete-long term goals. To learn more about how to set long-term goals to help your team develop their skills, read our article on how to coach teammates .

Pro: Can increase motivation and productivity

Depending on how your team members are motivated, transactional leadership can increase motivation by setting a reward at the end of a short-term goal. This method is most frequently used in sales teams in the form of commissions. For example, a sales team might offer a small, immediate bonus for the team member who books the most calls at the end of a sales cycle.

Con: Not everyone is motivated in this way

Transactional leadership can motivate some team members, but not every team member is motivated by rewards and perks. Additionally, the transactional leadership model doesn’t encourage team members to go above and beyond or be creative in their roles.  

That’s why you shouldn’t exclusively rely on the transactional leadership model—and avoid implementing this leadership style consistently with your team. Make sure your team is effectively motivated and supported, and always give them opportunities in at least some projects to be creative. This is a critical factor in motivating team members to do their best work— 44% of employees cited having work that’s engaging and enjoyable as a motivating factor of what would make them work better in 2021. 

Pro: Easy to measure success

When you set a short-term goal as a transactional leader, you should also set clear goals and guidelines on how to get there. These guidelines can include when the goal should be accomplished, any risks or dependencies that might impact the goal, and any relevant project milestones along the way. 

Providing all of these details up front can be particularly helpful on teams that don’t always have clear-cut goals. Knowing exactly what they’re aiming for and how they’ll get there can help team members more easily gauge success and effectiveness at the end of a period of time.

Con: Doesn’t foster creativity or innovation

Transactional leadership tends to maintain the status quo—not challenge it. Because there is a clear chain of command on this type of team, this leadership style can be ineffective for creative teams. If your team is relying on you to set the goal post and identify their short-term goals, they’ll be less likely to iterate or think outside the box.

To combat this, make sure you’re creating a supportive work environment that prioritizes diverse ways of thinking. Encourage your team members to build their teamwork and collaboration skills and build cross-functional relationships within your company.

Is transactional leadership effective?

At the end of the day, transactional leadership is effective. But depending on the specific scenario, work environment, and team, it might not be the best leadership style. Like most aspects of leadership, you’ll want to adjust to fit your team and work. 

For example, if you manage a team of volunteer firefighters, transactional leadership would be a great fit. That’s because a directive approach can help improve group performance and potentially save lives. But if you’re leading a team of designers? Probably not. Since they have a creative job by nature, designers need more active management and support in order to function effectively as individual contributors. In that case, taking a more supportive style of leadership will likely be more beneficial.

How we think about leadership at Asana

The modern workplace is mentally cluttered and “always on.” Every day, we lose clarity to the chaos of murky priorities, duplicative work, and work about work. This lack of clarity and stress can lead to burnout—almost one in four of workers experience burnout four or more times per year. Additionally, knowledge workers around the world struggle to focus on the right work at the right time. Over half of workers feel they have to respond to notifications immediately and over a third feel overwhelmed by persistent pings.

As a leader, you’re empowered to guide your team in the right direction. One of the most powerful things you can do as a leader is to help your team connect daily short-term goals to team and company objectives. By giving your team the big picture about how their work leads back to the company’s mission or vision , you can motivate them to get high-impact work done.

What is your leadership style?

Similar to building your management style , finding your leadership style is a lifelong process. But you can start by considering your current leadership approach—what leadership skills do you already have? And where is there room for leadership development?

Don’t be afraid to look to leaders you respect for advice, as well. Like these key lessons that Asana’s CEO Dustin Moskovitz learned over decades as a leader:

Delegating is both good for you as a leader and the people who are receiving the work, getting more autonomy, and learning more skills.

Acknowledge that everyone is a partner in what you’re trying to do and not an enemy.

Recognize that you agree with people more than you think you do . Where you disagree is probably a difference of assumptions and not a real conflict.

Don’t let perfect be the enemy of the good. Make decisions, even if you’re unsure of which decision is strictly the best one at that very moment. Letting a decision linger for too long is energy-draining.

Make sure there are regular checkpoints for reflection and that there’s time to think at a high level—don’t just be tactical all the time.

How does transactional leadership compare to other leadership styles?

Transactional leadership is one of many different leadership styles. Here, we compare it to other common leadership styles including transformational, democratic, and servant leadership .

What is the difference between transformational and transactional leadership?

In transformational leadership, a leader will develop and execute on an idea in conjunction with their team. Transformational leaders prioritize putting autonomy and authority in the hands of their direct reports, instead of centralizing the decision-making process.

When should I use transformational leadership?

Transformational leaders are always focused on the future—their goal is to think “outside the box” and implement new ideas at their company. Transformational leaders inspire commitment and tend to focus on their charisma to support, encourage, and motivate their employees. 

If this type of leader sounds magnetic, it’s because they typically are—in fact, people sometimes say transformational leaders have “followers” rather than team members or employees, because of the way they tend to become role models for their direct reports. Like transactional leadership, this has its pros and cons. While transformational leadership puts decision making in the hands of the team—instead of consolidating the decision making at the top—a study published in the Journal of Applied Psychology showed that transformational leadership led to lower job satisfaction and job performance than transactional leadership.

What is the difference between servant and transactional leadership?

With servant leadership, the leader acts as more of a guide than a commander. The focus is on serving the team and finding ways to be supportive, as opposed to telling them how to work. It’s a people-first approach, where the members of the team always come before deadlines, tasks, or goals.

When should I use servant leadership?

Servant leaders are always focused on their people—what they need comes first even at the expense of work. As a result, employees with servant leaders typically have high team morale and show a lot of integrity with their work. 

This comes at the cost of losing some authority as a leader. If your work relies on you being more autocratic, then servant leadership won’t be a good fit. If, however, your work is more flexible and can benefit from having a happy, supported team, then servant leadership is a great way to lead.

What is the difference between democratic and transactional leadership?

Democratic leadership could be considered the opposite of transactional leadership. This is a team that by definition is run “by the people.” Decisions are made as a group, and you are always encouraged to challenge thoughts and ideas. Employees tend to be highly engaged and work by hosting group brainstorming sessions and cross-collaboration to complete projects. 

When should I use democratic leadership?

Democratic leadership is best for highly integrated and creative teams that don’t operate on strict deadlines. It can take a while for the team to decide, and they might use their democratic culture to challenge it even when they have. This can make forward-progress slow. At the same time, team members will feel heard and seen throughout any discussion and can see themselves in all aspects of the work.

Which leadership style is right for me?

The best leaders vary their leadership styles depending on the situation, their employees, and the particular needs of a project. Every team member is different, which means they’ll respond to different styles or situations. As a leader, the best thing you can do is to identify the most effective motivators for each team member and use those to support them. 

Even still, aim to use transactional leadership sparingly. These leadership qualities tend to foster less creativity and be less flexible than other leadership styles, like transformational leadership. But transactional leadership can bring clarity and goal-oriented focus to your team. Implementing this leadership style in structured ways can help you better guide your team towards success. 

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• Business and Management

Transactional and Transformational Leadership: A Case Analysis

20 Dec 2022

Format: APA

Academic level: College

Paper type: Case Study

Downloads: 1

Introduction 

Transactional and transformational leadership dominate in the contemporary business world whereby companies assimilate either of the two in their leadership approaches or mix both to achieve organizational goals. Transactional leadership centers on short-term planning, organizing and controlling. The strategy also follows the reward and punishment principle. Unlike transactional leadership, transformational leadership promotes enthusiasm, allows for a quick formulation of visions, and motivates followers through inspiration. Though perceived as humane, transformational leadership carries a potential for abuse; it can overlook truth and reality and may face serious detail challenges. This case analysis seeks to prove that: Both transactional and transformational leadership models can guarantee success depending on the type, context, and structure of a company. 

Background 

The problem of an unhappy workforce impacts the top and bottom line outcomes in most economies. For instance, such employees lead to an increased turnover rate, which ends up costing the U.S economy and companies above $550 billion annually (Efron, 2016). As such, a purposeful and skilled leadership guided by the understanding of factors that engage and motivate personnel is ideal to alleviate the problem. 

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Alternatives 

Bill Gates-Microsoft 

Bill Gates, a computer tycoon, adopts transactional leadership as an essential façade of his leadership style. With the help of his leadership acumen, Microsoft became a trendsetter by revolutionizing the information technology industry. His strictness to both his subordinates and rivals helped him transform Microsoft into a firm monopoly (Mirror Business, 2015). Bill enables this through careful control of the company’s production process and creating barriers. Evident in Bill Gate’s attributes that renders his management influential are competitiveness, intelligence, and ambition. Bill Gates does not embrace adaptive or engaging communication since he is abrasive and easily dismisses others’ ideas. For instance, in one of his hiring exercises, he stated, “I don’t hire bozos (Mirror Business, 2015).” This statement further reveals that Microsoft employees must be highly dedicated and hard-working, as he drives the workforce as hard as he pushes himself. 

David Ossip-Cerdian 

Ceridian’s CEO, David Ossip is an example of a leader whose transformational leadership approach transformed the metrics and future trajectory of his workforce. Ossip’s leadership strategies rapidly increased the company’s customer base. In 2011, for example, the company forecasted 100 customer purchases, only to end up selling 483 items (Efron, 2016). His first approach in reviving the Ceridian was to reinvent the company’s culture. Ossip did this to properly drive employee engagement, which subsequently resulted in improved market share and customer engagement scores. 

Ossip’s leadership emphasizes employee engagement in decision-making using a program dubbed, “Top Talent” to drive changes through the improvement of workforce and leadership interaction. Where there is an involvement of the workforce in making decisions, proper communication is a requirement. Before Ossip took over the company’s top management, the existing communication methods were a constraint (Efron, 2016). In contrast, his leadership advocated for an enabler form of communication. An enabling communication platform allows more comfortable sharing of ideas with leaders, and it requires the interest of administration to ideas from subordinates. 

Transactional leadership base on a system of penalties and rewards, but fails to motivate employees to perform beyond the basics. The basics in this regard mean agreements between the leaders and employees regarding the rewards in store for the worker after achieving a negotiated performance level. Concerning the Bass/Bruns model, workforce under transactional leadership tends to become complacent and focus mainly on attaining minimal expectations synonymous with those the management expects of them. Contingent reward leadership advocated by Bill Gates transactional leadership is detrimental in a diversified industry with competitive rivals (Bass, 1999). This statement is right because it is likely to impact on employees’ performance negatively. Poor workforce performance under such leadership arises from the fact that a leader passively awaits problems before deciding to take actions. 

Transformational leadership practiced by David Ossip enhances the consciousness of personnel regarding essential things, whereby they learn to sacrifice their interests for the sake of the organization. Bass (1999) contends that numerous studies support the possible expectation that transformational leadership generates more commitment from followers. Such obligations, supported by a focal innovation role assumed by the leader, motivate innovation by promoting learning within an organization. Besides, transformational leadership facilitates the creation of transformational teams vital in the modern business world where companies abandon steep hierarchical structures to embrace a flatter model (Bass, 1999). This model creates lateral multifunctional networks that motivate the formation of teams. The teams, in this setup, identify concerns and propose solutions. 

Recommendations 

Both transformational and transactional leadership have their merits and disadvantages. In instances where an organization pursues a specific organizational goal, transactional leadership suffices. A company that needs to stand out among its competitors for an extended period without triggering high turnover should apply a mix of both transactional and transformational leadership models. Bill Gates of Microsoft can realize even more success by integrating transactional leadership with transformational leadership constructs such as workforce involvement in decision-making. On the other hand, David Ossip can improve the motivation of Ceridian employees by establishing rewards for achieving set organizational goals that need achievement in the short-term. 

References 

Bass, B. M. (1999). “Current developments in transformational leadership: Research and applications.”  The Psychologist-Manager Journal, 3,  1, 5-21. 

Efron, L. (2016). “How transformational leadership saved this company: Ceridian’s story.” Retrieved from https://www.forbes.com/sites/louisefron/2016/07/06/how-transformational-leadership-saved-this-company-ceridians-story/#7cb067162909 

Mirror Business. (2015). “Bill Gate’s transactional leadership style .” Retrieved from http://www.dailymirror.lk/75949/bill-gate-s-transactional-leadership-style 

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Describe the transactional and transformational leadership characteristics that don green and michael budman possess., transformational and transactional leadership case studies example, introduction, good definition of management and leadership case study example, management and leadership development.

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Sample Case Study on Transactional leadership

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Transactional leadership

This literature review examines scholarly literature that different researchers have documented as pertains to leadership. Evidence indicates that contemporary scholars have introduced two styles of leadership, transactional and transformational leadership, which are commonly being used to manage organizations in the 21 st century society. As argued by Gardiner (2006) in his literature, transactional leadership, which is also defined as managerial leadership, is a theory of leadership that concentrates on supervisory, organizational and group performance. It is a style of leadership whereby an organizational leader enhances compliance among the subordinate members through rewarding and punitive actions. Different from the transformational style of leadership, leaders employing transactional leadership do not focus on future but they merely intend to maintain things in their present form. Transactional leaders further pay attention to the subordinate members’ work so as to establish possible faults or deviations from expected outcomes and subsequently imply negative reinforcement as a corrective measure. Unlike the transformational style of leadership that intends to integrate innovative ideas that can transform the organization as a whole, transactional leadership can only be effective when applied in crisis and emergency management particularly when undertaking projects that need to be implemented in a particularly way.

By contrast, transformational leadership describes a style of leadership that charges leaders with the role of perpetuating change through vision creation as well as inspiring committed members of a subordinate group. This style of leadership aims to influence major transformations in thoughts and assumptions of organizational members to enhance realization of key organizational objectives (Foster, 1989). From this definition, it agreeable that transactional leadership is a style of leadership that focuses on the current situation by aiming to improve current performance without focusing on the future as is the case with transformational leadership.

Qualities of transactional leadership

            Understanding qualities that distinguish transactional leadership can help to explain the appropriateness of its application in organizational management. A study by Fullan (1999) showed that transactional leaders integrate punitive and rewarding actions to enhance compliance among the subordinate members (Bass, 1990). Leaders using this style of leadership tend to be action-oriented and they are always willing to negotiate with the subordinate members to perpetuate realization of organizational goals. Transactional leaders tend to work with prevailing systems and think within the box when addressing problems. On this note, it is agreeable that this style of leadership is merely passive as it does not integrate new ideas but it only aims to employ already exiting ideas to address issues. Two key attributes, contingent reward as well as management-by-exception distinguish transactional style of leadership. Contingent reward is an attribute that offers rewards in recognition for good performance while management-by-exception upholds the status quo and only allows for intervention when subordinate members do not meet expected level of performance (Assaf, 2012).

Comparison between transactional and transformational leadership

            A comparative study was carried out by Boehnke at al (2003) with the intention of establish how transactional leadership differs with transformational leadership. He established that transactional leaders trade concrete rewards to compliance and achievements made by subordinate members. By contrast, transformational leaders engage with the subordinate members and focus on greater intrinsic needs and raise awareness on the need to enhance certain outcomes. On this note, it is apparent that transactional leadership is a more passive style of leadership where subordinate members only aim to respond to certain types of rewards (Dougherty, 2012). Transformational leadership is however a proactive style that allows subordinate members to exhibit active behaviors intended to accomplish certain organizational goals and strategies. Transactional leadership is inclined on management-by-exception factor, which intends to maintain the status quo and only seeks to implement corrective measures when desired performance is not met. By contrast, transformational leadership is based on individualized consideration where each performance-related behavior is directed to each member of the organizational team to express consent and support (Fullan, 1999). On this note, it is evident that transactional leaders do not create room for introduction of new ideas as is the case with transformational leadership.

Transactional management in educational context in UAE

Previous studies indicate that transactional leadership style has widely been used to manage educational institutions in UAE. Educational leaders in UAE increasingly promote contingent reward by giving reciprocal reinforcements in exchange for duty from subordinate members. The contingent factor is usually promoted by school principals who create employment contracts and define agreements that would guide teachers in achieving specific work-related goals. School principals for example clarify the specific outcomes that subordinate teachers ought to accomplish and they in return receive rewards that include complements, pay increment and recognition for achieving expected outcomes (Assaf, 2012). These transactional leaders are however not interested in promoting a high degree of motivation or job satisfaction. This however is not the case with the few educational leaders that manage schools using the transformational style of leadership (Bass & Steidlmeier, 1999). This is because transformational leaders in UAE tend to be more focused on future stability of the system for which they are responsible. Such leaders are not committed towards exchanging rewards for the outcomes achieved but they aim to promote innovative ideas that can bring change. At this point, it is agreeable that transformational leadership is a more desirable form of leadership particularly because there is a rapidly evolving trend in educational transformation in UAE (Fullan, 2007).

Assaf, M. A. (2012). Students Learn Best in Schools that Learn: Professional Learning Communities, in Dougherty, P (Ed.).

Bass, B.M. (1990). From Transactional to Transformational Leadership: Learning to Share the Vision, Organizational Dynamics , 18(3): 20 – 31.

Bass, B.M. & Steidlmeier, P. (1999), Ethics, Character, and Authentic Transformational Leadership Behaviour, Leadership Quarterly , 10(2): 181 – 217.

Boehnke, K., Bontis, N., DiStefano, J.J., DiStefano, A.C. (2003). Transformational Leadership: an Examination of Cross-National Differences and Similarities, Leadership & Organization Development Journal, 24(1): 5-15

Dougherty, P., (Ed.) (2012 ). Education and the United Arab Emirates: Perspectives from Experience . Abu Dhabi: HCT Press.

Foster, W. (1989). Towards a Critical Perspective of Leadership. In Smyth, J. (Ed.)

Fullan, M. G. (1999). Change Forces: The Sequel . Philadelphia, PA: Falmer Press.

Fullan, M.G. (2007). The New Meaning of Educational Change (4th ed.), New York: Teachers College Press.

Fullan, M. (2011). Change Leader: Learning to do what matters most . San Francisco: Jossey-Bass/Wiley.

Gardiner, J.J. (2006). Transactional, Transformational, and Transcendent Leadership: Metaphors Mapping: The Evolution of the Theory and Practice of Governance, Leadership Review , 6, 62-76.

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The majority (86%) of employees believe empathetic leadership boosts morale while 87% of employees say empathy is essential to fostering an inclusive environment.

As many employees face downsizings, restructurings and a looming global recession, most say that empathic leadership is a desired attribute but feel it can be disingenuous when not paired with action, according to the 2023 Ernst & Young LLP ( EY US )  Empathy in Business Survey .

The study of more than 1,000 employed US workers examines how empathy affects leaders, employees, and operations in the workplace. The survey follows the initial EY Consulting analysis of empathy in 2021 and finds workers feel that mutual empathy between company leaders and employees leads to increased efficiency (88%), creativity (87%), job satisfaction (87%), idea sharing (86%), innovation (85%) and even company revenue (83%).

“A  transformation’s success  or failure is rooted in human emotions, and this research spotlights just how critical empathy is in leadership,” said  Raj Sharma , EY  Americas Consulting  Vice Chair. “Recent years taught us that leading with empathy is a soft and powerful trait that helps empower employers and employees to collaborate better, and ultimately create a culture of accountability.”

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“Time and again we have found through our research that in order for businesses to successfully transform, they must put humans at the center with empathetic leadership to create transparency and provide employees with psychological safety,” said  Kim Billeter , EY Americas  People Advisory Services  Leader. “Empathy is a powerful force that must be embedded organically into every aspect of an organization, otherwise the inconsistency has a dramatic impact on the overall culture and authenticity of an organization.”

In fact, half (52%) of employees currently believe their company’s efforts to be empathetic toward employees are dishonest ― up from 46% in 2021, and employees increasingly report a lack of follow-through when it comes to company promises (47% compared to 42% in 2021).

To fulfill the authenticity equation, previous EY research indicates offering flexibility is essential. In the 2022 EY US Generation Survey, 92% of employees surveyed across all four workplace generations said that company culture has an impact on their decision to remain with their current  employer.

Lead with empathy  now  to combat the workplace challenges ahead

While leaders may experience lower employee attrition rates now when compared to the Great Resignation, a resurgence is brewing. Many economists expect a soft landing from the looming recession and with it may come turnover, particularly if employees already feel disconnected from their employer or from each other.

In fact, failing to feel a sense of belonging at work or connection with coworkers is a growing reason why employees quit their jobs. About half (50% and 48% in 2021) left a previous job because they didn’t feel like they belonged, and more employees now say they left a previous job because they had difficulty connecting with colleagues (42% vs. 37% in 2021).

“What happens outside of work has a direct impact on how people show up. It’s no longer enough for leaders to think of a person in one dimension – as an employee or as a professional within the organization,” said  Ginnie Carlier , EY Americas Vice Chair – Talent. “Leading with empathy helps move from the transactional and to the transformational Human Value Proposition, where people feel supported both personally and professionally.”

2023 EY Empathy in Business Survey methodology

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