Transactional Leadership Theory

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Transactional theory, as its name implies, involves a “transaction” or quid pro quo between a supervisor and a subordinate. It is important to adopt the appropriate leadership style for assuring the success of organization. Parry & Thomson (2002) stated that in some cases, transformational leadership becomes inapplicable to ensure subordinate’s honesty from examining and appraising by a leader. Then the leader can practiced transactional style of leadership. Literally, transaction means “exchange” therefore transactional leadership is described as instrumental exchange between leader and subordinate. In this type of transaction, whether an employee deserves a reward or discipline, it depends upon its performance.
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The responsibility of leader is to articulate what behaviors are required and what will be the rewards for accomplisher and also to provide feedback for subordinate’s behavior. Rewards are awarded to those followers who comply with behavior requirements. In transactional leadership, leaders have the aptitude to evaluate the needs and aspirations of employees in exchange of performance of them and clearly exhibit the ways in which these needs and requirements can be fulfilled (Jung, 2000-2001). In transactional leadership, rewards and discipline are administered according to adherence or deviation from instructions. It is reported that interests of employees, who auspiciously succeeded in fulfilling the commitments of their leaders or organization, are accommodated by giving contingent incentives, admiration and promises (Bass, 2000). Singer and Singer (1990) agreed that transactional leader motivates subordinates by negotiating and strategically supplying rewards for services provided in order to achieve goals of an organization. He clarifies the subordinates’ goals and arranges contingent rewards as inducements toward the achievement of the goals. Burns (1978) suggested that managers’ use rewards methods to increase the corporate performance by…show more content…
A research was conducted on association between leader-member exchanges, in both leadership styles to estimate employee performance and concluded transactional leadership to be a positive predictor of subordinate’s performance judgment (Howell & Merenda, 1999). Burns (1978) found that transactional leadership is characterized by the standard process in every management i.e. continuing and mutual exchange process between a leader and subordinate or follower and it is a base for transformational leadership. Bass et al. (2003) perform their research for an organization which was working in an unstable environment and it demonstrates that transactional leadership boosts up performance of soldiers. Transactional leadership style is indicated as a dominant style of leadership over transformational and laissez faire style (Rejas et al., 2006). Elenkov (2002) observed that leadership style also effects organizational performance and those companies who adopt transactional leadership behavior positively correlates with better organizational performance and

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