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Everything you need to know about transactional leadership

Finding a leadership style that works for you is challenging for many business leaders. As you search for the best way to guide your employees, you will likely encounter five different styles: transformational, delegative, participative, authoritative, and transactional leadership.

These styles have unique advantages that can help you grow as a leader. However, determining which style is best for your organization is essential to guide your employees successfully. This article will cover transactional leadership, its benefits, and how to become a transactional leader.

Get a complete view of transactional leadership:

  1. What is transactional leadership
  2. How transactional leadership can change you and your career
  3. What are the benefits of using a transactional leadership style
  4. How can you become a transactional leader?

1. What is transactional leadership and what are its key characteristics

Transactional leadership, also known as managerial leadership, relies on rewards and punishments. Transactional leadership prioritizes structured tasks with clear guidelines to ensure that employees stay on task with minimal error. Transactional leaders often implement this style to prevent employees from losing motivation to complete their tasks.

Transactional leaders use a reward-based system to give their teams specific goals and tasks. When providing these guidelines, transactional leaders emphasize the potential for the employees to receive a reward, most often with monetary value. Offering rewards help transactional leaders keep their employees motivated to ensure that work is high-quality and on time.

The “give and take” method in transactional leadership establishes specific roles and responsibilities for each employee and rewards employees based on effort, outcome, and success. The transactional leadership style requires structure to be successful.

2. How transactional leadership can change you and your career

Transactional leadership helps progress your career by encouraging you to take a practical leadership approach. Transactional leaders are deeply sourced in consistently creating a structure that works within an organization and following that structure.

You and your organization will benefit immensely when you successfully execute a transformational leadership style. Transactional leadership helps you strengthen your communication style between yourself and your employees. You will understand how to clearly express your expectations from each employee and master a direct, transparent communication style.

Being a transactional leader entails fast and confident decision-making on your behalf. Transactional leadership can help you and your organization manage crises. With transactional leadership comes newfound confidence in your executive abilities.

3. The benefits of using a transactional leadership style

Transactional leadership has the potential to benefit you and your business substantially. Understanding why transactional leadership is a beneficial strategy and a valuable option for identifying your leadership style is essential. Below are the primary benefits of a transactional leadership style.

Transactional leadership encourages fairness among team members

When employees feel like favoritism is involved in their success, tensions arise in organizations. Whereas other leadership styles could strengthen these sentiments, transactional leadership encourages fairness and peace.

By implementing a rewards system where each employee has an equal opportunity to succeed, you eliminate any doubt employees have over perceived favoritism that you have for specific members. With transactional leadership, all employees are on equal footing.

Transactional leadership implements a simple and structured system

Transactional leadership is one of the most straightforward styles for employees to stay on track and motivated. As a transactional leader, you provide employees with specific roles and require them to follow a structured framework for their tasks.

Transactional leadership is effective because all employees understand the organization’s definition of success and the expectations of each employee. This style ensures that every employee understands their job and has no questions about their work or role. Transactional leaders provide employees with a singular goal for success, and each employee knows what they can gain or lose if they do not reach performance standards.

Transactional leadership is motivational for employees

A rewards-based system is a huge motivator for employees and encourages them to complete their work efficiently and flawlessly. Transactional leadership utilizes rewards to guarantee that employees are always performing their best. Transactional leadership does not implement any structural changes to be successful but instead uses compensation to push the company forward and continue growing.

Successfully implementing a transactional leadership style motivates employees to produce high-quality work and makes them feel like valued team members. This leadership style demonstrates the importance of their contributions. No matter how rigid you keep the structure of your organization, rewards and recognition show employees that they aren’t insignificant and that the business is better because of their contributions.

4. How can you become a transactional leader?

Transactional leadership benefits any organization hoping to improve its structure and functionality. If a transactional leadership style suits your organization, there are vital steps to becoming a transactional leader. Becoming a transactional leader begins by creating an unwavering structure to guide your employees.

Implementing structure in your organization is possible by giving individual employees clear tasks to complete with high expectations for the quality of their work. The rewards-based system in transactional leadership ensures that no one goes against the typical structure and that all leaders and employees remain on the same wavelength.

Becoming a transactional leader also requires advanced communication skills. Communication is essential to implementing and reinforcing structure within an organization. To be a successful transactional leader, you must remain transparent with your employees. Share your expectations and ensure that all employees follow your exact guidelines. As you implement a transactional strategy and employees adapt to this new system, continuously check that everyone is on the same page.

Once your employees are comfortable with your transactional leadership style, you can begin recognizing top-performing employees and offering monetary rewards, such as a bonus. Recognizing your employees will keep them motivated and guarantee they continue performing at their best.

Additionally, recognizing employees makes them feel proud of their work and helps them build a bond with you. When you recognize an employee’s hard work, they feel more comfortable with you and more confident in their abilities. A leader’s recognition lets employees know they are valued and appreciated. The transactional leadership style helps form bonds between leader and employee, strengthens communication, and boosts workplace morale.

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