HomeBUSINESSTransactional Leadership: What is it? What Advantages?

Transactional Leadership: What is it? What Advantages?

The corporate world has undergone a true revolution in recent decades, with the inclusion of new management strategies, new technological tools and new leadership perspectives.

In this sense, the figure of the leader who motivates and engages was created, as opposed to the leader who demands results based on the idea of ​​reward and punishment, called transactional leadership. This more traditional model, however, can be quite useful for some company profiles.

In this article we are going to know the meaning of transactional leadership, its concept, its benefits, and its contrast with other styles of leadership. Let’s understand the profile of the company that tends to do well with this leadership model .

The leadership

Before understanding the concept of transactional leadership, it is important to understand the leader’s role within a company.

Leading a company means organizing, planning the steps it intends to take and distributing all functions among employees in the best possible way, creating a healthy, harmonious and fair environment.

In this way, the leader differs from the boss, who is in a company to make sure that the work is carried out, without any connection with the personal and collective development of the employees.

The leader needs to be willing to listen, plan, rethink strategies, set goals and create tools and mechanisms for these goals to be met.

Transactional Leadership

Understanding the meaning of leadership, we can now focus on different styles of exercising the role of leader, mainly on two models that are very different from each other.

When we talk about transactional leadership, we are referring to a model that is very similar to the job of managing . The manager has much more similarities with a boss and does not behave like a leader.

This traditional model of leadership, which resembles a boss, is characterized by a relationship of authority between manager and employees. It is the famous “mander who can, obey who has sense”.

It is a type of management focused on the idea of ​​direct reward: you perform your work efficiently and I pay your salary, in a mere exchange relationship.

This management model does not embrace issues that are popularized from the evolution of theories on business management. Terms like engagement and motivation are forgotten in this traditional model of leadership.

In transactional leadership, the salary is the great stimulus for the employee to leave home and perform all his functions in the corporation.

Thus, we can see that the relationship between the leader and his collaborators is practically non-existent, which generates negative results within different organizational contexts.

As a counterpoint, the transactional leader has a fixation on meeting goals and following all imposed rules, which generates an environment of pressure and little freedom, but which tends to give results in the short term.

Transformational Leadership

Let’s talk about the benefits of developing the transactional leadership model within the company, but let’s understand a little how different this leadership model is from transformational leadership, which arrives to fill a space created by the most modern models of business management.

Transformational leadership is one where the leader acts as a leader should act, according to the most respected theories on business management. The leader is the one who inspires, is the one who motivates, is the one who engages, and who sets the right example, to serve as a model for all employees.

The function of this leader is to understand that for the company to give results, there must be a healthy, harmonious work environment that generates well-being for all employees.

The focus is not on the goals, but on the company’s values ​​and mission. Create an organizational culture and promote an environment of well-being among all its employees. In this context, it is natural that the goals are met.

That is, the goal is a natural consequence of all planning that involves creating a purposeful environment, which generates engagement and motivation, which will inevitably generate greater productivity.

Understanding the key differences between transactional leadership and transformational leadership

To understand once and for all the differences between transactional leadership and transformational leadership, we can observe:

  • In transactional leadership, the leader acts like a boss; already in transformational leadership, the leader acts like a real leader.

  • In transactional leadership, the leader is only concerned with accomplishing tasks and goals; in transformational leadership, the leader is concerned with the engagement, motivation and well-being of his team.

  • In transactional leadership, the leader sees no need to build relationships with his team; in transformational leadership, the leader insists on having a relationship with his team, seeking to understand the profile of his employees in order to create more efficient people management strategies.

  • In transactional leadership, the leader does not have an open channel of communication with employees; in transformational leadership, the leader understands that an efficient communication work generates better results, avoids noise and failures, and understands that the culture of constant feedback provides personal and collective growth that only brings benefits to the company.

The advantages of transnational leadership

You must be wondering: but if transformational leadership is so good, why are we here talking about transactional leadership, a traditional model that should be extinct?

Well, the issue is not so simple, and we can even see that some business models benefit more from the more traditional style. We will now see why:

clear motivation

The system of rewards, benefits and punishments established by transactional leadership tends to be effective because it makes it clear to the entire team what they will receive if goals are met and what they will lose if goals are not met.

Motivation is straightforward and involves measurable terms like cash and discounts. In this sense, this model simplifies the manager/employee relationship, facilitating the understanding of the rules, which benefits an employee profile that does not fit within the transformational model.

Clear and possible goals

Transactional leadership is focused on goals and objectives that produce results in the short term, and for this model to be successful it is necessary that the objectives are clear and the goals are as possible as possible.

It is a type of leadership that seeks in the team a quick and easy understanding of the goals to be met, and in short periods, so that a cycle can be completed more quickly, so that another can be started.

This model tends to generate less frustration, as it is focused on possible results to be achieved, and on goals that can be completed. And even so, if they are not conquered, the fact that they soon start another cycle of goals offers a new chance for the success of the team.

Maintenance of protocols and rules

The transactional leadership model is attached to the rules and protocols imposed by the company. There is not so much room for making rules more flexible, which can be an interesting choice if your team does not have a questioning profile, which is uneasy in the face of very strict rules.

Employees already know from the start what the rules are and that if they don’t comply with them there will be corresponding punishments.

Clear and direct communication

Unlike the transformational style, which encourages the creation of strategic communication planning, aimed at establishing different communication possibilities, transactional leadership focuses on clear, direct and hierarchical communication.

Employees understand all the information passed very easily, which hardly generates failures in communication, even because these failures always come together with pre-established punishments.

What type of company fits the transactional leadership model

We cannot automatically relate a business model to a leadership model. Thus, there is not necessarily a type of company that is best suited to developing transactional leadership.

What there are are procedures and projects within any company, which can be facilitated and implemented based on a more rigid leadership structure, with a defined routine, very clear communication and little room for experimentation and questioning by the team.

We can observe this model being executed in some types of industry, in environments with high security risk or even in projects with high investments. In these cases, it tends to be much more appropriate for the company to develop leadership that is rigid, consistent and clear in its objectives.

Offering loopholes for creating a feedback culture, or strategic communication planning can confuse employees, generating much more noise than benefits.

In companies that have crisis situations, or circumstances of chaotic or inefficient routines, a more authoritarian, transactional leadership model tends to be more appropriate, with no room for reflection, or for the creation of a creative culture, or an organizational culture. , or for a culture of communication.

In such a case, the simpler the work structure, the easier the team of workers will understand.


We have seen here that the transactional leadership model still survives within the corporate world, even though all managers and entrepreneurs understand that the world has changed and that a healthier and more well-being environment tends to generate more significant results in the medium and long term.

Even so, this traditional model of leadership still has a voice in companies, and depending on your situation, it can even generate good results in the short term.


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