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Transactional Leadership Theory

Transactional leader brings followers together on a joint purpose of the goal. They are the managerial leaders who supervise and organize the followers in such a way that the performance of the team is not affected and the goal is achieved, for every achievement there are some reward and punishment on the failure.

©[Ian Milburn]/Adobe Stock


Transactional Leadership Theory was first described by Max Weber in 1947. He called it Legal – Rationality authority. He described that the leaders are always – charismatic, authoritative, traditional, and transactional by nature.

This ideology was later developed by MacGregor Burns and further expanded by Bernard Bass in his theory of Leadership. His theory explains how the leader-follower instincts work psychologically.


Mac Gregor has classified leadership as two types – Transactional and Transformational leadership.

  • Transactional Leader works on the organizational line to get the things done in perfection and expects that his followers do the same. Transactional Leadership is based on the transactions – a give and take basis.
  • Transformational Leader works along with followers by encouraging, increasing the moral, motivate.

Characteristics of Transactional Leaders

These leaders take initiative as long as there is mutual benefit in the exchange. Every work completed comes with a prize.

  • They do not go and venture beyond the organizational line and policies.
  • When the target is met appropriate reward is met while punishments or intervention is there when targets and policies aren’t achieved.
  • Always looking out so that there are no aberrations and rules breaking in the team.
  • They are always focused on short term goals.
  • Inflexible and not ready to adopt changes.
  • Laissez-Faire approach i.e leaders do not involve themselves with the follower’s personal problems and issues.

Some of the renowned Transactional Leaders are Bill Gates, Norman Schwarzkopf, Vince Lombardi, and Howard Schultz.

To elaborate the way on how Transactional Leaders work – Bill Gates, known for his charismatic leadership. Before being a Transformational leader he was also known for his strict following in the chain of command. He delegates and guides through his employees on what exactly he needs and how it can be worked on about, giving them very little freedom. Control plays the central part in Transactional leadership. Bill Gates always focused on the completion of the task in hand for the efficient and quick achievement of the target.

It is also noticed that Bill Gates used a rigorous hiring process to appoint a lot of young minds and set leaders to lead the next generation. It is for his leadership and guidance that many employees stay with Microsoft for a long period of time than others.

Even though Bill Gates initially used only Transactional leadership skills he also turned to become a Transformational leader. With years of knowledge and expertise, he started using both the skills as per demand.


It is assumed that Transactional leaders often have seen following Maslow’s theory of Hierarchical needs.

Here the leader concentrates on the Psychological satisfaction and other basic necessities of his followers to make give their best performance.

Advantages of Transactional Leadership

  • Effective on maintaining Status Quo but very responsive.
  • Particularly effective in crisis management and troubleshooting.
  • Single-handed leadership and direct line of command is seen as cost-effective.

Disadvantages of Transactional Leadership

  • Never changes from a strict line even when there is a possibility of success on a different approach.
  • This model motivates the followers only on the grass-root level.


This leadership model is effective in achieving daily targets and short term goals. Being a very simple model it is very easy to understand and train the leaders in helping them understand the company’s requirement especially at times of crisis and troubleshooting management.

An effective manager, one who ensures that the demand of the company is efficiently met, while need fully ensuring that the basic need of the employees is communicated. For example, taking strict action such as removing an employee for sexual harassment will encourage female staff to continue working with confidence.

{ 5 comments… add one }
  • Khaled Alyami January 13, 2020, 9:47 pm

    Thanks for sharing

  • hamid August 3, 2020, 5:23 pm

    Nice post totally cleared all the points about transactional leadership theory.

  • HAMID August 3, 2020, 5:25 pm

    Nice and clear

  • Wilber November 16, 2022, 11:08 pm

    Thank you so much for sharing wonderfully.

  • Ajmal December 21, 2022, 7:59 am

    Wonderful Explanation brother!

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