Transactional leadership is more of a management style than a form of leadership. Nevertheless, it can be very effective for motivating subordinates and eliciting productivity. There are a few assumptions that go hand-in-hand with transactional leadership. Primarily, transactional leadership assumes that people are motivated by rewards, they will cede authority to their chosen leaders and fulfil goals and objectives set by their leaders. There are many benefits that come with an organisation's choice to implement transactional leadership.
Incentives and Rewards
Transactional leadership functions on a system of incentives and rewards. Under transactional leadership, people receive rewards for accomplishing the objectives and tasks given to them by their leaders. Thus, the relationship becomes transactional. Rewards and incentives are often of high value to subordinates. Many organisations use this style to stimulate productivity. Subordinates are often rewarded further when they exceed expectations, and managers and leaders will also work with those who are underperforming.
Subordinates working under transactional leadership have the advantage of a very clear and structured system. They know the chain of command and what is expected of them at all times. They also know that when they follow orders and complete objectives, they are rewarded with something that they find to be of value. Subordinates also know that negative consequences are the result of not following orders; therefore they are motivated to continually perform and try their best to reach a positive outcome.
Under transactional leadership, goals and objectives are set for the short term only, making them less daunting but also easier to fulfil. Subordinates and employees are motivated by the fact that short-term goals seem more easily attainable. Short-term goals also provide the opportunity for a sense of autonomy as there is less of a need for micromanagement. Employees understand what is expected of them; therefore they can independently complete the short-term goal at hand.
Control of Rewards
People may not be able to fully control their job satisfaction under transactional leadership, but they can decide what they value most. In many cases, management and leaders will allow subordinates to have some kind of control or say in the type of incentives they are rewarded with when they complete a task. These incentives come in many forms and can range from financial gain to points that can be redeemed for various prizes or time added to accumulated paid time off.