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Transactional Leadership

Transactional leadership focuses principally on the completion of tasks through rewards and punishments which impact the performance of employees, resulting in a “leader-follower relationship” based primarily on economic transactions which benefit the employee as well as the leader (Casimir, Waldman, Bartram and Yang, 2006). In transactional form of leadership, leaders play a passive rather than active role and intervene only when errors and mistakes occur. In transactional form of leadership, trust is a crucial factor and is based on two theories of motivation, namely the expectancy theory (Vroom, 1964) and equity theory (Adams, 1965). The expectancy theory postulates that instrumentality is a vital motivator according to which employees ought to be rewarded when their performance reaches a specific level, whereas the equity theory postulates that fair and equitable treatment of employees serves as an important form of motivation (Casimir, Waldman, Bartram and Yang, 2006). Transactional leaders enable their subordinates to work independently but intervene only in case of failures, and act through punishments. Similarly, rewards are distributed after a certain level of success is achieved. For example, call centres provide specific goals to their employees, like selling holiday packages leaders only intervene when the objective is achieved or when it is not achieved. If the specific goals are reached, there are incentives for employees. However, when objectives are not appropriately met and failures occur, employees could be punished with reduced incentives or even pay. 

However, transactional leadership fails to motivate employees through identification or internalisation which transformational leadership promises to achieve. Researchers note that transactional leadership, also known as Laissez-faire leadership as one in which leaders reflect utter and complete disregard of their duties and fail to provide guidance to their subordinates (Bradford and Lippitt, 1945). Transactional leadership fails to offer the necessary support to their assistants and tend to be unmindful to the productivity of their workforce of the completion of their duties in a rightful manner. Even though transactional leaders offer complete freedom to their employees, the guidance is minimal making these work groups extremely inefficient resulting in poor quality work. Barbuto (2005) asserts that transactional leaders tend to interfere only after a failure has occurred and consider punishment to be the corrective form of action. These leaders have pre-fixed actions for particular failures and practice specific action in the form of punishments so that their involvement is limited to necessity and there is compete lack of encouragement on their part (Barbuto, 2005).    As such, transactional or Laissez-faire form of leadership tends to be the “most inactive and least ineffective” for of leadership due to its unproductiveness and cheap work quality (Barbuto, 2005).
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