This leadership style prioritizes individual interests and extrinsic motivation as means to obtain a desired outcome.
[Transactional] leadership occurs when one person takes the intitiative in making contact with others for the purpose of an exchange of valued things.
[2] He built on the work of German sociologist Max Weber's rational-legal model of authority in the context of organizational theory, conceptualizing leadership as a power-imbalanced social contract between leaders and subordinates, each of whom has specific goals that may be shared or unrelated.
He distinguished between the two by explaining that: The object in [transactional leadership] is... a bargain to aid the individual interests of persons or groups going their separate ways.
The premise of [transforming leadership] is that, whatever the separate interests persons might hold, they are presently or potentially united in the pursuit of "higher" goals, the realization of which is tested by the achievement of significant change that represents the collective or pooled interests of leaders and followers.Transformational leadership focuses on clear vision, collective benefits and long-term value.
For example, a political leader may wish to ensure voter loyalty; a social media influencer may desire to grow their followers; and a factory foreman may be charged with maintaining worker productivity.
In exchange, subordinates will expect their leader to reward them with appropriate compensation:[4] for example, with tax cuts for voters, interesting content for social media followers, or salaries for factory workers.
"[5] Transactional leaders prefer to work within the existing structure and the culture of the organization, opting to following precedent rather than implementing change.
They emphasize practical and directive action, articulating specific measures of success with subordinates to focus group attention on the extrinsic motivators that are intended to guide their work behavior — as opposed to transformational leaders, who aim for their followers to achieve intrinsic motivation and job fulfillment.
[6] Transactional leaders have a fine-tuned understanding of workers' motivations and the effort necessary to reach a desired goal, and clearly communicate the terms of the conditional reward to their subordinates.
Management-by-exception: active means that the leader continually monitors each subordinate's performance and takes immediate corrective action when something goes wrong.
Another example of transactional leadership is former US Senator from Wisconsin, Joseph McCarthy, and his ruthless style of accusing people of being Soviet spies during the Cold War.