TRANSACTIONAL LEADERS

Divyae Sherry
&
Rakesh Choudhary

WHO IS A TRANSACTIONAL LEADER ?

1. Transactional leadership focuses on results, conforms to the existing structure of an
organization and measures success according to that organizations system of
rewards and penalties.
2. Transactional leaders have formal authority and positions of responsibility in an
organization.
3. This type of leader is responsible for maintaining routine by managing individual
performance and facilitating group performance.
4. Performance reviews are the most common way to judge employee performance.
Transactional, or managerial, leaders work best with employees who know their
jobs and are motivated by the reward-penalty system.

5. The status quo of an organization is maintained through transactional leadership.

ASSUMPTIONS OF TRANSACTIONAL THEORY

1. Employees are motivated by reward and punishment.
2. The subordinates have to obey the orders of the superior.

3. The subordinates are not self-motivated. They have to be closely

monitored and controlled to get the work done from them.

EXAMPLES
Many high-level members of the military, CEOs of large international companies, and
NFL coaches are known to be transactional leaders. Transactional leadership also
works well in policing agencies and first responder organizations. Here are three
examples of transactional leaders.

NORMAN SCHWARZKOPF

NORMAN SCHWARZKOPF
Gen. Norman Schwarzkopf was born in 1934 and graduated from West Point.
He went to Vietnam as an advisor to the South Vietnamese army. During that war, he
was wounded twice and awarded three Silver Star medals. In 1978, he became a
brigadier general; he attained a four-star ranking in 1988.
General Schwarzkopf was commander-in-chief of the U.S. forces in Operation Desert
Storm, responsible for tens of thousands of troops in Iraq and Kuwait.
He used the rules and regulations of the military to coordinate operations on
several continents.

BILL GATES

Founder Microsoft

BILL GATES
Bill Gates was born in Seattle in 1955. In his early teens, he met Paul Allen at the
Lakeside School, where they both developed computer programs as a hobby.
When Gates went to Harvard, Allen went to work as a programmer for Honeywell in
Boston. In 1975, they started Microsoft, and by 1978, the company had grossed $2.5
million, when Gates was 23.
In 1985, Microsoft launched Windows. Bill Gates is now one of the richest people in
the world.
As a transactional leader, he used to visit new product teams and ask difficult
questions until he was satisfied that the teams were on track and understood the
goal.

HOWARD SCHULTZ

CEO Starbucks

HOWARD SCHULTZ
Howard Schultz was born in 1953 and grew up in the Brooklyn housing projects. He
escaped the projects with a football scholarship from Northern Michigan University.
After college, he started selling coffee makers to companies that included the
Starbucks Coffee Tea and Spice Company, which originally sold coffee beans rather
than made-to-order drinks. He was hired by the company in 1982. In 1984, Schultz
opened the first Starbucks coffeehouse based on the concept of an Italian espresso
bar.
Schultz wanted to grow Starbucks, but the owners wanted to stay small. Schultz left
and opened his own company in 1985. With the help of investors in 1987, he bought
Starbucks and merged the two companies. By 2006, Schultz was ranked 394 on
Forbes magazines list of the 400 richest people in America. As a transactional
leader, he was responsible for the vision and implementation of the Starbucks model.

CHARACTERISTICS OF TRANSACTIONAL LEADERS

Focused on short-term goals
Favor structured policies and procedures
Thrive on following rules and doing things correctly
Revel in efficiency

Very left-brained
Tend to be inflexible
Opposed to change

ADVANTAGES & DISADVANTAGES

Advantages

Disadvantages

Rewards those who are motivated by self-interest

to follow instructions

Rewards the worker on a practical level only, such

as money or perks

Provides an unambiguous structure for large

organizations, systems requiring repetitive tasks
and infinitely reproducible environments

Creativity is limited since the goals and objectives

are already set

Achieves short-term goals quickly

Does not reward personal initiative

Rewards and penalties are clearly defined for

workers

..

VIDEO

Made By: Siddhant Chawla

CREDITS
Siddhant Chawla (1620334) : Video Editing/Production
Divyae Sherry (1620313): Examples and Cases
Rakesh Choudhary (1620370): Definition and Differences
Raghuvansh Parmar (---) : N/A