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This type of leader sets the criteria for their workers according to previously defined requirements.
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. The status quo of an organization is maintained through transactional leadership.
Transactional leadership theory is based on the idea that managers give employees something they
want in exchange for getting something they want. It posits that workers are not self-motivated and
require structure, instruction and monitoring in order to complete tasks correctly and on time.
The transactional leadership style was widely used after World War II in the United States. This was
a time when the government concentrated on rebuilding and required a high level of structure to
maintain national stability.
Political scientist James McGregor Burns was one of the most prominent authors to advance
Weber’s theories. In his 1978 book “Leadership,” Burns argued that both transactional and
transformational leaders must be moral and have a higher purpose. In Burns’s model, transactional
leaders espouse honesty, fairness, responsibility, and honoring commitments.
In the 1980s and 90s, researchers including Bernard M. Bass, Jane Howell and Bruce Avolio defined
the dimensions of transactional leadership:
Contingent reward, the process of setting expectations and rewarding workers for meeting
them
Passive management by exception, where a manager does not interfere with workflow unless
an issue arises
Active management by exception, in which managers anticipate problems, monitor progress
and issue corrective measures
Many current leadership theorists agree that principals of transactional and transformational
leadership can be combined for ideal outcomes for both management and the workforce.
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 four examples of transactional leaders.
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.
Vince Lombardi
Born in 1913, Vince Lombardi is best known as the coach for the Green Bay Packers. He signed a
five-year contract with Green Bay in 1959. Under his leadership, the team never had a losing
session. Over the course of his career, he led the team to a 98-30-4 record and five championships.
The Super Bowl trophy is named after him. He used to run the Packers through the same plays in
practice over and over again. The team’s opponents knew the plays Lombardi would run, but the
team was so well trained that many teams had trouble defending against them.
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
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 magazine’s list of the 400 richest people in
America. As a transactional leader, he was responsible for the vision and implementation of the
Starbucks model.
Transactional leadership quotes
Norman Schwarzkopf: “When placed in command, take charge.”
Vince Lombardi: “The price of success is hard work, dedication to the job at hand, and the
determination that whether we win or lose, we have applied the best of ourselves to the task at
hand.”
Bill Gates: “The first rule of any technology used in a business is that automation applied to an
efficient operation will magnify the efficiency. The second is that automation applied to an inefficient
operation will magnify the inefficiency.”
Howard Schultz: “Starbucks is not an advertiser; people think we are a great marketing company,
but in fact we spend very little money on marketing and more money on training our people than
advertising.”
Transactional leadership style
Here are some of the characteristics of transactional leaders:
The military, policing organizations, and first responders use this style of leadership so that all areas
of the organization are consistent. It is also easier to apply in a crisis situation, where everyone must
know exactly what is required of them and how a task is to be done under pressure.
To many people, money and perks are a powerful motivator. Many people need a job to pay the
bills. They have other obligations and distractions and would just as soon know exactly how to do
their job in order to keep it and reap the rewards.