Essay on Transactional Leadership

Introduction

In many enterprises and companies, leadership is a common management ability. Leadership refers to the ability to improve the efficiency of a team within the scope of management. Most leaders naturally judge many decisions by evaluating the information and making informed decisions (Borysenko, 2019). The leaders help employees analyze the situation and solve difficult problems. Therefore, leadership plays an important role in organization management and enterprise development.

Nowadays, leadership has become an indispensable component of a successful company. Given the huge influence of leadership on organizations, various countries have conducted a large number of studies on leadership and produced a variety of leadership theories, such as democratic leadership, Trait theory, Contingency theory, Style and Behavior Theory, and laissez-faire leadership. In other words, most of these theories are mainly related to the business and management field.

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Through continuous research and exploration in recent decades, leadership has made great achievements in business administration. The essence of leadership is the ability to manage effectively. In the last few decades, several definitions of leadership have been proposed.

This article will refer to two kinds of leadership theories, namely transactional leadership and transformational leadership. These two leadership theories are the most popular theories mentioned in the literature. In terms of managing a company, transactional leadership, and transformational leadership come from two very different perspectives.

Transactional leadership refers to the process of changing the efficiency of people in getting work done. “Transactional leadership was described as that in which leader-follower associations were grounded upon a series of agreements between followers and leaders”(House& Shamir 1993), Transformational leadership focuses more on results. This essay will evaluate transactional leadership and transformational leadership.

The significance and function of transactional leadership theory in business

Transactional leadership theory is a term in management psychology and it corresponds to transformation leadership theory. The transactional leadership model is a traditional leadership model, which defines the relationship between leaders and employees as an exchange relationship, which is equal and without any imbalance of interests. Transactional leadership aims to exchange for a leader-subordinate, but this theory does not establish a strong connection between the leader and each subordinate in management. (Yukl,1999). It was first proposed by James MacGregor Burns in 1918. Based on this equal relationship, leaders motivate employees to achieve better work efficiency and initiate task execution by assigning tasks and providing requirements to subordinates, like using rewards and punishments, awarding bonuses, and appreciating achievements according to performance. At the same time, the rewards and punishments give employees a clear idea of their goals, thus they will not lose their attention to finishing work effectively. It also appears to have verified contractual contracts as the main motivators (Khan et al., 1985 quoted in Bass, 2016) and to use extrinsic benefits to enhance the motivation of supporters.

With the rapid development of society and the adaptation to the characteristics of knowledge-based work, the superior requires employees to exert their potential as much as possible, to complete more creative work. At this time, the transactional leadership model can be used to complete this series of processes. The basic hypothesis of transactional leadership theory is that between superiors and subordinates and through the equivalent exchange between them, based on the physical contract. This is because, Connections between leaders and followers are based on a contract between subordinates and employers (House & Shamir, 1993). Transactional leadership is characterized by an emphasis on exchange. The disadvantages of this leadership model are harsh to some extent because leaders pay more attention to the completion of tasks and the obedience of employees. Heavily reliant on the principles of reward and punishment systems to affect employee work efficiency, in addition, the prominent characteristic of transactional leadership is its very emphasis on performance. This kind of leadership requires clear goals and strict order.

In general, the main form of transactional leadership behavior is a reward. When subordinates complete a specific task within a specified time frame, the leader rewards them for initial commitment. As its name suggests, the process is akin to a trade. Because the leader did not take measures to reward and punish clearly, thus some employees are not attentive enough at work to complete their tasks efficiently within the allotted time. One drawback of transactional leadership theory is that it can become a tool for personal gain. Leaders may focus on profit and goals and ignore some moral aspects. For example, some people may do anything like hurt others for their own benefit.

Two types of exception management (active and passive)

Exception management (passive) is a management method to investigate, solve, and deal with such incidents by using designated and familiar personnel and software tools. Good management improves the efficiency of the business. It is the transactional leadership style in which the representatives avoid specifying agreements and fail to set objectives and norms for employees to achieve. A leader sometimes waits before taking action for things to go wrong '(Khan et al., 2004 quoted in Bass & Avolio, 2016).

In general, this mode of management is the leader’s primary time and energy to deal with the very important and immediately to deal with human problems. I quite agree with this opinion. ’exception’ is an event that deviates from the plan and expected effect. It happens everywhere, especially in markets with a varied background, and something unexpected is inevitable. However, management by exception (active) is not that the leader ignores and indulges his subordinates. It is characterized by laissez-faire leadership and a free-range feeding mode. “This type of leadership does not inspire workers to achieve beyond expected outcomes, however, if the target is achieved, that means the system has worked, everyone is satisfied, and the business continues as usual,” (Bass & Avolio, 2004). If employees with poor self-control adopt this kind of management mode, they will probably not finish their work on time. It depends on people’s character. Transformational leadership is leading by charm, leadership charisma, knowledge excitation, and individualized care to let the staff feel the importance of their responsibilities and tasks, stimulate their potential to achieve a higher level of need, and then through their endeavor to try to get the better result.

The significance of transformational leadership and its contrast with transactional leadership in management

Transformational leaders embolden followers to attain higher-order needs like self-actualization, and self-esteem (Khan et al., 1985 cited in Bass, 2016). Transformational leadership is closely related to the research results of individuals and organizations. Compared with transactional leadership, transformational leadership is more humane.

Thus it pays more attention to the change in employees’ psychological quality. Instead of imposing requirements on others through a single and intuitive contract. Transformational leadership may provide more space and more room for negotiation. At the same time, it requires a high degree of trust on both sides. In other words, communication and trust between bosses and employees are the basis and premise of this management model. The implementation of both styles differs from scenario to scenario and from context to context. In situations involving a high degree of accuracy, technical knowledge, and time constraints, especially in an intensive technological setting, transactional leadership may more preferable whereas, in a human-intensive environment, where the focus is on motivating and respecting followers ' feelings on the grounds of common objectives, beliefs, and values, transformative management styles are the preferred choice (Khan et al., 2003 quoted in MacGregor Bums, 2016). This point of view

Is right that the characteristic of the former is to pay much attention to the exchange of equivalence, while the character of the latter is to pay more attention to the change of people. However, the motivation for this kind of leadership may be criticized for changing mandatory changes in employee attitudes. Transformational leadership is a kind of transformation of the leader’s thoughts and values to his subordinates while giving appropriate incentives to employees. Hence this deliberately coercive behavior is more like a moral abduction. Leaders brainwash their employees, which to some extent is irresponsible behavior. Because everyone has their independent thoughts, leaders inhibit other’s creativity and ideas for their interests, making them lose themselves because of the company. If this is an incentive, and the staff is not responsible for their work, leaders can solve such problems by firing them. Moreover, this approach is ineffective for a stubborn person. If an employee has a lazy attitude towards the company, she or he may not achieve the expected goal. Transformational leadership is related to transactional leadership.

Finally, transformational leadership is more charismatic. The characteristics of the objects they are implemented are also different. For example, most employees targeted by transactional leadership theory have technical expertise, advanced education, or certain working abilities, because it is easier to accept and reach a consensus by imposing rigid restrictions on them. However, transformational leadership may be more suitable for those who are less capable, because their status requires leaders to inspire and guide them. Implementing some treaty policies on those who are less capable may lead to the opposite effect. For transactional leaders, everything has time requirements and place restrictions, while transformational leaders may not have such strict requirements. The distinction between these two kinds of transactions is based on the timing of the participation of the leaders. The leader continually tracks performance in the active form and attempts to proactively intervene (Khan et al., 1997). Leadership style is to tell others what to do.

The two leadership styles described in this paper are combined with some conceptualized theories and implementation plans. The servant-leader focuses on the follower's requirements and helps them become freer and more knowledgeable in their own right. 'Positive assistance, merit pay for promotions, enhanced performance, and collegiality collaboration could be exchanged for an excellent job. As per Bass, the leader in transformation, 'Tentatives to persuade supporters to rearrange their requirements by transcending self-interest and striving for higher-order requirements.'

Conclusion

The servant-leader focuses on the follower's requirements and helps them become freer and more knowledgeable in their own right. In the end, this paper discusses and compares transactional leadership and transformational leadership, and the evaluation of the management of the trading type, the method of reward mechanism, and the punishment mechanism to encourage the employee to achieve the goal. The relationship between the leader and the subordinate is defined as the relationship between the equivalent exchange. Transactional leadership theory contains three factors which are called contingent reward, management-by-exception(active), and management-by-exception(passive). Transformational leaders pay more attention to the physical and mental development of employees. Leaders change the views of employees to encourage them to better achieve the set goals, change the attitude of employees, values, and other states of mind

Reference

1. Borysenko, K., 2019. What's The Best Leadership Style At Work? The One That Pushes You Outside Your Comfort Zone. [Online] Available at: [Accessed: 5 August 2019].
2. Dierendonck, D. et al., 1999. Same difference? Exploring the differential mechanisms linking servant leadership and transformational leadership to follower outcomes. The Leadership Quarterly, Volume 10, pp. 285-305.
3. Yukl, G. (1999). An evaluation of conceptual weaknesses in transformational and charismatic leadership theories. The Leadership Quarterly, 10(2), 285-305.