Transactional leadership

Exchange

The concept was introduced by James MacGregor Burns (1978) to describe leadership in which leader and followers exchange what each needs: work for pay, support for promises, effort for recognition. In the Full Range Leadership model Bernard Bass described its components:

• contingent reward - the leader agrees goals and rewards their achievement;
• active management by exception - the leader monitors work and corrects errors as they occur;
• passive management by exception - the leader intervenes only when a problem arises.

At the end of the scale is the laissez-faire style, i.e. avoidance of leadership - see Lewin's leadership styles.

Assessment

Judge and Piccolo's meta-analysis (2004) showed that contingent reward is surprisingly effective - in some analyses comparable to transformational leadership. Passive management by exception and laissez-faire, by contrast, are associated with poor outcomes.

Strengths: clear expectations, fairness, predictability. Weaknesses: extrinsic motivation, limited commitment, poor preparation for change.

In a community

In volunteer- and mission-based organisations the “transaction” is limited - there are no salaries or promotions. But its elements remain important: clear tasks, deadlines, feedback and recognition. Their absence often leads to volunteer frustration. A good leader combines the clarity of transactional leadership with the inspiration of transformational leadership.