I believe that if you show people the problems and you show them to solutions they will be moved to act.” – Bill Gates

Transactional leadership is effectively a leadership style that focuses on the transactions between the leader and its subordinates. Transactional leadership is a framework often analyzed in connection with transformative leadership and consequently can suffer from it. The transactional style is considered much more authoritative and stifling, although it has plenty to offer for different organizations.

Transactional Leadership Guide: Definition, Qualities, Pros & Cons, Examples

In this guide, we’ll explore the different concepts and ideas that have shaped the idea of transactional leadership. We’ll examine the core characteristics of the style and the different traits it requires from leaders. Before studying a few examples of transactional leaders, we’ll introduce you to the major advantages and disadvantages of this leadership model.


The transactional leadership theory is among the older leadership frameworks around. Thinkers such as Max Weber and later Bernard Bass and James McGregor Burns are among the most influential theorist of the specific framework, having influenced its definition and theorizing. To understand the transactional leadership model, you need to examine the ideas these theorists set forward.

Max Weber’s transactional leadership

Max Weber is among the most well known 20th century sociologists, with his work on leadership remaining at the centre of today’s understanding of different ways to lead. His core ideas on the subject were first published posthumously in 1947, in his book Economy and Society. The book was published with the help of his wife Marianne after Weber’s death, and it included all of Weber’s ideas regarding the legality of leadership and power.

Economy and Society describes three distinct leadership categories: traditional, charismatic, and rational-legal or the bureaucratic style. The main points of each style are presented in the below table:

Types of Legitimate Authority
Charismatic authority is based on the personal appeal of an individual leader
Traditional authority is based on appeals to the past or a long established way of going things
Legal-rational authority is based on legal, impersonal rules that have been routinized and rationalized

Source: Slide Share presentation

The rational-legal style of leadership is the style known as transactional leadership. Weber described it as “the exercise of control on the basis of knowledge’. The leader has the authority because they are the most qualified and because the structures support the hierarchy of power. The power lies in the position and the leader is generally thought to have gained the position due to his or her knowledge.

The style also emphasizes the role of norms and rules, which have been established as the core characteristic of the transactional leadership framework.

Under this style, power is on the hands of the leader with subordinates having little if any input on how things should be done. There is also no need to attract to the subordinates, such as in the charismatic style, as the position of power is sufficient to guarantee subordinates follow the leader.

James McGregor Burns and Bernard Bass’ definition

Weber’s ideas were developed further in the late 1970s and the 1980s by political scientists James McGregor Burns and Bernard M. Bass.

Burns introduced transactional and transformational leadership as the two core leadership theories in his book Leadership, in 1978. According to Burns,

“Leadership over human beings is exercised when persons with certain motives and purposes mobilise, in competition or conflict with others…so as to arouse, engage, and satisfy the motives of followers… in order to realise goals mutually held by both leaders and followers.”

Burns understood that subordinates can have different reasons for wanting to perform under the leader and a transactional leader will be able to motivate the subordinate through rewards and punishments. To Burns, the transactional relationship is about the ‘give and take’ with the subordinates, but it nonetheless has a moral approach. The leader isn’t dishonest or unethical, but the open communication ensures both parties understand what each other are looking for.

Bass extended Burns’ ideas further in the 1980s. Although Bass spent most of his research on expanding the idea of transformational leadership, he also mentioned transactional leadership in his work. Whereas Burns felt that transactional and transformational leadership are incompatible with each other, Bass suggested that leaders could display both styles simultaneously.

Bass and others identified the different reward structures with the leadership framework, which can influence how the leader manages the workforce and whether the interaction is based on positive or negative reinforcement.

Behavioral approach to leadership

One of the core assumptions and concepts related to transactional leadership is the idea of ‘the rational man’. Subordinates are considered to be rational people, with rather simplistic motivational models influencing their behavior.

In essence, the theory believes human behavior can be predicted, as each person is driven by a set of needs, which the transactional leadership framework assumes to be money and simple rewards.

Two main theories of human motivation have influenced the transactional framework: Abraham Maslow’s hierarchy of needs and Douglas McGregor’s Theory X.

Maslow’s hierarchy of needs

Psychologist Abraham Maslow first proposed his ideas around human needs in a 1943 paper “A Theory of Human Motivation”. The paper discusses the different elements of human motivation and needs. For Maslow, human needs are depicted in the form of a pyramid, with the lower-level needs at the bottom and the higher-level needs at the top.

Source: Simply Psychology website

At the bottom, the needs are the most basic one. It includes most physiological needs, such as food and sleep, and security needs. The higher the pyramid you go, the tougher the needs can become to achieve. The top needs are about esteem and self-actualization.

Transactional leadership focuses on addressing the basic, lower-level needs, with only slight attention to the higher-level needs. In terms of subordinates, the purpose of the leadership is to ensure there is job security and safety, with the creation of a financial situation where the person can take of needs like housing and food.

On the other hand, there is no emphasis on things such as career development or the realization of subordinate’s career goals.

McGregor and Theory X

In 1960, an American social psychologist Douglas McGregor published his theory regarding human motivation. He identified two theories, Theory X and Theory Y, which both influence the way leaders should influence followers and improve operational efficiency.

According to McGregor, the Theory Y group calls for participatory leadership. This is because subordinates are able to apply self-control and self-direction, without the need for punishment to guide their actions. Subordinates are highly motivated and willing to seek responsibility under the system. Therefore, leadership must be about providing opportunities to excel and to succeed.

On the other hand, the Theory X has a different view on subordinate behavior and leader’s role. Under this model, subordinates are not self-motivated and interested in performing tasks. Instead, it’s the leader’s role to use punishments to motivate and activate the workforce. Just like in transactional leadership theory, the subordinates don’t mind being directed and told what to do – they are by nature less interested in responsibility and subordinates don’t have ambitious goals or needs the leader should fulfill.


Transactional leadership can be described as a ‘telling’ leadership style. In comparison to other leadership styles, such as charismatic leadership or transformational leadership, the focus of the framework is not on inspiring the subordinates or to help the group of subordinates develop. Transactional leadership’s telling qualities means it emphases performance and structure.

In essence, the leadership framework refers to a situation where the leader exchanges rewards with work input with the subordinates, i.e. transactions. If the subordinate provides the leader with the work effort the leader is looking for, then the subordinate receives a reward for it.

The three core building blocks of the framework

There are three core building blocks to the transactional framework. These are:

  • The transactional model emphasizes supervision, although it isn’t necessarily through enhanced monitoring. The idea of supervision implies that the leader sets out specific guidelines and focuses on ensuring these guidelines are followed.
  • The leadership style also relies heavily on organizational structure. Under the framework, emphasis is placed on rules, procedures and standards. The leader establishes these and the subordinate’s role is to follow them.
  • Finally, performance is at the heart of the transactional model. As mentioned above, the whole leader-subordinate relationship is established on the basis of exchanges and the subordinate’s performance is at the core of it. If the performance meets the standard set by the organization, and monitored by the leader, a reward will follow. If not, then a punishment will take place instead.

These three mechanisms or approaches form the basis for the style. In order for the style to work appropriately, the leader’s focus should be on ensuring these are applied throughout the organization.

Really cool video on transactional vs transformational leadership.

Four core assumptions of transactional leadership

At the heart of transactional leadership are certain assumptions the framework makes about subordinates and the role of leadership. These assumptions are used for creating the structures of leadership and establishing the operational efficiency of the organization.

Assumption 1: A clear and defined leadership framework leads to better subordinate performance.

The most obvious assumption of the theory is the idea that workers require a clearly defined and established leadership to perform tasks. Subordinate behavior is driven by the desire to obtain a specific reward and because of it the subordinates don’t perform well on unclear systems.

The transactional framework believes that workers need limits and guidance in order to work most effectively. At the bottom of this assumption are the two behavioral theories of Maslow and McGregor, which depict subordinates as rather selfish and lazy. The subordinate simply wants to achieve certain basic objectives, but they aren’t necessarily motivated by the work in itself.

Since the reward is more motivating than the work, it’s the leader’s role to identify what is enough for the reward and to provide the means, in the form of guidelines, for the subordinate to accomplish the task.

Assumption 2: Subordinates can be motivated by rewards and punishments.

Because the transactional leadership theory is built around the theories of Maslow and McGregor, the model emphasizes the importance of a reward and punishment system.

As subordinates are thought to be easily motivated by things such as financial reward and on the other hand, the fear of job loss or similar punishment, the leader must use these for motivating the workforce. By creating a clear system where good behavior is outlined and rewarded, with bad behavior causing a negative reaction, the leader can motivate subordinates on his or her side and therefore guarantee productivity.

Furthermore, the assumption is that the subordinates are only looking for the fulfillment of these basic needs. The leader doesn’t need to provide extra motivation in the form of job or career development or the ability to make decisions for themselves. The most effective tool for achieving objectives is to manage the basic needs of rewards and punishments.

Assumption 3: Subordinates aim to obey the leader’s instructions and objectives.

The leadership style also assumes that subordinates hand out the authority to the leader when they sign a contract with the organization. In exchange for financial and other benefits, the subordinate is provided with work, and the subordinate hands power to the leader.

This exchange leads to the important assumption that the subordinate’s role is to obey the instructions and objectives set out by the leader. Unlikely in leadership theories such as laissez faire, the subordinate doesn’t have the power to make decisions or step outside the provided norms, at least not without the leader’s permission.

Assumption 4: The best performance comes from scrutiny and monitoring.

The above points lead to the final assumption, which calls for scrutiny and monitoring. Since the subordinate is motivated only by rewards and punishment, his or her performance can be inconsistent if the leader doesn’t continuously monitor it.

While the system doesn’t necessarily require constant monitoring in order to work appropriately, the emphasis is on scrutiny of expectations. The leader sets out a specific list of expectations and regularly check whether these are met. If not, then a corrective action is taken and a punishment might be applied.

It must be noted that the fourth assumption also implies that subordinates are not self-motivated. The monitoring is required because the subordinate isn’t motivated by the actual work but rather just the reward that follows. Therefore, to guarantee a quality finish, the leader must keep an eye on the subordinate throughout the process.

Four dimensions of reward and punishment

For the leadership framework to work efficiently, a system of reward and punishment must be established. The system will form a part of the approaching subordinate performance – if the subordinate does what is expected of him or her, a reward will follow and if the subordinate fails to perform as expected, a punishment is forthcoming.

The exchange between the transactional leader and the subordinates will generally fall into four possible dimensions. These are:

Contingent rewards. The leader establishes goals for the subordinates. The goals should be specific, measurable, attainable, realistic, and timely, or in other words, follow the SMART protocol. The SMART goals are explained in detail in the below table:

  • Define expectations
  • Avoid generalities and use verbs to start the sentence
  • Quality, quantity, timeless and cost
  • Challenging goals within reason. Do not assign too many goals even though each one is within reason
  • Link the goal to higher level business unit goals
  • Date or elapsed time to complete the goal

Source: Change Factory website.

The goals must then be linked to a specific reward, which can range from a monetary bonus to material gain. It is the leader’s role to clarify the expectations and the goals, as well as to provide the resources for the subordinate to assist in the performance.

Active management by expectation. The leader can take an active role in dealing with the subordinates by focusing on the expectations he or she has set out. The role involves monitoring the subordinates as they work on the objectives. The idea is to notice deviations from the expectations and therefore, for the leader to step in and take corrective measures. The active style could help identify situations where mistakes could be made before they happen.

Passive management by expectation. The other management by expectation dimension takes a more passive approach. The transactional leader will intervene only when the expectations are not met. The subordinate would have the power to conduct work as they want, but if they do not meet the requirements and expectations, the leader would introduce a punishment.

Laissez faire. Finally, the fourth dimension of a reward and punishment system will follow a laissez-faire style environment where the leader allows plenty of freedom for the subordinates. The objectives would come from the leader, but the subordinates would often be in charge of decision-making involved in setting up the processes. The responsibility falls fully on the shoulders of the subordinates and this can create a more relaxed environment, but means often that the group lacks direction.

Awesome video on transactional leadership.


The above focused on analyzing the characteristics of the leadership framework, but what about the transactional leader and his or her qualities? In order for the framework to work as intended, the leader must possess certain characteristics, which make the leadership style easier to implement and to manage.

The key traits of transactional leaders

A good transactional leader tends to showcase three essential qualities for approaching tasks and objectives: practicality, directedness and responsiveness.

Let’s study each trait and its relation to the leadership style, as well as the different ways a leader could train to improve these traits.


Transactional leadership is focused on the efficiency of procedures and in ensuring things are running smoothly. Since the leader doesn’t have to focus on creating a long-term vision, but sort out everyday management issues, a good transactional leader is practical in his or her approach. The leader understands how different aspects of the business relate to each other and is able to take a common-sense approach to organizing operations and solving problems.

The purpose of the leadership style is to improve productivity and efficiency, not about creating the most innovative systems or coming up with new ideas. Therefore, a leader who is able to understand and solve problems that currently exist will be able to use the transactional approach to the organization’s benefit.

Here are five tips for being more practical in everything you do:

  • Be more content with the current state of things. If you are able to accept reality as it is, you will find it easier to take a practical approach to dealing with it. Please note that being content or accepting reality doesn’t mean you can’t change it – you just understand the realities and can find the best ways to resolve the issues you are facing.
  • Take responsibility. Practical people also take responsibility for what they do. This is especially important as a leader, since you don’t want to be seen as someone who blames others for their own failures. Again, it’s important to understand that you can’t be in charge of everything, but when you are solving a problem or being in charge, you must be accountable and accept responsibility.
  • Be open to options and alternatives. Situations can more often than not be solved in a number of ways. You should always look at the options before you make a decision.
  • Apply logic to your decision-making. As well as considering your options, you also need to be logical in your approach. Creativity is important, but so is the understanding of common sense and logic. You are leading the subordinates with efficiency in mind, so you need to be able to apply this to your own decision-making.
  • Improve your self-esteem. Practical people must be confident in their own abilities, especially as a leader. You need to be able to trust in your skills and have the ability to listen to criticism with an open mind. You won’t always find your approach to be the right, yet you need to be strong enough to understand it might not be the fault of your approach, but just a chance of life.


The transactional leader must also have a direct approach to leadership and life in general. If you aren’t able to take charge and confidently tell people what to do, then you won’t be able to perform as a transactional leader. As the previous section showed, the transactional leader has to be able to come up with the procedures and guidelines, helping the subordinates understand clearly what is expected of them.

In essence, there are two key points to being a directive person in leadership. First, you need to have good communication skills to ensure you are able to outline the requirements and expectations clearly. If you feel your communication skills are lacking a bit, watch the below YouTube video and take note of the tips to improve your skills:

The second aspect of being better at directing people is about your own understanding of the tasks ahead. If you aren’t aware of the different nuances surrounding the project, you can’t clearly communicate the message and to get the subordinates do what you want. In order to outline the objectives and expectations clearly, you must be aware of them fully.

Therefore, always approach things through your own understanding first. Think what you want to achieve, the different ways you can achieve the goals, and the possible complications you might have. Question your own approach and find solutions to issues that you think might come up. This makes it easier to help others reach the desired conclusion.


Finally, a transactional leader must be responsive. The whole leadership framework is based on reaction and transactions, making responsiveness a key trait for the leader. You need to be able to respond to situations where expectations are not met or they are exceeded and be able to change the course if the situation requires it.

In fact, since the leadership style is more about the reaction, a good transactional leader is able to be responsive to balance out the reactionary and the responsive side of the style.

Here is how to improve your responsiveness:

  • Stop being controlled by urgency. Whether it is the use of instant notifications on your smartphone or responding to queries immediately, being controlled by ‘urgency’ is not a good thing. You don’t need to jump on things as soon as they happen – real emergencies actually happen less regularly at work than we think.
  • Implement practical methodology. Similar to the point made above, you need to start looking at tasks in a more practical manner.
  • Approach time with a purpose. You need to control your feelings of urgency, but you shouldn’t forget about prioritizing your time. Spending your work hours with a purpose is much better than aimlessly focusing on tasks. To-do lists are definitely worth utilizing.
  • Take time to analyze your work. It’s also important to continue looking at your project and guidelines strategically. This helps you understand whether they are working as intended, or if you’d need to change direction. This doesn’t necessarily mean monitoring subordinates, but simply examining the established routines and wondering whether a different approach might work better.

How to be a transactional leader?

As discussed above, the transactional leader’s role is more of a passive approach to leading. The focus is not on continuous management and oversight, but more about the setting of objectives and boundaries. As the name suggests, the leader tends to act when things go wrong rather than actively prevent issues from arising. In order to be a transactional leader, the focus should be on performing the following three tasks.

First, the leader must set clear goals and provide explicit guidance. The most crucial part of the leader’s job is to ensure the organization has a clear vision it is working towards and specific objectives along the way to help it get there. The leader alone shall decide on the approach and processes used to reach the objectives, creating a framework, which the subordinates can simply follow. Similar to an authoritarian model, the subordinates don’t get much influence over how they will perform the tasks required to reach the goals.

Furthermore, the leader’s role is not only to focus on establishing the objectives. The framework must be detailed and include information on the specific steps the subordinates take. In essence, the leader should establish a guideline that makes operations efficient and straightforward. The idea is that the leader has been able to explain these guidelines and objectives clearly to diminish the need for further assistance. The goals and guidance available at the start of a project, for example, should be enough to limit distractions and problems and help the subordinates complete the project on time.

The second point is about establishing a comprehensive system of rewards and punishments of subordinate behavior. As the above showed, the transactional leadership framework emphasizes the ideas set forward by Maslow and McGregor. As humans are considered to be motivated by a set of needs, the leader must be able to respond to these needs and use them as a motivational tool. Both rewards and punishments can act as powerful tools for enhancing efficiency and motivation. The leader’s role is to set established systems to reward a behavior that follows the guidelines set forth by the leader and, on the other hand, use punishment as a deterrent to keep subordinates from behaving in an inappropriate manner.

When it comes to developing these systems, the emphasis must be on consistency and balance. The leader shouldn’t create a situation where different people are treated differently. When there is a deviation from the established procedures, the leader must react appropriately and direct the behavior on the right track. Furthermore, the focus shouldn’t be only on rewarding good behavior or punishing bad behavior. A careful balance must be struck to maintain work security and motivation.

Finally, the transactional leader must provide feedback on performance. Subordinates are better at achieving targets and following procedures, if they are provided with constructive feedback. Even when a subordinate has been performing well, feedback can help them identify the things they are doing right. This is beneficial in emphasizing the positive behaviors and understanding the steps to a more productive process. In essence, the transactional leader reinforces good behavior of the subordinates, ensuring they continue with procedures and behaviors that are beneficial and avoid the actions that lead to punishment and negative feedback.


The discussion above has already highlighted certain negative aspects of the leadership, but should also have made you note the positive power of using this leadership style. Let’s now look in more detail what the advantages and disadvantages of this leadership framework are to get a better idea of its application.

Advantages of transactional leadership

The manner in which transactional leadership establishes clear guidelines and norms for performance can help productivity and efficiency within an organization. Subordinates will be told exactly what is expected of them, which can help them perform better. Starting a project with a clear understanding of what the end goal should look like can definitely make it easier to reach the goal. In a simplistic manner, you could say that building a house with instructions and designs is much easier than coming up the design as you go along.

To this effect, the transactional leadership framework works effectively in removing doubt or uncertainty from an organization or its projects. Companies don’t have to deal with unambiguity, as they have a set of objectives to meet.

Setting out clear guidelines and goals will also help in measuring success. Since the leader has set out the requirements and expectations, subordinates and the leader can quickly notice which of these has been met and which have not. In terms of learning, this kind of approach will make it easier to identify problem areas or the processes that seem to work effectively. By measuring performance, the leader can analyze the objectives and the processes used and tweak further goals and behaviors with previous experience in mind. Overall, the process can enhance productivity and therefore profitability.

The style’s focus on rewarding subordinates that can follow instructions and who are committed to achieving objectives can motivate certain types of subordinates efficiently. People who have just started or who don’t necessarily have high ambitions can foster under the model. Transactional leadership does focus on individual satisfaction in terms of providing rewards, which is something certain subordinates might be looking for, even if some are after something else.

In addition, the framework’s structure is clear to understand, especially when rewards and punishments are laid down correctly. For the subordinate, the clearly defined and implemented system offers a work environment that removes the confusion. If you perform your tasks as is expected of you, you will be rewarded for it. As mentioned above, this can provide motivation to work harder and to follow the rules. For the organization, subordinates who follow the rules can mean the benefits of fewer mistakes.

Overall, the transactional leadership style is effective. The focus on achieving short-term goals can provide immediate benefits and for example help an ailing company get back on its feet. The style is especially suited for sectors such as manufacturing and sales. These are industries where objectives are easily set, procedures don’t often require a lot of tinkering, and where the workforce can be inexperienced. Furthermore, organizations with problems can benefit from the leadership framework. The directive and detail-oriented approach can be effective in cutting costs of identifying the problem areas within an organization. Therefore, a failing company could benefit from applying this type of leadership.

Disadvantages of transactional leadership

But the leadership style isn’t without its problems. For a number of organizations, the key problem of the framework can be its focus on short-term objectives. Transactional leadership is mainly concerned about the ‘here and now’, in keeping the ship afloat. But as most businesses know, a good plan should always consider the future as well.

While in a crisis, a short-term focus can be essential for survival, most organizations will need long-term vision to ensure they maintain their market position. Simply by focusing on the current market and operations, the organization can be ill prepared for changes in the future. You can see this kind of lack of vision behind certain business failures, such as the case of Nokia, for instance.

Although the leadership style can work well with inexperienced or unmotivated workers, not every subordinate is motivated this way or finds the rigid system favorable. The first point to make about this is that transactional leadership somewhat assumed the subordinate to be ‘a rational man’, i.e. motivated by financial benefit. The leadership framework focuses on behaviorism, the idea that human behavior can be predicted because of its simple driving forces. But the opponents of the behaviorism theory often make the point that the view ignores other reasons for human motivation. The theory overlooks things like emotional factors and social values. For example, the idea of self-actualization, developing one’s knowledge on a topic, can act as a powerful motivation rather than just receiving a paycheck.

Furthermore, the transactional model has the problem of stifling creativity and innovation within an organization. The subordinates are expected to perform tasks according to the instructions and guidelines given to them. At no point are they given the option to provide their opinion or input the current frameworks and guidelines. Therefore, the tasks are performed with the same procedures for as long as the procedures work. The approach is efficient, but it doesn’t take into account the option that things might be done differently and better. The subordinate’s abilities are not used in terms of improvement and ideas, but rather the role of the subordinate is just to provide the technical task of getting things done.

In an organization, the reliance on the knowledge and expertise of a single person, the leader, can be problematic. While the leader might be knowledgeable and have a good understanding of the industry, anyone who just ‘listens to themselves’ can start suffering from tunnel vision. By adding different voices to decision-making and by looking forward and not just staying in the moment, the approach to solving problems can be more creative.

Interestingly, transactional leadership style can cause problems if it only applies the ‘passive management by expectations’ method. As we discussed earlier, this style only reacts when the subordinate doesn’t meet the expectations. But if the leader only reacts to mistakes, correcting them can become costly and difficult. Therefore, the approach by the leader has to carefully balance the benefits of strict monitoring and a more relaxed approach to how the subordinates conduct their work.

Overall, the contingent reward system has been found ineffective in studies. Jane Howell and Bruce Avolio’s paper ‘Transformational Leadership, Transactional Leadership, Locus of Control and Support for Innovation: Key Predictors of Consolidates-Business-Unit Performance’, published in the Journal of Applied Psychology in 1993, found the system to impact subordinates negatively in terms of performance. Workers showed signs of meeting only the minimum expectations and suffering from lack of work satisfaction.


In order to get to the heart of transactional leadership it’s beneficial to examine leaders who’ve used the framework. While the style is often used in the field of sports, with teams often rewarding or punishing players based on their performance, the transactional leader can be found elsewhere as well. Below are four examples of transactional leaders from the world of business and politics.

Charles de Gaulle

Charles de Gaulle was a French general during Word War II and in charge of leading the Free French Forces against their fight against the Nazis and the French occupation. After the war, de Gaulle was a key figure in setting up the French Republic and served as the republic’s first president from 1959 to 1969.

De Gaulle’s leadership style has often been described as transactional, as he had a direct approach to leading. He used the ‘telling’ style of leadership, where he appealed to the subordinates’ basic human needs and wanted full obedience from his subjects. De Gaulle used the reward and punishment structure efficiently, promoting key allies and punishing people who didn’t wish to follow his example.

He held deeply nationalistic views and was against civil obedience in the form of strikes during his presidency. He, for better and for worse, wanted the French to work together to solve issues rather than to focus on their immediate economic or social concerns at the time.

Transactional leadership is about action and de Gaulle’s quote “Deliberation is the work of many men. Action, of one alone” is a perfect example of understanding the essence of the framework. For the style to work people can’t continue talking and considering alternatives, but the leader’s role is to be decisive and tell people what they need to do.

Joseph McCarthy

Another political figure to display the transactional leadership qualities was the US senator Joseph McCarthy. McCarthy entered the public limelight in the 1950s, when he took a harsh stand against the Communists. McCarthy started suggesting that Communists and Soviet spies and infiltrated the top levels of the US government and other such institutions.

McCarthy used the transactional framework of expectations, as he took any deviation from the norms to be a sign of Communist agenda. Furthermore, he used rewards as a method for getting his followers to provide him examples of supposed spies or sympathizers. McCarthy often promoted people within his staff, who had provided him with names of possible people to accuse.

Although McCarthy’s tactics went to the extremes and he was never able to prove his theories, as a leader, he used the model to justify his actions. Ultimately, his inability to look beyond led him to be censured by the US Senate.

Sir Alan Sugar / Amstrad

But examples of transactional leader don’t just come from the world of politics or military. The business world has introduced transactional leaders, with the British businessman Sir Alan Sugar being just one example.

Although Sir Alan has been successful in his leadership of the Amstrad organization, the transactional qualities are especially evident in the way he runs his reality TV show, The Apprentice.

The show is all about reward and punishment, with people who are able to follow Sir Alan’s orders being promoted and taken forward, while people who deviate from the expected usually have to pack their bags. Sir Alan understands the importance of rules and norms, because in business it’s important to occasionally put your head down and perform.

Below is an informative clip of Sir Alan offering his vision for leadership and a few words of wisdom to people getting into the world of business.

Tim Parker / AA

Finally, there is the example of Tim Parker and how he managed to use transactional leadership in order to transform a problematic company around. He took charge of a British motoring company, AA, in 2004 and quickly noticed the problems the organization was facing. Parker identified issues with inefficiency, low productivity, and loss of members. Parker said,

The management seemed more interested in extending the brand rather than improving the core business”.

He realized that he had to set out a program of reconstruction, in which inefficiencies were noted and the people behind them punished. This meant big changes and a number of job dismissals, but Parker understood that in order to save the organization this had to be done.

His approach was further validated by the fact that company profits nearly doubled during the first few months he was in charge. Furthermore, the company was in such a bad state that employees were able to see the problems themselves.

Therefore, the changes that had to be implemented were understood to be essential for the company to survive.


The transactional leadership framework is an effective one to use. According to Changing Minds, the style is among the more popular leadership styles in action, even though on paper many leaders don’t seem to prefer it. Nonetheless, the clarity and straightforward nature of the framework give it an advantage over some of the other styles. In order to learn to be a transactional leader, you don’t necessarily need years of experience or a deep understanding of the human brain.

Yet, the straightforwardness of the style can stifle organizational innovation and cause a business to stall in development. The framework is rather transfixed in ensuring everything works in the present moment that it can forget to keep an eye on the future as well. The style is efficient and productive, but it lacks vision and creativity. Therefore, organizations that require a more flexible and long-term approach might not find the style useful.

For leaders who are starting out, the transactional framework can be beneficial in learning more about leadership. It can give the basic introduction to leadership – instructing, monitoring and communication -and to provide the leader with the building blocks to venture into other styles.

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