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Transaction leaders tell their team exactly what to do and motivate employees through benefits or rewards. While this leadership style is useful for short-term impulses or emergency situations, transactional leadership should be used with caution. Read on to learn about the pros and cons of transactional leadership, when to use it, and some alternative styles to consider.
We talk a lot about leadership at Asana. As a leader, it is your responsibility to inspire, motivate and encourage your team. They want to provide both the resources they need to be successful and the structure they need to function well. However, accIndex of anatomy work, only 15% of knowledge workers feel fully heard by their organization. Many leaders start a dialogue with their team but have trouble maintaining the dialogue or turning it into a discussion.action plan. If we don't act, our team may experience stress, confusion, or even stressexhaustion.
There is no one right way to lead, and the best leaders use multiple leadership styles. Transactional leadership is a leadership style that, when used intentionally, can help your team members excel in specific tasks or situations. In this article we cover what transactional leadership is and when you can use it and when to avoid it and use other types of leadership styles instead.
What is transactional leadership and where does it fit into all of this?
Transactional leadership is a leadership style that focuses on order, structure and goal-oriented planning. A transaction leader will tell his team directly what to do; As a result, this leadership style prioritizes maintaining the status quo rather than challenging it.
In this type of leadership, leaders often use a reward system to motivate their team. Transactional leadership appeals to each team member's self-interest and encourages them to do a good job in order to receive benefits or incentives. In some cases, transactional leadership theory implies a laissez-faire style in which the team leader does not take over until needed.
When should I use transactional leadership?
At Asana, one of ourscorporate valuesis “Be real (with yourself and with others)”, so we will be real with you; You should not use transactional leadership frequently. Transaction leaders use extrinsic motivation and conditional rewards (i.e., rewards that depend on behavior or performance). The benefit of this type of leadership is that you motivate people first with things that might be important to them, like money or recognition. However, the downside of transactional leadership is that team members tend to focus on achieving short-term goals to reap those rewards.
As a result, transactional leadership works in moments of concentration or emergency situations. With transactional leadership, there is only one decision maker, which can be beneficial when you and your team need to solve a short-term goal with tight turnaround times. However, it's important to soften the structured environment of transactional leadership with other leadership styles that recognize employee performance more holistically to ensure you create an open and collaborative work environment.
What is an example of transactional leadership?
Teams with transactional leadership:
sales teamswho have commissions use some form of transactional leadership. When a sales team member hits their quota, they get a reward, but corrective action can be taken instead if they don't meet their quarterly goals.
sports teamsThey often use a transactional form of leadership to persuade team members to do something uncomfortable like exercise for personal reward—in this case, doing well in a competition.
emergency or crisis situationsYou can benefit from transactional leadership when everyone needs to get together and quickly achieve a short-term goal. This form of leadership works best when a team needs to solve a problem rather than repeating possible solutions.
Advantages and disadvantages of transactional leadership
Should You Use Transactional Leadership? Transactional leadership, like any leadership style, has advantages and disadvantages. Here are some reasons why you should use transactional leadership sparingly, and some tips on when to avoid it.
Pro: Teams focus precisely on goals
Transaction leaders implement specific (usually short-term) goals. Because of this, the teams they lead tend to focus on those goals. Clarity and short-term focus mean team members knowhow to prioritizeto get where they need to go.
In short periods of time, this clarity can help your team members focus on specific tasks. During our research we found this out29% of employeeswho felt burned out over the past year said they felt overworked due to a lack of clarity about responsibilities and roles. By giving your team a clear goal and telling them what needs to be done through a transactional leadership style, you can eliminate those doubts and help them focus on the right priorities. For example, a transaction leader might set a goal to publish a certain number of articles this month or engage with a certain number of customers in a week.
Read: Four ways to deal with busy schedules and shifting prioritiesDisadvantage: Goals are usually short-term.
When using transactional leadership, you need to communicate clear goals that your team should strive for. But to make those goals feel achievable,They are usually short-term goals..
Therefore, you should practice different leadership styles at different times. Transactional leadership can help your team think short-term, but you also need to help your team buildlong-term goalsAlso. A key way to do this is to see yourself not just as a leader, but as a coach. Supporting team members not only as leaders but also as coaches can help your team set concrete long-term goals. To learn more about how to set long-term goals to help your team develop their skills, keep reading our articlehow to train partners.
Pro: Can increase motivation and productivity
Depending on how motivated your team members are, transactional leadership can increase motivation by setting a reward at the end of a short-term goal. This method is most commonly used by sales teams in the form of commissions. For example, a sales team could offer a small instant bonus to the team member who drives the most calls at the end of a sales cycle.
Cons: Not everyone is so motivated.
transactional leadershipYou canmotivate some team members, but not all team members are motivated by rewards and perks. Additionally, the transactional leadership model does not encourage team members to push the boundaries or be creative in their roles.
Therefore, do not rely exclusively on the transactional leadership model and avoid consistently implementing this leadership style with your team. Make sure your team is effectively motivated and supported, and always give them a chance to be creative on at least some projects. This is a crucial factor in motivating team members to do their best work:44% of employeesHe cited an attractive and enjoyable job as a motivating factor for what would make her work better in 2021.
Read: What is intrinsic motivation and how does it work?Pro: Easily measurable success
When you set yourself a short-term goal as a transaction leader, you must also set clear goals and guidelines for how to achieve that goal. These guidelines can include when to achieve the goal, any risks or dependencies that may affect the goal, and any othersproject milestonesby the way.
Providing all of these details up front can be especially helpful in teams that don't always have clear goals. Knowing exactly what they are striving for and how they will achieve it can help team members more easily measure success and effectiveness at the end of a period.
Cons: Does not encourage creativity or innovation.
Transactional leadership tends to maintain the status quo, not challenge it. Because there is a clear chain of command in this type of team, this leadership style can be ineffective for creative teams. When your team trusts you to set the goal post and identify their short-term goals, they're less likely to iterate or think outside the box.
To counter this, make sure you create a supportive work environment that prioritizes different mindsets. Encourage your team members to create theirsteamwork and cooperation skillsand buildmultifunctionalrelationships within your company.
Is transactional leadership effective?
Ultimately, transactional leadership is effective. But depending on the scenario, work environment and team, it might not be the best leadership style. Like most aspects of leadership, you will want to adapt to your team and your job.
For example, if you lead a team of volunteer firefighters, transactional leadership would be a good choice. This is because a direct approach can help improve group performance and potentially save lives. But if you lead a team of designers? Probably not. Being inherently creative in their work, designers need more active management and support to function effectively as individual contributors. In this case, it is likely more beneficial to adopt a more supportive leadership style.
How we think about leadership at Asana
The modern workplace is mentally overloaded and always on. Every day we lose clarity in the chaos of blurred priorities, duplication, and work after work. This lack of clarity and the stress can almost lead to burnoutEvery fourth worker suffers from burnoutfour or more times a year. Additionally, knowledge workers around the world struggle to focus on the right task at the right time.More than half of the workersThey feel they need to respond to notifications immediately, and more than a third feel overwhelmed by persistent pings.
As a manager, you have the opportunity to lead your team in the right direction. One of the most important things you can do as a leader is to help your team connect on a daily basis.Short term goalsthe goals of the team and the company. By giving your team an overview of how their work leads back to the companymission or vision, you can motivate them to do effective work.
What is your management style?
Similar to creating yourmanagement style, find yoursmanagement styleit's a lifelong process. But you can start by looking at your current approach to leadership: What leadership qualities do you already have? And where is there room for leadership development?
Don't be afraid to seek advice from leaders you respect. Like these key lessons Asana CEO Dustin Moskovitz has learned over decades of leadership:
Delegating is goodas a leader and the people who get the job gain more autonomy and learn more skills.
Realize that everyone is a partner.in what you are trying to do and not an enemy.
Realize that you agree with people more than you think.. Where you disagree is likely a difference in assumptions and not an actual conflict.
Don't let the perfect be the enemy of the good.Make decisions even if you are not sure which decision is the best right now. Letting a decision drag on takes energy.
Make sure there are regular checkpoints to reflect on.and that there is time to think at a higher level, don't always be just tactical.
How is transactional leadership different from other leadership styles?
Transactional leadership is one of many different leadership styles. Here we compare it to other popular leadership styles, including transformative, democratic, andserving leadership.
What is the difference between transformational and transactional leadership?
In transformational leadership, a leader will develop and implement an idea together with his team. Transformational leaders prioritize placing autonomy and authority in the hands of their direct reports rather than centralizing the decision-making process.
When should I use transformational leadership?
Transformational managers are always future-oriented: Their goal is to think "out of the box" and implement new ideas in their company. Transformational leaders inspire engagement and tend to focus on their charisma to support, encourage, and motivate their employees.
If this type of leader sounds magnetic, that's because they usually are; In fact, it is sometimes said that transformative leaders are more likely to have "followers" than team members or employees because they tend to become role models for their direct reports. Like transactional leadership, this has its pros and cons. While transformational leadership puts decision-making in the hands of the team, rather than consolidating decision-making at the top, a study published in the showsJournal of Applied Psychologyshowed that transformational leadership resulted in lower job satisfaction and job performance than transactional leadership.
What is the difference between serving and transactional leadership?
In servant leadership, the leader acts as a leader rather than a commander. The focus is on serving the team and finding ways to provide support rather than telling them how to work. It's a people-first approach, where team members always arrive ahead of deadlines, tasks, or goals.
When should I use servant leadership?
Servant leaders always focus on their employees: what they need comes first, even at the expense of work. As a result, employees with serving executives tend to get highTeam-Moraland they show a lot of integrity with their work.
This comes at the expense of a certain loss of authority as a manager. If your job depends on you being more autocratic, then servant leadership is not a good fit. However, if your job is more flexible and you can benefit from a happy and supported team, then servant leadership is a great way to lead.
Read: Servant Leadership: How to Lead by Serving Your TeamWhat is the difference between democratic and transactional leadership?
democratic leadershipcould be viewed as the opposite of transactional leadership. This is a team led by "the people" by definition. Decisions are made as a group and you are always encouraged to question your thoughts and ideas. The staff are generally very dedicated and work by guest group.brainstorming sessionsand cross-collaboration to complete projects.
When should I use democratic leadership?
Democratic leadership is best suited to highly integrated and creative teams that don't work to strict deadlines. It can take a while for the team to make a decision, and they can use their democratic culture to challenge you even if they did. This can slow down progress. At the same time, team members feel heard and seen during every discussion and can see each other in all aspects of the work.
Which leadership style suits me?
The best leaders vary their leadership style based on the situation, their people, and the specific needs of a project. Each team member is different, which means they respond to different styles or situations. As a leader, the best thing you can do is identify the most effective motivators for each team member and use them to support them.
Still, try to use transactional leadership sparingly. Thisleadership skillsThey tend to encourage less creativity and are less flexible than other leadership styles, such as B. Transformational leadership. But transactional leadership can bring clarity and goal-oriented focus to your team. Implementing this leadership style in a structured way can help you better lead your team to success.
Leaders come in all styles and sizes. To learn more about leadership and find the style that suits you best, read more of ourleadership resources.