15092010;Transactional Final)

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Transactional Leadership Style

Presentation by

Amanda Ramburuth, Sandrine Ah Choon & Audrey Hannelas

as part of the

Group Assignment

for the module

Organisational Leadership

15th September 2010

1



The meaning of and detailed scrutiny of the

transactional leadership style.

Presented by

Amanda Ramburuth

2



How Transactional Leadership came about

1947 - First described by Max Weber

1978 - John Macgregor Burns elaborated further to comewith the terms ‘transactional leadership and ‘transformingleadership

1981 to1985 – Further research by Bernard M Basscoins the ‘transactional v transformational’ framework of leadership

By1990 – Bass & Avolio , the full range leadership model

is developed which consists of Transactional,Transformational and Laissez-Faire Leaderships

3



TRANSACTIONAL

Focuses on theexchangesthat occur

between leadersand their followers

- No new taxes = votes.- Sell more cars = bonus.- Turn in assignments = grade.- Surpass goals = promotion.

The exchange dimension is socommon that you can observe it in

all walks of life.

What is transactional leadership ?

4



Transactional Leadership

Classical management

Puts leaders and followers on opposite sides. Transaction

◦ Work for pay

◦

Work for psychological benefits (status, recognition or esteem) Requires appropriate role behaviour

Requires clear goals and appropriate instructions

Transactional leadership focuses on the task

5



Transactional Leadership

Ebb and flow of power and reward depending

on follower performance.◦ High task performance=power and rewards to the follower.

◦ Low task performance=Leader exercises legitimate and coercive

power.

Promotes “game-playing”

6



Transactional Leadership Behaviour

The exchange process between leaders and followers in whicheffort by followers is exchanged for specified rewards

Leadership that involves corrective criticism, negative feedback, andnegative reinforcement

Two forms Active - Watches follower closely to identify mistakes/rule violations Passive - Intervenes only after standards have not been met or

problems have arisen

Contingent Reward

Management by Exception

7



Approach of Transactional Leaders

Rational approach to leadership assuming people are

“hedonic rationalists” (i.e., seek to maximize rewards as predicted

by economic model)

Give rewards in exchange for performance

Manage by looking for deviations from rules◦ directive + Management by Exception

'These are the rules and this is how you've broken them'.

◦ participative + Management by exception

'Let's work out together the rules to identify mistakes'

Intervenes only if standards are not met Focus is on evaluation as much as direction

Has a telling style

8



Limitations of Transactional Leadership

Low expectations

Minimal accomplishments Low levels of satisfaction

Focus is on short-term, immediate outcomes only

Carrot/stick rewards, emphasis on plans, targets,systems, controls

management > leadership

fails to develop, motivate, bring to full potential (Bass)

9



Full Range of Leadership Model

10



Tannenbaum-Schmidt Continuum

Tells Sells Consults Joins AbdicatesSuggests Delegates

Boss-centred Follower-centred

decision making &action freedom forfollowers

use of authority byleader

Continuum based on situational factors:value system, wants, confidence, willingness.

11



Characteristics

of the Transactional Leader

Presentation by

Sandrine Ah Choon

12



Characteristics of the Transactional Leader

Transactional Leadership = Reward/Punishment

Approach

The characteristics of the Transactional Leader asdescribed by Bass (1981, 1985):

◦ Contingent Reward

◦ Management by Exception (active and passive)

Relationship between the leader and the led

◦ Top-down Approach

◦

An economic and directive Relationship Power

◦ This Leader seems to possess legitimate, reward, and

coercive power

13



This leader is different from the laissez-faire and the

transformational leader .

The transactional leader possesses some valuablequalities:

◦ Characterised by negotiation skills

◦

Puts into place a reward system that increases employees’motivation

◦ Puts into place a clear communication strategy for the

organisation

Leaders, in their day-to-day work, tend to displaycharacteristics of the three leadership styles. This is

what works best


14



Leaders, in their day-to-day work, tend to display a

mixture of the characteristics of the three leadershipstyles namely

◦ Transactional

◦ Transformational

◦ Laissez faire

This is what works best


15



The extent to which transactional leadership style

is exercisable in organisations and the barriers thatmight arise in exercising transactional leadership

style.

Presented by

Audrey Hannelas

16



Is the transactional style of leadership still

used in organizations? Some critics against Transactional leadership style by

comparing Transactional with Transformational

Transactional leadership is focused on achieving results

Transformational leadership is shown to consist of caring

behaviour that listens to employees, encourages autonomy,

creativity , a sense of importance and self-esteem. Transformational leadership addresses the needs of the

person

Transactional leadership addresses the organizational process Transactional leadership does not motivate workers to

perform beyond expectations

17



Is the transactional style of leadership stillused in organizations?

Transactional leadership still in use today Transactional leadership is the pattern of

leadership prevalent in most organizations and

organizational situations because it contains abasic mechanism of ‘exchange relations’.

Bass (1985) argues that transformational

leadership builds on transactional leadership but

not vice versa.

18



Transactional Leadership : SICOM – an example in action

The company operates according to a performance

appraisal system.

It is undertaken twice during the year.

The first one is effected to decide upon the yearly

increment in basic salary in July.

The second one to determine the amount of

productivity bonus in December.

At the beginning of the appraisal period, a Job

performance and contribution target sheet is given to

each employee

The employee is rated during the appraisal exercise.

19



Purpose of SICOM’s evaluation system

Evaluating each employee during the appraisal period on

the employee's performance plan;

Recognizing and rewarding employees whose

performance so warrants;

Assisting employees in improving unacceptable

performance;

Reassigning, reducing in grade, or removing employees

who continue to have unacceptable performance.


20



Does the transaction style apply or work in this case?

If we look at the purposes of SICOM’s appraisal system, it is

evident that the transactional style is widely prevalent at

SICOM

There are indications of the Contingent Reward andActive Management by Exception behaviours in that:

Managers/Officer-in-Charge are expected to clarify their subordinates’

responsibilities, monitor their work, reward them, correct or withholdrewards for failing to meet objectives

Employees are fully aware that their rewards will depend upon their

performance and are satisfied with this ‘Quid Pro Co’


21



Does the transaction style apply or work in this case?

Thus, the Transactional Style of Leadership works at

SICOM. This is so because:

◦ the tasks are mostly routine and specific in nature

◦ the structure and procedures of the organisation are well

defined with a clear hierarchy

◦ employees are not expected to participate in strategic decisions

◦ It is a process of exchange of valued rewards for performance


22



Barriers in exercising transactional leadership

Highly routine and mechanistic environment where

repetitive tasks are the norm

Dynamic environment, a more flexible participative stylemay be required.

All employees do not participate in decision-making nor

setting the direction. It is considered to be a “by the book’ approach in which

employees work within the rules laid down.

There is no creativity and innovation as the employeesare not expected to take initiatives nor are they allowed

to think outside the box.

23



This approach does not value employees as

contributors to the organization's success as it does not

provide time and space for innovation. It is not concerned with the needs of followers nor

helping followers look at difficulties or problems in new

ways. It is also not concerned with exciting, arousing and

inspiring followers to put an extra effort to transcend

their own self interest to achieve group goals. Employees are not expected to take more

responsibilities that have already been attributed in

order to gain more satisfaction in their work.

Barriers in exercising transactional leadership

24



Summary

Transactional = Give something to get something

Transformational = Go beyond self interests for the good

of the whole

To Rule or Govern is easy – To Lead is Difficult.”

Leadership today

The focus on leadership today is on understanding how to

use different styles at different times and in different placesto meet the needs and circumstances in our rapidly

changing world.

25



Transactional Leadership Style

Any questions ?

Thank you!

Amanda, Sandrine & Audrey

15.09.2010

26

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