Transactional Leadership

The transactional leadership model suggests that people are motivated by rewards and punishment. It's a system of quid pro quo - reward/pay for effort. If a person does something well then they can expect to be rewarded if they do something poorly they can expect to be punished.

Some form of transactional leadership can be found in all organizations (people get paid don't they!). The major flaw with this model (if it is the primary model being used to motivate people to better performance is that it is at odds with the vast volume of research that suggests people today are less motivated by $$ and more inspired by work that is meaningful, allows them to use their talents and enables a sense of accomplishment. Get those elements working together well and you are more like to have high performance ... and better yet high performance that is sustained for a long period than you ever will by waving just a fist full of dollars in front of a person.

I have yet to come across a high performance organization that uses the Transactional Leadership model as their focus for improving performance. You are more likely to see it being used in organizations that are still immersed in the traditional thinking that people only come to work to get paid. The types of organizations that don't deliver the outstanding results that their high performance competitors do! When you read the e-book "Creating an Inspiring Work Environment" you will understand why!

So if you are stuck in one of those organizations that still think they will get their best performance from people by use of carrots and sticks below are five things that leaders using Transactional Leadership should do.

5 Ways To Successfully Implement Transactional Leadership

1. Understand what rewards motivate team members. Because the success of transactional leadership relies on the team member valuing the rewards that are in place, it is important for you to understand what it is that motivates each individual. What works for one person, may not work for another.

   Link the rewards, most valued by a particular team member, with the successful completion of the task. You can read more about effective ways to reward employees in this article.

2. Team members need to understand the reward system and how they can achieve the rewards. Because this model pre-supposes people will work harder for rewards - then it is essential that people are crystal clear about what they get for their efforts and exactly what they have to do in order to get those rewards. Any confusion and you won't get the performance you want.

3. Ensure that both reward and punishment systems are in place and are consistently used. If team members feel that their leaders are biased (either toward or against specific individuals or groups) then any motivation that this system is meant to inspire will suffer.

4. Provide timely feedback throughout the work process. People will become quite disillusioned and mutinous if they feel they've put in a huge effort (or actually just the effort they needed to) to get their expected reward only to find out too late that they have missed the mark and no reward is on its way to them.

   Giving feedback about the quality/quantity of work someone is doing is critical (regardless of whether you are using a Transactional Leadership style or not). However, when using the framework of the transactional method you are constantly linking and shaping the employees expectations to the reward they will receive for their efforts.

5. Ensure that rewards and recognition are provided shortly after performance. Timing is everything and because this is a carrot and stick approach - if the rewards come too late after the task/job is completed, next time around you may struggle to get people to link their actions to the reward. Reward too early and you may be rewarding the wrong behaviors.

A Few Lookouts When Using A Transactional Leadership Style

1. Do not assume that transactional leadership will yield the same results across different cultures. Most North American cultures emphasize individualism, so reward systems that allow for individual reward might be most effective there. Many Asian cultures emphasize collectivism, so in those cultures group rewards or rewards that are paid due to overall group performance may work better.

   Take into account as well the type of work being performed and whether it is group performance reliant or individual performance reliant.

   If you don't want to be up to you ears in morale issues ... make certain any group rewards are made in such a way that they are fair. E.g. non/low performers aren't rewarded at the same level as high performers -- or systems are in place to quickly get non/low performers up to speed so they don't impact too negatively on the rest of the group's rewards.

2. Short Term Focus Transactional leadership can steer people toward taking a short-term focus which can create problems for the business longer term. For example, some people will take short-cuts to achieve the reward on offer for this period - knowing full well that further down the track there could be consequences that could be severe for the organization.

   I once worked with a team who had used this style of leadership to get productivity improvements, unfortunately their rewards steered team members towards focusing only on output and not quality. The customer complaints eight months down the track went through the roof as some of the glue components of the packaging began to fail. The team members had reduced the glue expulsion rate in order to speed up the machine - without thinking through the efficacy of the practice on the final product for the long-term.

   So do make sure that the rewards and goals work together to achieve the desired outcomes of the business.

If you want fully engaged, enthused and high performing people you wouldn't use Transactional Leadership as your prime strategy. Certainly, bribing people with rewards you will get them taking action ... but will you get them performing at their peak? I very much doubt that - their heart and soul just won't be in it. They'll be doing enough to get the reward and get the heck out of there and on to something they'd much rather be doing.

Ultimately the vast majority of people are inspired to be at their best for far different reasons than rewards. In Creating an Inspiring Work Environment I share with you the areas in which you should focus to inspire people to be at their best ... without dangling carrots like pay increases, bonuses and other short-term-performance inducing rewards.