Transactional Leadership

In professional development sessions I often talk about the difference between being a manager and a leader. In fact, I recently designed and hosted a Leadership Bootcamp for managers, with the goal of helping them become more people-focused.

Being people-focused is everything when you're a leader.

So this morning, while reading HR blogs, I came across another manager vs. leader blog that blew my socks off. 

The Effect of Transactional Leadership in the Workplace, by O.C. Tanner for  'a' Magazine. 

The blog post says: Transactional leadership focuses on the bottom levels of Maslow's hierarcy of needs in order to motivate and drive success. 


Transactional leaders don't worry about being a role model, or providing employees with opportunities for self-actualization, or even challenging them to create without the fear of being punished if the fail. They don't know (or sometimes care) what motivates their employees.

How do you know if you're a transactional leader?

  • You give contingent rewards - if an employee meets their goals, they get money/promotion/any kind of reward. If they don't, the reward is taken away.
  • You monitor work - you have to make sure employees are following the rules, so frequent check-ins are critical. (By the way, if you're doing frequent check-ins and your employee is highly engaged and highly knowledgeable, then you are micro-managing)
  • You don't give consistent feedback - you intervene only when the work is unacceptable or not up to standard, instead of coaching employees along the way.

Many new managers start off as transactional, and as mentioned in the blog post, that's ok, because it's a stepping stone to transformational leadership. But if you're transactional and you've been leading people for quite some time now, it's not ok. People don't like working for transactional leaders, and once they've had enough, they will leave.