A transactional leader is someone who, as the name imply, relates to his team and tasks in terms of «transactions». His decisions are often based on tangible benefits and losses, rewards and punishments, results and performances. Between a transactional and transformational leader, the transactional leader is a much more common species.
Transactional leadership involves a relationship between the leader or manager and his team that is carrot-and-stick in nature. This means to say that team members are rewarded when they carry out an action that benefits the team’s performance, and they are punished when they take an action which is detrimental to the team’s performance. Rewards and punishment are often used to signal to the team as to the appropriate and desirable action to take. Evidently, the transactional leadership style is very much based on «exchanges» in favours and debts, or «transactions». As such, it is also worthy to note that a transactional leader is often also an autocratic leader as he enlists the use of punishment and reward to motivate his team.
In terms of operations, a transactional leader may be considered to be task oriented. A transactional leader makes decisions based on what produces best results. That is to say, a transactional leader would allocate resources, manpower, time and money based on what he believes would suit the immediate outcome the most, for instance, putting the best people for the job.
As seen, the transactional leader is very much outcome oriented. This leadership trait renders the transactional leadership model useful to get results. It would be especially effective when short term success in needed while long term performance is secondary.
However, should long term performance be equally important, the transactional leadership style would be less desirable as it has little emphasis on investment of resources, such as people development and asset growth.
A famous transactional leader is none other than the TIMES CEO of 2009, Steve Jobs. At the top of the technology and innovation giant, Apple Computers, Steve Jobs was known for his down to earth and task oriented nature of his leadership. He was also notorious for not hesitating to give employees a dressing down should they fail to meet his expectations.