How to Use Transactional Leadership Style to Drive Team Success

In recent years, the transactional leadership style has lost favor as inspirational leadership methods have risen in popularity. However it can be powerful if implemented correctly.

What is Transactional Leadership?

If you’re not familiar, the transactional leadership style follows these basic steps:

  • Leaders set goals for their teams.
  • They give employees orders and process documents to achieve the goals.
  • If employees perform well, their leaders reward them.
  • If employees perform poorly, their leaders punish them.
  • These steps repeat in a continuous cycle.

It’s a simple, no-fuss leadership style that many now argue is inadequate to keep today’s purpose-driven employees motivated. However, transactional leaders are great at setting expectations and rewarding people for completing them. In many results-driven organizations, this is ideal for holding teams accountable for achieving their goals.

With some minor adaptations, leaders can use this style to maintain simplicity and clarity in their organization’s management practices while appealing to employee’s emotional needs in similar ways as inspirational leaders.

Here’s how:

Invite Employees to Participate in Goal Setting

A major flaw of the transactional leadership style is that managers set goals and expect employees to follow them without question. While teams should fall in line with organizational objectives, employees struggle to stay motivated when they don’t feel connected to their goals.

The easy way to fix this is to invite employees to participate in goal setting. Research shows that goal commitment increases when managers ask for employee input. Before launching new performance objectives, have a meeting with your employees where you discuss what you want them to achieve and give them an opportunity to share their ideas. While you may not shift the end outcomes, you expect from your employees, at least take into consideration their thoughts regarding the milestones and methods it’ll take to get there.

By having these conversations with your employees, you can set objectives that everyone on your team is on board with.

Add Purpose to Your Orders

Once you’ve set team goals, the next step is to give orders. Typically, transactional leaders tell their direct reports what tasks to accomplish and, if relevant, provide them with a process document. Lists of assignments give employees a clear understanding of your expectations. However, they can feel impersonal and rarely inspire enthusiasm.

To combat this, deliver your instructions with information about why the assigned work matters. According to Wharton professor, Adam Grant, reminding employees of their work’s greater purpose is the key to keeping them engaged.

For example, here at Quickskill, we lead a team of virtual personal assistants who provide administrative support to high-level professionals throughout the U.S., Canada, and the UK. One of the ways we keep them motivated is by reminding them that their work plays a pivotal role in enabling our clients to grow their businesses.

Personalize Employee Rewards

Transactional leaders motivate their employees by promising rewards upon goal completion. Typically, they offer bonuses, promotions, and other types of standard incentives that may or may not be meaningful.

Leaders must realize that there is no one-size-fits-all approach to incentivizing performanceResearch indicates that financial rewards are less motivating to employees who earn comfortable wages, some employees don’t want promotions because they’d rather be doers than leaders, and others are so intrinsically motivated that common rewards fail to interest them.

Instead, offer employees several options to choose from or, particularly with highly valuable employees, ask individuals to share their wish list of rewards and see if you can accommodate it.

Here are some examples of alternative rewards to offer employees:

  • PTO to volunteer
  • Administrative support services
  • A physical token of recognition
  • Charity donation matching
  • Professional and educational development programs
  • Off-site team bonding activities
  • & many others

Talk with your team to develop a personalized rewards program.

Read More: How to Capitalize on the 4 Types of Employee Motivation

Transactional Leaders Replace Punishments with Constructive Criticism

When employees fail to reach their goals, transactional leaders respond with punishments like public ridicule, threats of demotions and/or firings, and harsh private conversations. The problem with this approach is that it causes employees to react defensively and/or withdraw.

Unless your employees are making lazy, careless mistakes, respond to their failures with constructive criticism instead of anger. Engaging employees in a discussion about what went wrong is an effective way to reprimand employees who failed due to miscommunications, lack of skills, and other issues that you can resolve through coaching.

During your discussion, develop an improvement plan with new milestones for completing their project. Frequently check in with employees during this time to hold them accountable for changing their behaviors.

By following the tips in this article, you can use the transactional leadership style to keep your employees on track without suffering from the lack of connection and motivation that employees typically experience with this type of leadership.

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