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Carrot vs Stick: An Introduction to Transactional Leadership


Transactional leadership is most famously associated with the idea of rewards and punishments. In essence, a leader applying the transactional leadership style aims to achieve specific goals through recognising good employee performance and sanctioning poor performance. This means they are focused on supervision and management to closely track the performance of individuals and teams. They are concerned with positively reinforcing performance that meets or exceeds expectations, and punishing performance that is uncompleted or finished to an unacceptable standard.


In theory, then, transactional leadership speaks to the satisfaction of employees’ basic needs – the need to be praised; the desire for reward for good performance; the drive to avoid being punished for a poor level of output. These followers are essentially being motivated and encouraged by their own self-interest. For the leader, the effect is likely to be the achievement of particular tasks through the concentrated management of each portion of the undertaking. They will be focused on action and will be hands-on with their directions for subordinates.


As a result, the style is often linked with a close concentration on existing processes and organisational culture, and is considered as a very much reactive, responsive leadership approach. Corrections to performance are likely to come after the event, and the capacity for such leaders to innovate and push for new ways to do things is likely to be limited. Indeed, they are unlikely to be particularly driven to challenge the status quo, as their attention needs to be on the immediate performance (or otherwise) of individual tasks.


There are, then some evident shortcomings to the approach – in terms of a lack of forward-thinking and minimal employee engagement, for example – though there are also circumstances that can benefit from a leader’s use of the style. Most obviously, this is when tasks need to be completed during a crisis or unexpected short-term situation - where the priority is simply task completion, rather than any longer-term considerations.
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