Transactional Leadership — Temporary Motivation

Transactional leadership is the form of leadership that says, “I pay you for X amount of work. You get paid in proportion to your work. Not more, not less.” This can be a good leadership model to use when people are motivated by acquisition and material reward.

Incentivization is a prime motivator in commission-based field sales and front-line work. Opportunities for advancement in these organizations are primarily performance or merit-based, as in a meritocracy. That style works for those who are competitive in nature, but it doesn’t work so well for those who are more collaborative.

Transactional leadership can base its motivation on rewards and punishments. This leadership has been shown to be very effective as a short-term motivator, not so influential for the long term. Material bonuses lose their appeal after a while in most environments, in others, the reward tends to outshine the more important aspects like values, mission, purpose, ethics, corporate social responsibility (CSR), etc.

Transactional organizations have practices such as paying for college with a 5-year contract to work at the organization following graduation, or a corporate apartment, car, or relocation expenses paid with a 2–3 years-long commitment.

Organizations that control through compliance or a transactional model have employees that do not stay much more than 4–5 years. People either burn themselves out competing with one another, tire of hearing other people celebrate, and find opportunities that are more supportive and transformational, more meaningful.