Transactional Leadership and Employee Performance

Transactional Leadership

Transactional leadership: is a leadership style that emphasizes to transactions between leaders

and subordinates. Bass and Avolio (2003) suggest that characteristics of transactional

leadership consist of two aspects, namely contingent reward, and exception management.

Contingent reward is where leaders make agreement about what must subordinate do and

promising reward obtained when goal is achieved. While exception management is leader

monitor deviations from established standards and take corrective action to achieve

organizational goals. Yulk (2007) asserts that transactional leadership style is one leadership

style that emphasizes on transaction between leaders and subordinates.

Transactional leadership involves an exchange relationship between leaders and followers in the

direction of established goals by clarifying role and task requirement. Transactional leaders’

focus is to maintain the status quo and they are oriented to enhance the present way of doing

things (Brahim, Ridic & Jukic, 2015). Transactional leadership involves two major dimensions

namely task orientation and people orientation. Nevertheless, it is very difficult to find fully

task oriented or people-oriented leaders. Instead, we find leaders with a combination of both

characteristics. In this research, such leaders are labelled as Shared Leadership. Task-orientation

is the degree to which the leader organizes and defines relationships in the group by activities

such as assigning specific tasks; specifying procedures to be followed; scheduling work, and

clarifying expectations; encourage people to work harder; emphasize t deadlines; see to it that

people in the work group are working up to capacity; closely supervise employees; and getting

the job done is more important to them than employees‟ growth or personal satisfaction

(Wahyuni, Purwandari & Syah, 2020). People orientation is the degree to which the leader

creates an environment of emotional support, warmth, friendliness, and trust. Employee

oriented leaders are friendly; trustful; earn respect; have a warm relationship with team

members; do personal favors for people in the work group; treat all people in the work group as

his/her equal; be willing to make changes; back up what people; and have a participative

decision making (Feranita, Nugraha & Sukoco, 2020).

Transactional Leaders

Rowold, (2014) defined transactional leaders as individuals who know what they want to achieve

from their work and attempts to determine how they can achieve it. They determine whether

performance warrants exchange of rewards.; exchanges rewards and assurances reward for

performance; and they are receptive to one’s direct self-interests if they can be encountered by

accomplishing the work done. Groves and Larocca (2011) asserted that workers are encouraged

using compensation. Rowold (2014) asserts that the leader holds the employees accountable

regardless of resource availability or competency. The transactional leader develops a vision,

sells the vision to the employees, and leads the way to the accomplishment of that vision

Success is determined by the leader having enough power and strength to have the employees

perform the duties required of them (Pieterse, Van Knippenberg, Schippers & Stam, 2010).

Kuppelwieser (2011) reported that the transactional leaders are mostly concerned with

upholding of the status quo for their respective organizations. Transactional leaders have been

identified to inaugurate routine requirements and ascertain they are achieved within a given

time frame, limiting the contentment of workers and fashion low amounts of employee

obligation and satisfaction (Dana & Bing, 2015).

Transactional leaders reward or punish followers to achieve organizational goals and for leaders

to receive compliance from them (Zeinabadi & Salehi, 2011). Such leaders are action oriented,

and results focused and emphasis on planned and scheduled work. Dimensions of transactional

leadership according to Bass & Riggio (2006) are: Contingent reward: The most important target

of a transactional leader is to realize organizational objectives. To achieve this, the leader offers

different awards to raise the performance and motivations of his followers. His followers usually

receive the award upon meeting the set targets. Management –By- Exception: It is applied in two

ways, active or passive. If the management is active, leaders take corrective actions on the

mistakes of followers by tracking their performance which means leaders continually follow

performance and pass action to correct errors as they arise. On the other hand, if the management

is passive, leaders wait until the errors occur, which means that they normally fail to intervene

until serious problems occur after which they take relevant corrective action.

Transactional leadership has been alienated into three distinct procedures that assist in the

influencing of employees: active management by exception, contingent reward, and passive

management by exception (Harold, 2011). In active management by exception, the transactional

leader examines for mistakes, indiscretions, exceptions, divergence from standards, complaints,

infractions of policy and regulations, and failures and he or she takes remedial act earlier or when

these happen (Caldwell, 2011). Transactional leadership has various shortcomings than advantages.

Wegge, Shemla and Haslam (2014) assert that a transactional leader tends to be commanding and

does have high confidence which is fixated on the job. Wilson (2011) asserts that transactional

leadership is mostly suitable for a group setting that is under crisis since it offers gratification

through a vital resolution. Caldwell, Hayes and Long (2010) noted the outcomes

with transactional leadership are not valuable over time. Often transactional leaders focus on

staff‘s needs; they do not suggest opportunities for obtaining motivation, job contentment or

allegiance (Phipps, 2012).

REFERENCES

Avolio, B.J (2011) Full range leadership development Sage, Thous & Oaks.

Bass B.M. (1997). Transformational leadership: industry, military, & educational impact.

Bass, B. M. (1985) Leadership & performance beyond expectations

Bass, B.M & Avolio, B. J. (1997) Full range leadership development: Manual for the

multifactor leadership questionnaire, Mind Garden, Palo Alto

Bass, B.M. & Avolio, B.J. (1993) Transformational Leadership & Organizational Culture,

Public Administration Quarterly, 17. 112-121.

Bass, B.M. (1997) Does the transactional-transformational leadership paradigm transcend

organisational & national boundaries? American Psychologist, 52 (2) , pp. 130-139.

Bass, B.M & Avolio, B. J (1994) Improving organizational effectiveness through

transformational Leadership, Sage Publications, Thous & Oaks

Bastari, A., Eliyana, A., & Wijayanti, T. (2020). Effects of transformational leadership styles

on job performance with job motivation as mediation: A study in a state-owned

enterprise. Management Science Letters, 10(12), 2883-2888.

Bonsu, S., & Twum-Danso, E. (2018). Leadership style in the global economy: A focus on

cross-cultural and transformational leadership. Journal of Marketing and

Management, 9(2), 37-52.

Brahim, A. B., Ridic, O., & Jukic, T. (2015). The effect of transactional leadership on

employees performance-case study of 5 Algerian banking institutions. Economic

Review: Journal of Economics and Business, 13(2), 7-20.

Burns, I.M. (1978). Leadership. New York, NY: Harper & Row

Donna, C. (2011). Overcoming the Drawbacks of the Democratic Leadership Style.

Doucet, O., Fredette, M., Simard, G., & Tremblay, M. (2015) Leader profiles & their

effectiveness on employees’ outcomes, Human Performance, 28 (3), pp. 244-264

Edoho, F. (2007), “State-corporate alliance: ramifications for corporate social responsibility and

sustainable livelihood”, African Journal of Business and Economic Research,

Feranita, N. V., Nugraha, A., & Sukoco, S. A. (2020). Effect of transformational and

transactional leadership on SMEs in Indonesia. Problems and Perspectives in

Management, 18(3), 415-425.

Fiaz, M., Su, Q., Ikram, A., & Saqib, A. (2017). Leadership styles and employees’

motivation: perspective from an emerging economy. The Journal of Developing

Areas, 51(4), 143-156.

Ghasabeh, M. S., Reaiche, C., & Soosay, C. (2015). The Emerging Role of Transformational

Leadership. The Journal of Developing Areas, 49, 459-467.

Hater, J.J & Bass, B.M (1988) Superiors’ evaluations & subordinates׳ perceptions of

transformational & transactional leadership, Journal of Applied Psychology, 73 (4)

Holbert, J., Madhakomala, R., Saparuddin, S., & Timotius, E. (2021). The influence of

leadership styles on employees' job satisfaction in public sector organizations in

Indonesia. Management Science Letters, 11(4), 1393-1398.

Kacmar, K. M., & Rews, M. C. (2001). Discriminating among Organizational Politics,

Justice & Support. Journal of Organizational Behaviour, 22 (4).

Kendra, C. (2013). What is Laissez-Faire Leadership? 8 (2), pp. 35-41

KNBS (2021) Leading economic factors in Kenya

Kuria, L., Namusonge, G. & Iravo, D. (2016) Effect of Leadership on Organizational

Performance in the Health Sector in Kenya.

Lockwood, N. (2007). Leveraging Employee Engagement for Competitive Advantage.

Society for Human Resource Management Research Quarterly, 1(1), 1-12.

McCall, M. W. (2010). Recasting leadership development. Industrial & Organizational

Psychology

Menz, M. (2012). Functional Top Management Team Members.

Miller, D. (1986) Configurations of strategy & structure: Towards a synthesis Strategic

Management Journal, 7(3), 233.

Ministry of Industrialization, Trade and Enterprise Development Kenya, (2021) Industries and

Sectors in Kenya

Mohammed, U. D., Yusuf, Sanni, Ifeyinwa, Bature, & Kazeem (2014) The Relationship

between Leadership Styles and Employees’ Performance in Organizations.

Mugenda, O.M. & Mugenda, A.G. (2003) Research Methods, Quantitative and Qualitative

Approaches.

Murray, A. (2013). The wall street journal guide to management: lasting lessons from the

best leadership minds of our time. New York: Harper Collins Publishers

Mwaisaka, D. M., K'Aol, G., & Ouma, C. (2019). Influence of directive and supportive

leadership styles on employee job satisfaction in commercial banks in in

Kenya. International Journal of Research in Business and Social Science (2147-

4478), 8(6), 168-174.

National Treasury, Kenya (2021) Budget 2021, Key Sectors in Kenya

Ng’ethe, J.M., Namasonge, G.S. & Mike, A.I. (2012). Influence of Leadership Styles on

Academic Staff Retention in Public Universities in Kenya. International Journal of

Business and Social Science, 3 (21), 297-302.