Category: Leadership

Transactional Leadership

Transactional leadership is a kind of leadership which focuses on results, conforms to the existing structure and measures success according to the organisation’s system of rewards.

Transactional leader maintains routine by managing individual performance and facilitate group performance. He/she has the formal authority and responsibility in an organisation. Transactional leaders set criteria for workers according to the already defined requirements. They work best with the employees who are aware of their jobs and are motivated by the reward-punishment system.

History of transactional leadership theory

A 20th-century German sociologist Max Weber did an extensive study on different leadership styles and divided into three main categories: traditional, charismatic, and rational-legal. Max Weber then described rational-legal – the style that is now known as transactional leadership- as “the exercise of control on the basis of knowledge.”

Transactional leadership theory is based on the concept that managers give employees something if they want something in return. It focuses on the point that workers are not self-motivated and require instruction, structure, and monitoring to complete tasks on time with accuracy.

This leadership style was widely used after World War II in the United States of America. This happened because there was a need to build a high level of structure and to maintain national stability.

According to Burns model, transactional leaders espouse fairness, responsibility, honesty, and honoring commitments.

Dimensions of transactional leadership are:

1. Contingent reward – It a process of setting expectations from workers and rewarding for meeting them.
2. Active management by exception – It is a process where managers anticipate the problems, monitors the progress and take corrective measures whenever required.
3. Passive management by exception – It is a process where manager does not interfere with the ongoing work until and unless an issue arises.

Characteristics of transactional leadership style:

1. Thrive on following rules and doing things correctly.
2. Opposed and reluctant to change.
3. Tend to be inflexible.
4. Focuses on short-term goals.
5. Favours structured policies and procedures.

Advantages of transactional leadership style:

1. It provides an unambiguous structure for large organisations.
2. It helps in achieving short term goals quickly and efficiently.
3. Rewards and punishments are clearly defined.
4. It provides rewards who are motivated by self-interest to follow instructions.

Disadvantages of transactional leadership style:

1. It does not promote creativity as goals and objectives are already set.
2. It does not reward personal initiative.
3. Only provide financial rewards.

Multinational corporations is the place where transactional leadership can be of best use because not all the workers speak the same language. Once the structure is in place and requirements are learned, it is easy for workers to complete the tasks. Transactional leadership doesn’t require extensive training. It brings consistency across the organisation. This will work best during the time of crisissituation when it is important for everyone to know exactly what it is required and how the tasks need to be done under pressure.

Those people for ehich money and perks act as powerful motivator eill adjust well in the transactional leadership.

Some of the famous transactional leaders areHoward Schultz, Bill Gates,Vince Lombardi, Norman Schwarzkopf, etc.

Julie Straw and team in their book The Work of Leaders discussed three steps of leadership – Crafting a Vision, Building Alignment and Championing Execution. In this article, we discuss the importance of not just crafting a shared vision but also the role of a leader in crafting a shared vision.

To begin with, people like their leaders to have two distinct characteristics – being forward-looking and futuristic and being credible or trustworthy. To get extraordinary things, people must work in the present and focus on the future into the whole realm of possibilities. All things are created twice – once in the mind and then in reality. A leader’s job is to continuously envision new products and services and new business ecosystems that can take the organization towards success.

Leaders must focus on creating long term value for the organization and its customers while focussing on the present for delivering results. By focussing on the future, leaders can provide a sense of meaning and purpose to the organization that binds its people together and inspire them to work hard. By continuously seeking clarity of vision and then enlisting others, leaders create a sense of shared vision.

Motivation theories provide a business case for creating a shared vision. As we know, motivation is essentially of two types – extrinsic and intrinsic. Extrinsic motivation stems from the external environment, for getting rewarded or when we must achieve certain goals set by others. External motivation creates compliance and in some cases defiance. Externally controlled people could stop making efforts once rewards disappear.

Extrinsic motivation is difficult to sustain. However, the second type of motivation – intrinsic motivation is about what one wants to achieve internally. Not set or controlled by others, internal motivation is about our own interests, passion and desires. It gives us tenacity to see through rough times and work with tangible rewards. By enlisting people in the process of shared vision, leaders play on intrinsic motivation of people. By offering a shared vision that everyone feels intrinsically inspired by, leaders create a rich environment where employee engagement and performance are enhanced. The role of a leader in creating a shared vision is in enticing the intrinsic motivating of the people and in building consensus.

Role of a Leader in Crafting a Shared Vision

Self-Reflection

One of the first steps in crafting a vision is to do some self-reflection and articulate as much as possible one’s likes, passions, interests and inspirations. Because the process of envisioning is more art than science, more emotional than a sequence of activities, it is important to start by articulating what drives and inspires the leader. The role of a leader is in not just self-reflecting but also encouraging the leadership team in an exercise of self-reflection.

Direction

Second, by engaging with the larger team, where everyone shares in their values, inspirations, perspectives, questions, hopes and dreams, you could arrive at certain themes or directions that define the overall shared vision. Role of a leader is in engaging the leadership team in a structured process of deriving these idea directions.

Hindsight

Past provides a great way to start looking into the future. It is filled with experiences, data, perspectives, reality and most importantly learning. It gives a picture of what is possible and how long does it take for you as a company to do something new. It provides a good view of what can go wrong as well. While the past does not always portray the future possibilities of an organization, it provides a good way to extrapolate the success and assess what an organization may achieve. The role of a leader is in engaging the leadership team in a systematic process of sharing the highs and lows about the past and arriving at the key learnings form the past.

Present

By assessing the current business ecosystem, leaders can enable the creation of a shared vision. Recent research and surveys involve understanding how the organization creates value for its customers, what the current capability and shortcomings are and how people feel working in the organization. The juice of assessing, reflecting and articulating the current state of the organization is in knowing what must change and what must be preserved in the future.

Imagining the future

The final step of creating a shared vision, which the leader must drive is in imagining a bold future. A future that considers the unfolding market situation, trends and patterns in the buying behavior of the customers, technological advancements and disruptive trends. The role of a leader is in providing a psychologically safe environment for the team to share their version of the vision without the fear of loosing credibility.

Not surprisingly, people are most willing to attend training that has direct, concrete applications in their world – technical knowledge relate to their jobs. But when asked which would greatly increase their effectiveness at work, the number one answer, was executive development program.

Executive Development Program is basically leadership development program, and, in this article, we shall explain the three fundamental responsibilities an executive has. Leadership is a process by which an executive can guide, direct and influence the behaviors and working style of others to achieve the common goal of the organization. It is defined as the potential to influence and motivate others.

An executive has three fundamental responsibilities:

They need to craft vision, build alignment, and they should champion execution. There’s a lot of skills that goes into each of these responsibilities.

When leaders lack a clear vision of the group’s future, they are feeling their way through the execution process, relying on day-to-day revelations. Sure, they have a collection of goals, plans, and schedules, but they don’t see the underlying tapestry, how everything fits together. They’re much less likely to realize when priorities are misplaced or when opportunities are passing them by. Vision, however, is more than just the efficient use of time and resources. A truly great vision elevates our work. It sparks our imaginations. It touches on our human need to do something of value with our lives.

Think of difference between a beaver building a dam based on its instincts and a team of people building the Indira Dam. The vision of the Indira Dam involved reimagining not just a river but an entire landscape. That vision opened a whole awe-inspiring array of possibilities for the land and the community. Visions are designed to inspire us. They speak something that is uniquely human. Your executive development program should consider this factor.

Building alignment is the second responsibility an executive has after creating a vision. Building alignment is an act of gaining buy-in for the vision crafted and it’s critical in moving from imagination to reality. For an executive’s development, building alignment is as crucial as vision. It is people centric and is therefore as complex and unpredictable as human relationships. The full spectrum of human motivations, personalities, cultural understandings, perspectives, and needs is present in your workplace every day.

The people you work with may be seasoned employees or new hires, with vastly different experiences and levels of responsibilities. But building alignment means ensuring that every person understands his or her role in making the vision a reality. An executive also understand that alignment is not something to check off a to-do list. Alignment is dynamic, ongoing process that requires continual monitoring and realigning as conditions and needs change. By staying plugged in, an executive can quickly tell when alignment begins to wane, and they can then give the time and energy needed to revive it. Your executive development program should consider this factor.

At its most basic level, execution is making the vision a reality. And not just any reality, but the right reality, one that takes the imagined future and turns it into a real accomplishment. Execution is how organizations and teams take all the good ideas and tun them into results. While an executive may or may not be directly involved in day-to-day implementation and production, they are always responsible for ensuring that people have what they need to do their work effectively. Successful execution of a vision can’t happen without the deep commitment. Your executive development program should consider this factor.

For developing an executive, it is important that the executive have deep understanding of all these three responsibilities and therefore, while designing an executive development, one must keep in mind these crucial responsibilities.