Significant Behaviors of Transactional Leadership

Comparative study is an excellent method to understand greatness in certain things. Neurons have a pattern of learning objects by relating them. This is important for faster recollection which otherwise termed as quicker learning or better understanding. When someone says “Lightning”, you remember words like “Thunder” and “Rain” even without hinting. When I say “Transformational Leadership” you automatically think of “Transactional Leadership”. In this post, let us see significant behavior’s of Transactional Leadership for better understanding of “Transformational Leadership”.

As per Bass, “Transformational Leadership is in someways an expansion of Transactional Leadership”. With detailed Full Range of Leadership Model, he clearly explained how one can link Transactional and Transformational behaviors.

Transactional Leadership is based on exchange between leaders and followers. Leaders explain what needs to be done & what followers will get on achieving the goal. Significant Transactional Leadership Behaviors are:

1) Contingent Reward(CR)

2) Management-by-exception (either Actively or Passively) – MBE

3) “Hands-Off” or Laissez-Faire Leadership (LF)

Above behaviors are widely followed throughout the world as leadership styles also. These behaviors are having its own merits and it is not wrong in following them. Even a leader can be effective by using these transactional leadership behaviors appropriately at the right time.

Contingent Reward (CR)“If you finish up these goals with high-quality then you will get good bonus next year”. This is a usual statement you hear from any manager. Most of the time, this style is effective in motivating the team. But surely, it is always linked with benefit, hence it is transactional.

Management-by-Exception (MBE) – The name itself explains the way. Based on the output (exceptions) leaders take corrective actions. As this one is more related to issues rather than rewards, it is less effective than CR. There are two types of MBE.

MBE – Active(MBE-A) involves proactively identifying & tracking possible issues, mistakes and errors in the assigned activities. This style is required in some activities where safety is important.

MBE – Passive(MBE-P) involves taking corrective action until issues occur. When compared to MBE-Active, this one is less effective.

Laissez-Faire Leadership (LF) is doing nothing as a Leader – ignoring all its responsibilities. Letting others do the work & avoiding to show. Researchers termed this as “Non-transactional” and as the “Most Ineffective Leadership Style”. This behavior is shown when one holds the positional level leadership without the required skill or interest in the job.


1. Transformational Leadership (Second Edition) BY Bernard M. Bass, Ronald E. Riggio, Lawrence Erlbaum Associates, Inc.,2006

Is anything called transactional leadership exists?

After writing my earlier blog post, I read number of books on transformational leadership. In one of his book, John Adair asked “Is anything called transactional leadership exists?” I got interest on his explanation and found that his statement is true but to some extent.

“I believe, that there can be no such thing as transactional leadership, for merely honouring mutual agreements meets none of the necessary conditions we identified for explaining why the term leader can be used for anyone.”

Those individual termed as ‘transactional’ leaders possess leadership skills but it is less transformational. Instead of using the word ‘less transformational’, researchers would have used ‘transactional’.

Transactional behavior exists and it is prevalent in this world. Transactional Leadership got into every discussion of Transformational Leadership because a) ‘transactional’ way of dealing things are very familiar to everyone b) contrasting two different methods are easier for understanding c) it is included as leadership to bring out the excellent concept of transformational leadership.

My Other posts on Transactional & Transformational Leadership:

1. Transactional Leadership Vs. Transformational Leadership

2. What are the components of Transformational Leadership?