Effective Leadership Based on a Transactional Relationship - Coursework Example

Is effective leadership based on a transactional relationship in which leaders provide followers with tangible returns and incentives in return for compliance and productivity? Introduction Effective leadership is achieved by matching a leader’s style to the existing setting. Thus, there is no single leadership style that fits all settings or all organisations. There are many types of leadership styles, and while one style may be suitable for one organisation or a certain management level in an organisation, it may not be appropriate for another organisation or a different level of management even within the same organisation. With this in mind, this paper discusses whether effective leadership is based on a transactional relationship in which leaders provide followers with tangible returns and incentives in return for compliance and productivity. The paper thus examines the attributes of transactional leadership and assesses how they relate to effective leadership. It is noted that transactional leadership also has its weaknesses and thus it is not the only determinant of effective leadership. Meaning of effective leadership Since effective leadership is contingent on by synchronising a leader’s style to the organisational setting, it means that for a person to become an effective leader, he or she must learn when to utilise different styles of leadership so as to reach their maximum potential as well as that of his or her followers (Stanfield 2009, p. 53). However, Stanfield (2009, p. 53) also notes that most effective leaders use one particular style and only deviate from that style when it is necessary and beneficial. Therefore, it is possible that if a leader chooses to adopt the transactional style of leadership, he or she will endeavour to pursue it most of the time. Worth noting is fact that effective leaders are those who exercise leadership by inculcating vision, meaning and belief in their followers (Uhr 2003, p. 131). Therefore, in regard to the gist of this paper, if a leader chooses to adopt transactional relationships in an organisation, he or she will be anticipating such relationships to fulfil a certain role in the organisation. Thus, the question is, does transactional leadership translate to effective leadership? This question can be answered by analysing what transactional leadership entails. Transactional leadership and effective leadership According to Ivey and Kline (2010, p. 247), transactional leadership is characterised by leader-follower relationships, whereby leaders offer their followers tangible incentives and returns in exchange for compliance and productivity. That is, leaders and followers in transactional relationships exchange things of value in order to advance both the leaders’ and followers’ agenda. In a transactional relationship, followers perform in compliance with the will and direction of their leaders and the leaders positively reward the followers’ efforts (Riaz & Haider 2010, p. 30). Moore (2007, p. 25) argues that transactional leaders operate by recognising what actions their followers must take so as to attain the desired outcomes of performance, and then enabling that action. They enable followers to act by clarifying tasks and role requirements, appreciating the needs and wants of their followers, and clarifying how their needs and wants will be met once they accomplish the required outcomes. In this sense therefore, the reward is offered to the follower as compensation for achieving what is desired by the leader. As Xirasagar (2008, p. 602) put it, transactional leadership is an influence process aimed at exchanging valued rewards for performance. It is important to analyse how these exchanges between leaders and followers impact leadership. Transactional leadership has been identified to represent a form of strategic leadership which is an important factor in organisational effectiveness (Waldman, 2001, cited by p. Liu, Liu and Zeng, 2011, p. 283). A review of literature conducted by Liu, Liu and Zeng (2011, p. 284) shows that transactional leadership lays the foundation for relationships between followers and leaders in terms of outlining expectations, making clarifications regarding responsibilities, negotiating contracts, and offering recognition and rewards so as to attain the expected performance. This implies that in a transactional relationship, a leader knows what needs to be done and the follower knows the significance of and the rewards associated with what he or she is required to do. This augurs well with the thought that effective leaders have a strong character, care for their employees, work hard and are successful communicators as pointed out by (Schafer 2010, p. 654). That is, if transactional leaders have a clear plan of what their organisations intend to achieve, then they can ensure that their followers work towards attaining this goal by providing whatever is required to attain the goal, including motivating the followers to do so. Such leaders must have a strong character to define the desired vision and mission, they must have the interest of their employees at heart (which is why they reward them), and they must be able to effectively communicate the organisation’s objectives to employees so that everyone understands what he or she is required to do. Transactional leaders achieve this by attempting to satisfy the present needs of followers by paying attention to contingent reward behaviour and exchanges and by paying close attention to departures from the norm, mistakes, and irregularities and taking action to rectify affected areas (Liu, Liu & Zeng 2011, p. 284). Xirasagar (2008, p. 603) asserts that transactional leadership is premised on three constructs which are essential in facilitating effective leadership: continent reward and passive and active management- by-exception. Contingent reward deals with behaviours intended to clarify expectations in performance and to reassure the follower that valued rewards will follow good performance. Passive management by management- by-exception includes being on the lookout for deviations from the norm. On the other hand, active management- by-exception instils behaviours meant to proactively prevent potential problems before they occur. This means that leaders pursuing a transactional approach will to tend to reward employees for fulfilling what is required of them, they will be keen to ensure that followers attain the set goals, and they will try to avoid potential problems before they arise. According to Edwards and Gill (2012, p. 26), many previous studies on leadership suggest that most effective leaders typically use both transformational and transactional leadership. In addition, the effectiveness of transformational leadership is premised on transactional behaviours, and the effectiveness of transformational leadership has been found to build on transactional leadership behaviours (Edwards & Gill 2012, p. 26). Transformational leadership refers to a relationship in which the purposes of leaders and followers are blended, creating wholeness, unity and a collective purpose (Barker 1990, p. 42). The argument by Edwards and Gill (2012) that most effective leaders depict some form of transactional leadership can be disputed by looking at the issue more critically. For instance, since the role of transactional leaders is to make sure that all members in a team follow the job requirements such that those who meet them are rewarded and those who fail are punished, this leads to a situation where the freedom of followers is limited because they cannot do anything against the norm. As stated by Liu, Liu and Zeng (2011, p. 285), innovation by teams works best when the teams have considerable freedom and autonomy. Hence, a leader who does not allow his team members to try what has never been tried before is likely to kill innovation in the organisation. This is because the followers will have the tendency to adopt the simplest and most straightforward methods to solve problems instead of embracing the challenge to try other alternatives (Liu, Liu & Zeng 2011, p. 285). The scenario above can be illustrated using the case of Kodak. Although Kodak is the company that invented the digital camera, it failed to develop it further and instead focused on its photographic film business (Lucas 2008, p. 157). What happened is that Kodak’s senior management thought that producing photographic film would remain the most profitable business in the imaging industry. Hence, the company’s management rejected the challenge to create a vision for the future (Williams 2002, p. 131). Therefore, it is apparent that transactional leadership kills innovation since managers prefer things to be done according to their plan with no deviation from the norm. If the leaders are not concerned with innovation, or see innovations as a low priority, they will be satisfied with things as they are and avoid change, the will keep playing safe and go for guaranteed, low-risk options, and they will avoid doing anything that is perceived to be risky (Jones 2008, p. 43). Thus, if transactional leaders are hesitant to embrace innovation, it is very clear that their organisations will lag behind in terms of new and innovative products or services as was the case with Kodak. Kodak’s scenario can be contrasted with the transformational leadership style at the Virgin Group which is led by Sir Richard Branson. According to Nelson and Quick (2007, p. 234), Branson believes that if a leader does not use his or her employees’ creative potential, the organisation is doomed to fail. Thus, the culture at Virgin Group involves taking risks and rewarding innovation. Regulations and rules are not essential, and employees can implement ideas as soon as they conceive them. Branson even promoted a manager who made an innovation decision that cost Virgin Atlantic (one of the companies under the Virgin Group) more than £30 million because he felt that dismissing the employee would have sent the wrong message to other Virgin Atlantic managers, thus killing the company’s forward thinking culture (Harmon 2010). The two cases above show that effective leadership is not merely about rewarding followers in exchange for compliance and productivity as is the case with transactional leadership. Kodak managers followed this approach and stuck to producing photographic film at a time when the market was quickly embracing the digital camera. This is because managers feared new ideas that would have led to a timely advancement of the camera but which were perceived to be risky. If the management had allowed the culture of innovation to exist, perhaps Kodak would have conquered the digital camera market as it did with its photographic film. On the other hand, the Virgin Group allows employees to come up with new ideas and even appreciates failed attempts as opposed to a transactional leadership approach which would punish failure or deviations from the norm. Conclusion Based on the discussion, it is apparent that effective leadership is not all about transactional relationships as good leadership is about matching a leader’s style to the existing setting. While a transactional relationship ensures that the leader’s visions and ideas are strictly followed – which may be good for an organisation in the short-term, it is not preferable in the long run because it stifles innovativeness when followers have to adhere to the leader’s directions all the time. Ironically, innovativeness is essential for the successful growth of any organisation as evidenced by the slow-down of Kodak’s growth and the apparent success of the Virgin Group. Therefore, effective leadership should involve consideration of other factors like innovation rather than mere focus on rewards for productivity and compliance. As such, effective leadership should encompass other strategies such as transformational leadership to inculcate vision, meaning and belief in followers. References Barker, A M 1990, Transformational nursing leadership: A vision for the future, 2nd ed., Jones & Bartlett Learning, Burlington, MA. Edwards, G & Gill, R 2012, ‘Transformational leadership across hierarchical levels in UK manufacturing organizations’, Leadership & Organization Development Journal, Vol. 33, No. 1, pp. 25-50. Harmon, P 2010, The mind of an innovator: A guide to seeing possibilities where none existed before, Strategic Book Publishing, Florida. Ivey, G W & Kline, T J B 2010, ‘Transformational and active transactional leadership in the Canadian military’, Leadership & Organization Development Journal, Vol. 31, No. 3, pp. 246-262. 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Xirasagar, S 2008, ‘Transformational, transactional and laissez-faire leadership among physician executives’, Journal of Health Organization and Management, Vol. 22, No. 6, pp. 599-613. Read More