Transactional Theory – Leadership Theories Series

Use transactional theory to obtain compliance from a member of staff who needs to be persuaded to comply with your request.

It was James MacGregor Burns who popularized the transactional theory. In doing so he described a process that has been going on between leaders and followers, managers and staff and parents and children since Adam was a lad in short pants.

Burns’ theory describes the, often informal, bartering process that goes on between leaders and staff all the time. He identified two very different strategies that managers can use.

Constructive transactions occur:

When the leader offers inducements to the follower to comply with their request. For example, ‘If you work tonight you can have Friday afternoon off. ‘

Corrective or coercive transactions occur:

When the leader threatens the follower if they refuse to co-operate or if they fail to stop acting in a certain way. For example, ‘If you do that again I’ll make sure you get no overtime for the next month.’

Burns believed that the range of inducements and threats available to a leader were virtually limitless and were not restricted to financial rewards or sanctions.

How to use transactional theory

Confirm the limits of your power/authority. As a leader your ability to deliver on what you promise or threaten is vital. You must deliver on both or you’ll lose credibility.

Find out what makes your staff tick. It’s alright reading about the various factors that either motivate or demotivate followers. But every individual is different. You need to identify specifically what your followers really value and fear and use this knowledge in your negotiations.

This data-gathering exercise must be on-going. It starts on the day you arrive and only finishes when you move on to a new job. Start with constructive transactions. A willing volunteer is always better than some poor sod that has been coerced into doing a job.

Questions to ask

  1. If I constantly engage in constructive transactions will staff see me a soft touch and/or expect rewards for everything they do?
  2. What effect will the use of coercive transactions have on levels of co-operation and team spirit?
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