Transactional Leadership Theories

The hallmark of the transactional leadership theories is the idea of equitable exchange. Every day, individuals engage in an exchange process whereby one valued benefit, resource, or commodity is exchanged for another. A mechanic fixes a car for monetary compensation, a student completes a thesis to receive a degree, or a supervisor praises an employee for securing a lucrative contract. The transactional approach characterizes effective leadership as a reciprocal and mutually beneficial process of give and take between leaders and followers. Leaders manage valued resources (e.g., information, support, consideration) and provide [Page 928]rewards or punishments to assist followers to achieve goals. In return, followers reciprocate with loyalty and compliance to the leader's requests while bestowing status on the leader.