Transactional Leadership: An Outdated Compass

7 August 2023

Compass For Life

In today’s rapidly evolving work environment, where innovation, collaboration, and emotional intelligence are highly valued, it’s time we scrutinise the guiding principles that determine effective leadership. The leadership compass many grew up with, that of transactional leadership, is increasingly appearing as an archaic relic of the past. It’s essential to understand why this model is losing relevance and how it might be misaligned with the aspirations and expectations of today’s workforce.

At its core, transactional leadership operates on a simple premise: rewards for performance and penalties for failure. It leans heavily on a clear hierarchy, where instructions flow downhill and compliance goes up. In such a setup, leaders command, and followers obey. Respect is not earned through shared experiences, trust, or vulnerability but rather through position and power.

This approach lacks the integral components of empathy and compassion. In a world driven by human ingenuity, creativity, and collaboration, a leadership model that treats employees merely as cogs in a machine, defined only by their output, feels out of place.

An essential part of leadership is understanding. Understanding the dreams, challenges, motivations and distractions each individual on a team may have. Transactional leadership, with its cold calculus, often overlooks this human dimension.

Yes, performance is recognised, but what about the softer needs? What about nurturing an employee’s potential, fostering a sense of belonging, or addressing emotional and mental well-being? These are areas where transactional leadership often falls short, as it lacks the tools or the inclination to attend to them.

When considering our Compass for Life, it’s clear how transactional leadership is in conflict with each cardinal:

Super North Star (Northern Cardinal): True leadership aims for a greater collective goal, a shared vision that transcends individual achievements. Transactional leadership, however, often remains fixated on short-term targets, missing the broader horizon.

Strategist (Southern Cardinal): Strategy isn’t just about meeting targets; it’s about understanding the landscape, anticipating challenges, and preparing for the future. Transactional leadership, often stuck in the present, lacks the foresight required of true strategists.

Ethos (Easterly Cardinal): At its core, leadership should be about values, about standing up for what’s right. Transactional leadership, with its reward-penalty system, can sometimes compromise ethos for results, leading to a culture where ends justify the means.

Warrior (Westerly Cardinal): While transactional leadership may embody certain aspects of the Warrior – action, for instance – it often neglects accountability, especially the softer, more vulnerable side of acknowledging and learning from mistakes.

In conclusion, while transactional leadership may have its merits in certain contexts, relying on it as the predominant leadership style will do little to foster genuine trust in a team and may be the cause of failure. Organisations and leaders need to evolve, embracing more inclusive, empathetic, and visionary models of leadership. Only then can they truly harness the potential of their teams and pave the way for a brighter, more collaborative future.