In a previous article, I began discussing transactional leadership and how it can be a great form of leadership, but also incredibly flawed. While it’s not a leadership style you need to totally avoid, it’s important to recognize the shortcomings. In this article, we’ll dive into the cons of being a transactional leader.


Less Relationship Building

Instead of focusing on the people’s working conditions, transactional managers often use rewards to motivate their employees. They don’t consider the relationship between the manager and the employee as a key factor in their satisfaction.

The relationship between the manager and the employee is very important to employee retention. If the managers are only focused on making sure that the employees meet their goals, then they might lose their employees to other companies.

Not All Rewards Are Viewed Equally

We all have different reasons for wanting to work for a company. Some of us want more money, while others appreciate the flexibility of certain working environments.

Not everyone is motivated by rewards. They are motivated by the work that they do, the people that they help, and how their hard work makes a difference.

Even though our motivations are different, companies can’t always find a reward that will work for everyone. For instance, if you have a health issue, you might want to improve your health insurance instead of getting more money.

Dampens Creativity

To be successful, leaders and employees need to be able to fail without worrying about consequences. Transactional leadership only enforces this fact.

Instead of encouraging employees to come up with new ideas, transactional leaders insist that they follow the company’s strict system.

Google has allowed its employees to spend up to 20% of their time working on other projects. This type of approach has been shown to encourage creativity and innovation, but it is not allowed under a transactional leadership system.

Lack of Vision

Instead of planning for the long-term, transactional leaders tend to focus on short-term goals and projects. This type of approach can lead to failure as it doesn’t take into account the long-term goals of the company.

Getting the proper direction and planning for the long-term is very important for any company. Doing so will help it reach its goals and provide the necessary foundation for future success.

Lack of Leadership Development

One of the most important factors that companies need to consider when it comes to developing their succession planning process is the development of both the employees and the managers. If the managers are only focused on making sure that the employees meet their goals, then both employees and those in leadership roles will struggle to grow any further within their organization.