2.3.2 Transactional leadership. (Independent Variable)

There a lot of definition in transactional leadership that has been written by most of the research. According to Schneider (2002) said, that there are contrast charismatic leaders with non-charismatic leaders. Although, transformational leadership inspires exceptional performance, transactional or non-charismatic leaders aspire to achieve solid, consistent performance that meets agreed upon goals. Besides that, transactional can be defined as give rewards and punishment to encourage performance, making the leader relationship essentially an economic transaction, Bass (1985). Transactional Leadership, known as managerial leadership, focuses on the role of supervision, organization, and group performance. It is a style of leadership in which the leader gives of his followers through both rewards and punishment but transformational leadership, leaders using the transactional approach are not looking to change the future. They will act based on the situation that occurred. These leaders pay attention to followers' work in order to find faults and deviations. This type of leadership is effective in crisis and emergency situations, as well as when projects need to be carried out in a specific fashion. It also call “carrot and stick” which means if perform will get reward and if employee failed to perform will get punishment.

Transactional leaders clarify to each team member their responsibilities, the tasks that must be complete, the performance objectives, direct poorly performing members and tell the benefits that can be gained related to the self-interests of the employees for compliance (Morgeson et al., 2010).Within the context of Maslow's hierarchy of needs, transactional leadership works at the basic levels of need satisfaction, where transactional leaders focus on the lower levels of the hierarchy. Transactional leaders use an exchange model, with rewards being given for good work or positive outcomes. Conversely, people with this leadership style also can punish poor work or negative outcomes, until the problem is corrected. One way that transactional leadership focuses on lower level needs is by stressing specific task performance (Hargis et al, 2001). Transactional leaders are effective in getting specific tasks completed by managing each portion individually. The transactional leader tends to intervene into the employees’ work process only when their performance deviates from the assigned standard (Bass & Avolio, 1993). The perception of the leader’s preferences is likely effects on employees, blocking them from their own creative opportunities. Moreover, transactional leadership may be perceived as controlling and demotivating (Deci & Ryan, 1987). Smith and Bell (2011) noted that transactional leadership was utilized by leaders when they respond to accountability measures. Such instances may occur when responding to political pressures, student achievement, or teacher performance. Transactional leadership has been framed as short-term practice to achieve results.

transactional leader works with followers‘ current needs and tries to satisfy those needs with desired outcomes once agreed upon performance level are achieved, (Jung & Avolio, 2000). Other than that, according to Conger & Kanungo (1998), transactional leader have three primary characteristic which are first is transactional leaders work with their team member or develop clear, specific goals and ensure that workers get the reward promised for meeting the goals. Secondly, the characteristic is they exchange reward and promises of reward for worker effort. Lastly is transactional leaders are responsive to the immediate self-interests of workers if their needs can be met while getting the work done. According to Yukl (1981), transactional leadership represents those exchanges in which both supervisor and subordinates influence on each other. Simply transactional leaders follow the rule of consideration (something in return). These leaders work with coordination of their followers so that they can be rewarded and praised also (Kellerman, 1984). Furthermore, the definition of transactional leadership is based on ―individual‖ self-interest philosophy. Managers and employees are considered to be individuals who are rational in pursuit of individual interest and it is just pure trading relationship between them (Bass, 1996; Sergiovanni, 1990). According to Burns (1978) and Zhao (2003), transactional leaders regard employees as ―economic men‖ who have low quality and demand, work hard to obtain remuneration and care about the clarification of tasks and roles. Transactional leadership emphasized traditional instrument exchange, which means providing employee salary and position according to their contribution and performance.

 According to Bass (1985) and Avolio (1995), transactional leadership is divided into contingent reward, active management-by-exception and passive management-by-exception. Next, transactional leadership can be defined according to Mackenzie, Podsakoff and Rich (2001) it refer to the practice of motivating followers through an exchange process involving extrinsic rewards, rules and compliance. Transactional leaders are led by exchanging or offering a reward for a desired outcome for an example, bonus rewards or promotional opportunities for attaining performance targets. Transactional leaders are concerned with processes rather than forward-thinking ideas. These types of leaders focus on contingent reward (also known as contingent positive reinforcement). Contingent rewards are given when the set goals are accomplished on-time, ahead of time, or to keep subordinates working at a good pace at different times throughout completion. Contingent punishments are given when performances do not meet standards or goals and tasks are not met at all. Contingent punishments are handed down on a management-by-exception basis, in which the exception is something going wrong. Within management-by-exception, there are active and passive routes. Active management-by-exception means that the leader continually looks at each subordinate's performance and makes changes to the subordinate's work to make corrections throughout the process. Passive management-by-exception leaders wait for issues to come up before fixing the problems. With transactional leadership being applied to the lower-level needs and being more managerial in style, it is a foundation for transformational leadership which applies to higher-level needs.

Researcher from Kahai et al (2003) observed that creativity was higher under transactional leadership than under transformational leadership. It is a simple process of creating expectations with employees, along with clear indications of what they will get in return for meeting (Blanchard and Johnson, 1985). Most of research has linked that contingent rewards to positive organizational outcomes. Transactional leadership encourages specific exchanges and a close connection between goals and rewards. Therefore, employees are not motivated to give anything beyond what is clearly specified in their contract. This is especially troubling for knowledge employees for whom it is much more difficult to specify complete job descriptions in advance. According to Conger and Kanungo (1998) and Schneider (2002) all leaders exhibit characteristics of both transformational and transactional leadership styles. Individual leaders tend to emphasize one of these styles more than the other. Both types of leaders are required to effectively manage knowledge (Conger, 1999).