Transaction 2

In another piece that I recently wrote comparing transactional and transformational leadership, I made the following statement:

" Since its introduction, transformational leadership theory has cast a negative connotation on transactionalism. Not only is this unfair, I would argue, but it is wildly unrealistic; though transactionalism (and quid pro quo) is espoused as shallow and petty, I would submit that it permeates every aspect of our lives, to include work.”

Please allow me to expound along this line of thinking.

Transactionalism is Everywhere

Transactionalism is everywhere, in every aspect of our lives. I believe that ONE way to describe absolutely every relationship that a human being participates in is as transactions. Consider the presence of transactionalism in your life, in the following areas:

1. Any and every financial transaction. Buying a soda, paying your rent, driving your car - participating in any way in our economy is obviously a transaction. When you spend money to buy things (goods and services) that improve the quality of your life, this is an example of positive transactionalism.

2. Any and every relationship. Transactions occur in every relationship you have. For example:

  • Parents. Parents trade time, money, and effort for love, companionship, life in accordance with societal norms (self-actualization), and placation of the evolutionary craving for procreation and sustainment of the species. Children, although entered into the transaction without their explicit agreement, trade time and effort for love, affection, protection, basic life needs (food, clothing, shelter), education, acceptance, and approval.
  • Spouse / Significant Other. While the specifics of each relationship can vary wildly, generally speaking, partners trade some combination of time, effort, money, physical intimacy, love, self-actualization, and companionship for some combination of the same.
  • Friendships. Again, the specific details of each relationship can vary significantly, but friends usually trade some combination of time, effort, money, support, advice, companionship, self-actualization, and love for some combination of the same.

3. Job. Employees trade time and effort for money, benefits (health insurance, parking spot, et cetera), status, career, and self-actualization. Employers trade money for effort, performance, and results.

4. College Education. Students trade time, effort, and money for education, educational credentials, self-actualization, and the prospect of a better job and life. The college trades time, effort, education, and educational credentials for money, which enables the organization to continue to exist, and to pursue its organizational interests (education, research, community development, et cetera).

5. So-called 'selfless' acts and activities. What about acts of selflessness? I would argue that selflessness is actually self-actualization. When you do something 'selfless' (make a charitable donation, place the well-being of your subordinates before your own, et cetera), you receive on your side of the transaction that self-affirmation and self-actualization of living up to your values, and being the person that you want to be. You trade the selfless act for self-actualization.

Transactionalism as the Nature of Things

Thinking about the above points, I hope it is obvious that transactionalism is present in abundance in every facet of our lives, and I am here to adamantly state that this is not a bad thing. On the contrary, transactionalism is a healthy, effective method of interaction. Further, egocentrism, which I would argue is a driving force for transactional behavior, is ingrained in our genetic programming, so we probably can't get away from transactionalism even if we wanted to.

Transactionalism and egocentrism are the nature of human behavior, and when controlled and moderated, can be very productive and positive forces.

As a Leader, Use Transactionalism to Your Advantage

As a leader, I try to employ the best of a number of leadership methods, including transactionalism. Can transactionalism be used to inspire loyalty and outstanding subordinate performance? In my experience, I have found the answer to be a resounding yes. Considering the following three steps:

1. Determine people's goals and dreams. Take an interest in your people. Find out what their longer-term goals and dreams are. As a side note, I think my description of this first step sounds not at all like transactionalism, but more like transformationalism (connecting with people).

2. Identify and explain where their goals and dreams align with the organization's objectives. How can we meet both the organization's and subordinate's needs? By finding those areas where our interests and needs align. This is setting up two birds for one stone.

3. Make a fair deal. If you can identify common needs, make a fair deal using transactional methods. If you can't identify common needs, employ other methods of leadership, or perhaps that subordinate should look to other organizations for opportunities more closely aligned with his or her personal needs.

Using this method, I have enjoyed very positive results. If the subordinate lives up to the agreement, I get the level of performance and results that I negotiated for, and the satisfaction of brokering and realizing a fair deal. If the subordinate fails to perform as agreed, I have a deal to refer back to during performance counseling, and ultimately, if necessary, disciplinary and separation actions.