Which leadership style is based on an exchange process?

Transactional leadership is anchored in the concept of an exchange process, where leaders provide rewards or punishments based on the performance and compliance of their followers. This leadership style is characterized by a clear structure and the establishment of short-term goals. Leaders using this approach engage in negotiations with their team members, offering tangible rewards—such as promotions, bonuses, or even simple recognition—in return for achieving those objectives.

In essence, the emphasis is on the transactions that occur between leaders and followers; when followers meet expectations or achieve results, they are rewarded, thus reinforcing specific behaviors and performance metrics. This pragmatic focus distinguishes transactional leadership from other styles, which may prioritize motivation through inspiration, service to others, adaptability, or situational context over a straightforward exchange relationship.