ADM 612 - Leadership
Lecture 8 – Transactional or
Exchange Leadership
Introduction
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The previous lectures dealt with leaderoriented theories. Followers were
referenced largely as targets of influence or
support.
Introduction
•
Transactional theories view leader-follower
relationships as reciprocal exchanges in
which leaders and followers create a
transaction that allows for mutual
satisfaction of goals and needs.
Exchange Theories in Social
Psychology
•
Homans’ Theory of Elementary Social
Behavior.
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Homans argued that human beings seek to
maximize rewards and pleasures and to
minimize costs, pain, and punishment.
When two people engage in social interaction,
they exchange behaviors that either reward or
punish each other.
Exchange Theories in Social
Psychology
•
Homans’ Theory of Elementary Social
Behavior (contd.).
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For each member of the exchange, the resultant
combination of rewards and costs incurred will
yield either a profit (i.e., rewards exceed costs)
or a loss.
Profitable relationships will be continued,
whereas unprofitable ones will not.
Exchange Theories in Social
Psychology
•
Homans’ Theory of Elementary Social
Behavior (contd.).
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Each person’s needs and desires, some of
which are constant over time and some of which
may vary, will determine the reinforcement
“value” (i.e., the rewardingness) of any
behavior).
Homans also discussed the principle of
distributive justice.
Exchange Theories in Social
Psychology
•
Homan’s Theory of Elementary Social Behavior
(contd.).
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Justice occurs when an individual who is engaged in an
exchange with another person receives rewards that are
proportional to costs such that the profits of each person
are proportional to their investments (knowledge, skills,
effort, material resources).
Two individuals might differ greatly in what they expect
based on their previous experience and will thus evaluate
the “just” result differently.
Exchange Theories in Social
Psychology
•
Thibaut and Kelley’s Theory of Interdependence.
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Determining the reward value of social interactions.
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Exogenous factors that increase value of relationship.
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Abilities – Interact with those with abilities that they do not
possess.
Similarity – Shared values increases the likelihood of social
cohesion and support.
Proximity – Physical proximity reduces interaction costs.
Complementarity – Compatible goals.
Exchange Theories in Social
Psychology
•
Thibaut and Kelley’s Theory of
Interdependence (contd.).
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Exogenous factors (leadership examples).
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Leader’s task-related skills > Follower loyalty and
effort.
Similarity of values would enhance trust between
individuals of differing powers.
Leaders and followers share close proximity.
Complementarity of purpose could make the exchange
emotionally as well as practically rewarding.
Exchange Theories in Social
Psychology
•
Thibaut and Kelley’s Theory of
Interdependence (contd.).
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Endogenous determinants are those factors
internal to the interaction that increase the
amount of positive outcomes. Adjust and
synchronize their behaviors so pursuit of
individual goals does not not undermine the
other person’s pursuit of their goals.
Exchange Theories in Social
Psychology
•
Thibaut and Kelley’s Theory of
Interdependence (contd.).
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Leader-follower relationships characterized by
gross inequalities in power and the frequent use
of that power are likely to be compared quite
negatively to alternative relationships, whereas
exchanges based on feelings of mutual
interdependence are likely to become
increasingly cohesive and interdependent.
Exchange Theories in Social
Psychology
•
Equity theory.
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Both Homans’ distributive justice and Thibaut
and Kelley’s comparison levels recognized that
relationships are evaluated not only in terms of
their absolute levels of rewardingness, but in
comparative terms.
Implicit or explicit assumption: Relationships
should be fair and equitable.
Exchange Theories in Social
Psychology
•
Equity theory (contd.).
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The assessment of fairness in a relationship is made by
comparing one person’s ratio of outcomes to inputs to
another person’s ratio.
Each person in a relationship asks, “Am I getting what I
deserve?” and compares his or herself to appropriate
comparison persons.
If you are unfairly disadvantaged or unfairly advantaged,
the imbalance leads you to change outcomes or inputs or
the perceptions of outcomes or inputs.
Transactional Leadership
Theories
•
Hollander’s Idiosyncracy Credit Model.
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Leadership is a social exchange; the currency is
legitimacy.
Leadership is a dynamic process involving ongoing
interpersonal evaluations by followers and leaders.
Leader provides task-related vision and direction;
followers reciprocate with heightened responsiveness to
the leader, legitimating the leader’s authority to exert
influence.
Transactional Leadership
Theories
•
Hollander’s Idiosyncratic Credit Model.
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Idiosyncrasy credit relates followers evaluations
to leader legitimacy.
Leaders earn credits that allow them to innovate,
that is, to act in ways or suggest strategies that
deviate from traditional approaches of the group
or behave idiosyncratically.
Transactional Leadership
Theories
•
Hollander’s Idiosyncratic Credit Model (contd.).
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Credits are earned through the demonstration of
competency in helping the group achieve goals and
conforming to group norms.
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Success leads to increased credits, status, and influence (and more
flexibility).
Failure leads to loss of credits.
Elected leaders feel more legitimacy and are more likely to
behave idiosyncratically, but are also more subject to
criticism.
Transactional Leadership
Theories
•
Hollander’s Idiosyncratic Credit Model
(contd).
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Salient points:
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Leadership is a process of give-and-take, in which the
leader’s ability to influence is based on a legitimacy
that flows from followers. Followers are the leader’s
most important strategic audience, determining the
leader’s latitude to act.
The exchange between leader and follower must be
seen as both just
Transactional Leadership
Theories
•
Graen’s Vertical Dyadic Linkage Model.
–
A leader and a subordinate go through a rolemaking process in which they negotiate the
terms of their collaboration. This is particularly
important for work on unstructured tasks for
which job definitions and standard procedures
are not sufficient to define all aspects of leaders’
and followers’ respective responsibilities.
Transactional Leadership
Theories
•
Graen’s Vertical Dyadic Linkage Model.
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By sampling the possible ways in which they
may interact around these unstructured tasks,
leader and subordinate develop a pattern of
reciprocal influence that moves the dyad toward
greater or lesser interdependence.
Transactional Leadership
Theories
•
Graen’s Vertical Dyadic Linkage Model.
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Superiors have a number of rewarding options.
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Subordinates have a number of responses.
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Information, openness to influence, interesting tasks, latitude
and autonomy, emotional support, and attention.
Commitment, loyalty, effort, and ingenuity.
When exchanges of reciprocal influences develop that are
rewarding to both parties the working patterns become
more intricately and productively coupled.
Transactional Leadership
Theories
•
Graen’s Vertical Dyadic Linkage Model.
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Quality of leader-follower exchanges is related to
job-related communication, subordinate
satisfaction, turnover, and frequency of
promotions.
Exchanges can be differentiated within a unit.
Exchanges must be sensitive to the particular
subordinate.
Processes of Influence,
Motivation, and Control
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Behavior modification approaches.
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Several theorists argue that effective supervision involves
“pinpointing” desirable target behaviors and targeting
reinforcements in a contingent and timely fashion.
Generally speaking, contingent rewards work better than
contingent punishments.
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Clarify path-goal relationships and promote notions of equity.
But, many behaviors critical to effective organizational
behavior are difficult to pinpoint and even harder to
consistently monitor.
Processes of Influence,
Motivation, and Control
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Goal setting approaches.
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Tasks may be difficult to monitor because they are not
highly structured and the specific behaviors may not be
known in advance or may change. Task behaviors may be
continuous and not discrete.
Alternative: focus on desired outcomes rather than
behaviors.
By focusing on the outcome, the responsibility for
regulating behavior is left to the individual worker who
monitors and corrects his or her own behavior to reach
goals.
Processes of Influence,
Motivation, and Control
•
Goal setting approaches (contd.).
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Degree of employee participation in goal setting can range from
very low (superior-set goals) to very high (delegation).
Tenets of goal theory (Locke):
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Conscious intentions regulate actions, that is, people are more likely to
do what they intend to do.
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Specific goals result in higher performance than general goals or no goals.
Difficult, but not impossible, goals result in higher performance than easy goals.
Goals enhance the positive effects of incentives, feedback, and deadlines on
performance.
Supervisor-set goals only have an effect on performance to the degree that
they are consciously accepted by the subordinate.
Processes of Influence,
Motivation, and Control
•
Goal setting approaches (contd.).
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Employees will accept difficult goals when they perceive
them to be reasonable, and when they perceive a strong
contingency between goal attainment and desirable
outcomes.
High performance cycle model (Locke and Latham).
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Goal acceptance and commitment are determined by the
subordinate’s perception of the likelihood that effort will result
in suitable levels of performance, with that perception largely
affected by the subordinate’s level of self-efficacy.
Processes of Influence,
Motivation, and Control
•
Goal setting approaches (contd.).
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High performance cycle.
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Assigned goals have a powerful effect on self-efficacy.
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They reflect the judgment of a competent and legitimate
authority.
They show confidence in a subordinate’s ability to meet the goal,
resulting in increase in confidence and efficacy.
They provide a challenge that motivates the employee to prove
competence.
They set a standard against which the subordinate can measure
achievement and again a sense of accomplishment and
satisfaction.
Processes of Influence,
Motivation, and Control
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From goals to self management.
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Sims and Lorenzi regarded reinforcement
schedules and assigned goals as stages to selfdevelopment.
In self-management, the individual worker or
manager sets and monitors his or her own goals,
rewarding him- or herself when performance is
achieved and taking corrective action when
performance falls short of the goal.
Processes of Influence,
Motivation, and Control
•
From goals to self management (contd.).
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Self-management process: situational leadership theory
modified with social learning theory.
In the early stages of development, when the subordinate
does not yet have the ability or interest to operate
independently, the superior creates a learning experience
that simultaneously maintains the subordinate’s attention
on set goals and provides the opportunity for successful
experiences to build confidence.
Processes of Influence,
Motivation, and Control
•
From goals to self-management (contd.).
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As the subordinate matures, he or she is encouraged to
participate in setting goals and has large aspects of task
and the decisions surrounding the task delegated to selfmanagement.
The characteristics of the leadership situation most
conducive to self-management are unstructured tasks,
subordinate with important information on the task,
effective implementation requires subordinate acceptance,
employee shares organizational goals (normative decision
theory).
Processes of Influence,
Motivation, and Control
•
Communication and Influence.
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The emphasis in social learning and goal theory
is understanding the needs of the subordinate
and creating an organizational environment that
encourages the subordinate to seek the
satisfaction of those needs through avenues that
promote organizational success.
Processes of Influence,
Motivation, and Control
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Communication and influence.
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Influence tactics.
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Ingratiation.
Assertiveness.
Rationality.
Exchange of benefits.
Upward influence.
Coalitions.
Inspirational appeals.
Consultation.
Processes of Influence,
Motivation, and Control
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Communication and influence.
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Most commonly used tactics: rational persuasion,
inspirational appeals, and consultation.
Least commonly used tactics: exchanges, coalitions, and
pressure tactics.
Noncoercive strategies that provide a rational and
justifiable basis for attitude change, rather than
manipulative or threatening attempts to gain compliance.
Coercion likely to lead to negative attributions leading to
further use of strong tactics.
Summary
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Leadership influence rests ultimately
on the follower’s perceptions of the
legitimacy of authority.
Best relationships are built on high
levels of mutual respect and trust
(mentor-protégé relationships).
Summary
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The most successful influence strategies are those
that employ reasoned argument (rational appeals)
and shared interest (consultation).
The most acceptable forms of power are those that
rely on the leader’s legitimate expertise (expert
power) and the follower’s trust and respect for the
leader (referent power).
Summary
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Even the most specific forms of exchange,
embodied in behavioral contingencies or
goals, realize their greatest potency when
employed in a program that allows the
subordinate the autonomy for selfmanagement with its potential for instilling
intrinsic motivation and personal dignity.