In leadership lore, there are two main types of leaders, the transactional leaders and the transformational leaders. It’s become canon that transformational leaders are the best. They are responsible for inspiration and vision. Superhero CEOs are invariably of the transformational type – everybody knows who Steve Jobs and Elon Musk are. At some point, a lot of people started to think of transactional leadership as mere management by another name. Indeed, transactional leadership even became associated with mediocrity.

The reality of transformational versus transactional leadership is a little more complex, though. First, research has shown that transactional leadership is more closely associated with creativity than transformational leadership is, in addition to the more expected finding that transactional leadership is associated with more predictable outcomes. And let me ask you this – what’s wrong with predictable outcomes? Is predictability bad for Costco’s business? Is it bad for FedEx?

Put another way, do you want your team leads banging bongos in a drum circle trying to have the most exceptional vision for your service desk, or do you want them following processes and procedures that you already know will deliver exceptional service experiences? The idea that transactional leadership is somehow suboptimal could not be further from the truth. Especially, in the case of an MSP.

Let’s dig into this a bit more.

What is Transactional Leadership?

The academic definition of transactional leadership is task-focused based on reward and punishment, whereas transformational leadership sets out a vision for what should be, and leaves more leeway for employees to figure out how to get there. Those definitions seem to imply that different styles align with different functions within the organization.

Do I Want Transactional Leaders in my MSP?

For an MSP, task focus makes a lot of sense. You equip your technicians with a set of best practices and documented procedures, and then they take good care of your customers. In the day-to-day working of an MSP, transactional excellence is the pathway to profit, especially if the processes and procedures that your team follows are designed in such a way that your team is efficient, provides great service experiences, and doesn’t make any catastrophic errors.

How Transactional Leadership Works in an MSP

Think about the systems you have in place. Or maybe the ones you wish you had in place. You have SLAs built into your contracts. You have internal standards that help ensure that you hit those SLAs. You have KPIs to aggregate the behavior of your team members – who’s billing their hours properly, are they escalating appropriately, are the CSAT scores where they need to be. Anybody who is monitoring these metrics and then using them to create and enforce standards of performance within your team is engaged in transactional leadership. Indeed, transactional leadership is at the heart of how managed services get done.

Can You Teach Transactional Leadership?

Here’s the good news – yes, you can teach transactional leadership. Most MSPs don’t; they rely on promoting service desk stars into leadership roles and then hoping for the best. But you can and should use the principles of transactional leadership to train your leaders. As with anything, you just need the right tool for the job.

Team GPS is specifically designed to raise the standards of your transactional leaders. Team GPS takes in information, such as KPIs, from a variety of different sources. This information is then used to help your leaders create powerful 1:1 conversations with their team members, where they walk through the metrics, and use these sessions to coach their team members. This process, when repeated, allows your leaders to reinforce positive behaviors, shore up deficiencies, and identify when remedial action needs to be taken.

Your MSP relies heavily on transactional leadership, whether you’ve ever thought about it that way or not. You set the vision, but then the rest of the team carries it out. If you equip your team with the right tools, such as Team GPS, you can build better IT leaders, and this, in turn, will create a cascading effect of superior performance throughout your organization.

At Build IT, we offer executive education programs that cover the full range of leadership skills. You can learn more about our Communities of Practice courses of Fundamentals of Leadership and Transactional Leadership here.

[i] https://www.tandfonline.com/doi/abs/10.1080/1360312042000213877

[ii] https://journals.sagepub.com/doi/abs/10.1177/0021886318764346

[iii] https://bpspsychub.onlinelibrary.wiley.com/doi/abs/10.1348/096317907X202482