Much has been done but more still needs to be done before we can fully
understand and confidently make use of the full range of transactional and
transformational leadership. Transactional leadership refers to the exchange
relationship between leader and follower to meet their own self-interests. It may take the form of contingent reward in which the leader clarifies for the follower
through direction or participation what the follower needs to do to be rewarded
for the effort. It may take the form of active management-by-exception, in which
the leader monitors the follower’s performance and takes corrective action if the
follower fails to meet standards. Or it may take the form of passive leadership, in
which the leader practises passive managing-by-exception by waiting for
problems to arise before taking corrective action or is laissez-faire and avoids
taking any action.