Archer Baseline Assessment Practice Test

The potential downside of transactional leadership lies in its heavy reliance on a system of rewards and consequences to motivate team members. This model focuses on clear structures, tasks, and rewards for performance, which can lead to a lack of intrinsic motivation among employees. When leaders prioritize transactional exchanges—where performance is only acknowledged through external rewards—employees may become less engaged in their work because they're not encouraged to take initiative or think creatively. This can stifle innovation and limit the potential for individuals to develop their skills beyond the outlined tasks, as their focus becomes solely about meeting the criteria for rewards rather than embracing new ideas or taking risks. Thus, while transactional leadership can effectively manage performance in the short term, it may hinder long-term growth and adaptability within a team.