In today’s workplace, organization charts are flatter, reporting relationships are more temporary, and employees are much more willing today to advocate for what they want and need. Managers are finally seeing old-fashioned models of hierarchical authority become a thing of the past.
Transactional management can be a powerful incentive tool to drive performance.
But the short-term, transactional nature of work today doesn’t mean managers must be at a disadvantage. In fact, leaning into transactional management can help you tap into more sources of leadership power.
These are six ways to make your management more transactional.
1. Understand, accept, and embrace management as a day-to-day negotiation.
This is the new reality of managing people. Accepting it means abandoning the top-down assumptions of hierarchical leadership and letting go of insult when direct reports resist your authority and make demands. It means constantly answering the questions that are always on every employee’s mind: “What’s the deal around here? What do you want from me? And what do I get from my hard work—today?”
Does that mean that everything is open to negotiation? Of course not. In fact, to become a transactional manager, the first thing you must do is decide what is non-negotiable. What are the basic performance standards for which employees should expect nothing more than to be treated fairly, paid for their work, and keep their jobs? Those are your deal-breakers. Whatever they are, be very clear about them. That becomes your starting point. Just remember that you’ll have to remind people of that basic “deal” on a regular basis.
2. Recognize that everything is up for negotiation.
Don’t be alarmed by the idea of negotiation. Many of your employees are probably negotiating with you already on a regular basis. It’s only a problem if you are not negotiating back.
This means you have to be prepared to negotiate and get really good at it, taking control of the dynamic and using the ongoing negotiation to drive performance. Let’s say you want an employee to be ambitious about achieving a particular set of goals by a particular deadline. How do you know what’s fair? What’s reasonable? You find out by negotiating. Let market forces decide. See what negotiation yields.
3. Tie financial rewards and detriments only to measurable instances of employee performance.
There are often opportunities to distinguish between an among employees on the basis of performance in ways that directly affect the compensation. Depending on the situation, this can mean any of several things, such as:
- Scoring high level performers higher and lower level performers lower on project evaluations and in semi annual and annual reviews.
- Working with limited bonus pools and allocating funds among team members according to performance, rather than evenly across the board.
- Having to go to bat to get additional discretion or additional funds so that you can, in fact, reward the performers who deserve to be rewarded.
For this strategy to succeed, you must:
- Give every individual a chance to set and meet ambitious goals and deadlines on a regular basis.
- Keep an accurate ongoing analysis of each individual’s performance.
- Document everything clearly and consistently in writing.
4. Also tie non-financial rewards to employee performance.
It is true that in most organizations, shared rewards and detriments are often allocated without regard to individual performance. And it is true that these do contribute to important business goals like employee wellness, corporate culture, overall morale, and feelings of belonging. But unless you want to run a club instead of a business, you should make as many rewards and detriments as you possibly can purely be contingent on measurable individual performance.
This means you often must be creative and use the discretion and discretionary resources at your disposal. Use your power over such things as:
- Resources and work conditions
- Assignment of tasks
- Training opportunities
- Scheduling
- Recognition
- Exposure to decision makers
- Work locations and work partners
5. Use each employee’s unique needs and wants to make custom deals.
Every employee has at least one needle and haystack—a unique need or want. Look for these needles in your individual performers and use them to make custom deals in exchange for exceptional performance.
Look for something the employee really needs or wants and would probably be willing to do more to get—such as work longer, harder, smarter, faster, or better. You can find a way to offer the individual that needle, and you are in a position to make a custom deal.
Now, of course you cannot do everything for everybody. What you need in order to meet certain wants and needs may simply be unavailable. At such times, you have to tell the direct report, “I just can’t do that. What you want isn’t possible. But maybe I can do this instead.” Although not ideal, this is better than saying, “There’s nothing I can do for you.”
6. Have the discipline and guts to enforce every deal you make.
You must be prepared to enforce every deal you make, whether it’s for increased financial rewards non-financial rewards, or needles in a haystack. No deals should be permanent. Every deal should be on the table all the time, contingent on the direct report making good on their commitments to you. When your direct reports deliver for you, you deliver for them. If they fail to meet expectations, you must call them on that failure and withhold the quid pro quo.
Don’t be afraid to reward some people more than others. That’s not unfair. Quite the opposite, it’s the only fair way to do business. Give every person the chance to succeed, the chance to meet the basic expectations and then exceed them, and the chance to be rewarded in direct proportion to his or her performance.
