Transactional leadership is a style of leadership that focuses on supervision, organization, and performance. It promotes compliance with existing organizational goals and performance expectations through monitoring and the use of rewards and punishments. Transactional leaders are task-and outcome-oriented, and their leadership is only valid under strict time and resource bound. The problem with transactional leadership is that is based on incentives which are cognitive rewards, and passive management by exception, which is corrective action and punishment. The participative leadership approach is much more positive and self-empowering leadership theory. The concept behind participative leadership is something that is shared rather than possessed by a dictatorial leader. Empowerment, cooperation, and collaboration are the maxims of this leadership theory. Though the participative leader elicits collaboration from subordinates, he or she does not surrender formal authority for the decision-making process. Thus, creating an environment in which leadership power is diversified; however, leadership authority for decision-making remains with the manager.
Offering semiannual bonuses to employees during adverse economic conditions is not a useful means of motivating the kind of behaviours that an organization need in its struggle of surviving economic downturns. Semiannual bonuses are usually very costly for the company, especially in hard economic times. The management decides the cost be incurred during the bonus allocation period, and it is not fixed to a specific value. However, when the cost is distributed amongst all the employees, it ends up costing the organization a great deal of money. If the organization gives the employees bonuses once in a year, the collective cost incurred will be low as compared to the semiannual rewarding. Additionally, offering bonuses semiannually at economic hard times may make the employees reluctant in their work in case the bonus amounts do not meet their expectations. However, they are aware of the organizations’ economic conditions.