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Chapter II
Body I:

a.What is transactional leadership?

Transactional leadership is of the leadership style that is often used by many companies. Transactional leadership consists of focusing on clarifying employees’ roles and task requirements and providing rewards and punishments contingent on performance. This leadership assumes that the leader provide reward to subordinates when they complete their job effectively or look at their accomplishments to reward.

b. How McNerney implies transactional leadership with 3M?

Jim McNerney, chairman and CEO of 3M, was successful in making the change at the company. What he did is to praise to stock price increase and up to high until now. It is the most important thing that the good leader as well as a good manager makes wealth of owners of company by maximum the stock price. For others, to hold stock price even is almost unprecedented, but to 3M Company under leadership of McNerney, stock price is all time high up to 30 percent during McNerney term. McNerney worked for 3M from 2001 to 2005. During the time he was at 3M, the sales increased from $16 billion in 2001 to $21 billion in 2005. In addition, net income boost more than double from $1.4 billion to $3.1 billion. The fundamental principle that makes McNerney become reputation leader is transactional leadership. He spoke with Fortune’s Geoffrey Colvin, senior editor at large that: “I star with people’s growth, my own growth included. I don’t start with the company’s strategy or products. I start with people’s growth because I believe that if the people who are running and participating in a company grow, then the company’s growth will in many respects take care of itself”. That means he guides the employees to do what is the best inside them. Then he focuses on the courage to do the right thing. In addition, he motivates them to reach for performance, value to bring to the job. Sometimes, he rewards them even though they are done a little part of the project, but it means a lot to the employees. His leadership’s style expects and inspires employees and asks them to take the value that are important to their life and bring it to work. Moreover, he continues pushing people to grow and keep succeed, because it feels good if someone success and it feels great to work with people who are improve and achieve. According to Mike Trigg, a columnist for the Motley Fool ( said that McNerney not only “know how to run a diversified business, but also how to cut costs and increase efficiencies”(Miller, William H.). McNerney did consists of cutting cost and restructuring 3M by reduce about 7 percent of the company’ workforce. These cuts bring 3M save $300 million annually in mid 2002. Besides, McNerney did put into operation includes global sourcing by cutting number of supplier by concentrate on particular purchasing; indirect cost reduction that tighten up on travel between workers and outside service. McNerney has ability to view what is really happening in his workplace and with his competition, knowing what his employees are really good at and what is not good at. Then, he would spotlight on them. That is what he did at the company. “If there’s such a thing as star quality in a CEO, McNerney has it” (Miller, William H.)

c. How transactional leadership effect others?

Transactional leadership try to motivate the followers to achieve the goal such as in business environment, the workers try do the best to exchange wages, or candidates effort to work hard exchange to vote in political environment. Regardless of environment, its principal is like as exchange process that encourages people by appealing their self interest. However, it is also cause the selfish personal to gain or to promote for higher position, power, perks and politics. ( This corresponds to short term success with the goal to seek profit or increase maximum good organization. Because of using the reward or punish will cause the pressure to followers as well as easy to engage others in unethical or immoral practices. Therefore, to achieve long-term success, leader should use the transformational leadership because it is the most functional and positive leadership behavior.