Leading public service organizations

Public management literature has often debated the usefulness of transactional leadership. Some scholars are concerned that transactional leadership strategies will harm public employees´ perceived competence (i.e. their self-efficacy), but in fact there are also arguments for the opposite result - that feelings of competence are strengthened by conditional rewards, because they provide feedback about performance. This study explores how 91 high school principals´ reported use of rewards and sanctions affect perceived professional competence among their 1,921 teachers. The results show that the use of rewards strengthens self-efficacy, and that the use of sanctions does not seem to have negative effects. Furthermore, the teachers´ self-efficacy can be linked positively to organizational performance. This suggests that rewards can be an important tool for managers in the public sector.