Clearing the transaction log isn't the right way to go. Nor is compressing it. At worse this can lead to a situation where you cannot restore your database anymore until next full backup is made.
First, check what is the recovery model of the database. If it is full then ensure that you make full and transaction log backups regularly. For the concepts see: http://msdn.microsoft.com/en-us/library/ms189275.aspx
The cause for the system slow response time can be quite frankly anything. Investigate the workload, CPU usage, memory usage, possible paging on the server, disk queue lengths and so on. When you have identified the bottleneck then start investigating the reason and corrective actions.