Transformational Vs Transactional Leadership Flashcard
Leadership and Team Development – Fall 2011
This research paper addresses various aspects of transformational and transactional leadership styles. It mainly presents a comparative overview of these leadership styles. Further, it talks about an example of each transformational and transactional leadership in real-world. This leads to mentioning various applications that each leadership style finds in today’s business. Analysis of strengths and weaknesses or potential growth areas of both leadership styles is mentioned to help in better understanding of the subject. At last, the paper concludes with some discusses if knowing one’s leadership style and leadership style of your leader is important or not.
In today’s volatile economy, the business is rapidly changing and getting more competitive with each passing day. Therefore, in order to survive in this market, the organizations need to continuously come out with innovative solutions. In these situations, transformational leaders play a vital role by encouraging creativity from their followers and maximizing their performance and productivity. On the other hand, transactional leaders are needed to maintain the stability and achieve goals on a regular basis. In order to analyze or compare these two styles of leadership, a brief introduction to both the styles is needed.
According to Bernard Bass, “Transformational leadership is a form of leadership that occurs when leaders broaden and elevate the interests of their employees, when they generate awareness and acceptance of the purposes and the mission of the group, and when they stir their employees to look beyond their own self-interest for the good of the group. Transformational leaders are characterized by the following four major characteristics of their leadership also known as four I’s:
- Idealized influence or Charisma
According to Bass, transformational leadership is based on two factors: the attitude or behavior of the leader and what the followers think of the leader. Usually, transformational leaders behave in such a way that tunes their followers to believe that the leader has exceptional qualities. These leaders generally gain positional powers due to their personality. Due to their charisma, transformational leaders influence their followers on an emotional level thereby developing a relationship of trust and respect.
- Inspirational motivation
The transformational leaders inspire and motivate their followers by establishing a clear goal of achieving the follower’s needs and objectives. The leaders are admired by their followers. These leaders encourage their followers by addressing their needs and taking risks to solve their problems. They always preach optimism to their followers and keep the team spirit alive.
- Intellectual stimulation
This quality of transformational leaders encourages creativity in their followers. They motivate the followers to approach a particular problem in a different way without condemning their ideas. They help their followers to develop new and innovative methods of approaching a problem by questioning their assumptions.
- Individualized consideration or individualized attention
This character makes the transformational leader act as a mentor or guru. The leaders understand the need for individual attention. These leaders follow the principle of ‘managing by walking around’, where the leaders have one to one interaction with their followers or employees of the organizations and the leaders concentrate on their individual needs. Different types of transformational leaders Generally transformational leaders are divided into the following four types:
- Intellectuals: These leaders visualize paths that can address everybody’s needs. They usually have a higher moral purpose and have the capability to change the society. Examples: Madison, Bentham etc.
- Reformers: These leaders usually lead reform movements and involve enough followers to change a section of society. Examples: Grey, Alexander etc.
- Revolutionaries: These leaders work towards changing the entire society and usually demand sacrifice from their followers. Examples: Lenin, Louis XVI etc.
- Charismatic: These leaders carry a high image in the eyes of their followers. Their personality is very impressive and influences the follower to admire these leaders. Examples: Joan of Arc, Kennedy, Moses etc.
Also, transformational leaders need to have some skill sets like self-management skills, interpersonal communication skills ,problem-management (coaching, counseling and mentoring) skills ,consultation skills (team and organization development) , and versatility (style-shifting, role-shifting, and skill-shifting) . Transactional Leader According to Bass, the basis of transactional leadership is mutuality or reciprocity. Transactional leaders develop a relationship with their followers by motivating them for a reward, such as performance ratings, pay, recognition, and praise.
These leaders practice both active and passive management by exception. Some of the characteristics of transactional leader can be stated as follows:
The transactional leaders maintain a straight forward relationship with their followers. They reward their followers on performing well and punish them or hold their rewards if the goals are not met.
- Resistant to change
The transactional leaders are not open to changes at workplace. These leaders are satisfied with the existing situation and provide no room for change or transformation. They do not welcome innovative ideas from their followers. They have a set of criteria to evaluate the performance of their followers.
The transactional leaders generally make the decisions and there is no scope of participation of the followers. The followers are expected to follow the rules or directions from the leader, the lack of which results in punishment.
- Acknowledges performance
Transactional leaders have a set of standards to observe the performance of their followers and they constantly monitor their performance with respect to achievement of goals. They recognize and acknowledge a good performance by rewarding them for that.
Transactional leaders are of four types:
- Opinion leaders: It involves less tangible transactions. Examples are McCarthy, Roosevelt etc.
- Group leaders: It involves bargainers and bureaucrats. Example is William F. Whyte’s Street Corner Society etc.
- Party leaders: It involves parties struggling for power. Examples are Jefferson, Lenin etc.
- Legislative leaders: It involves concepts of bargaining, reciprocity and pay off.
- Executive leaders: It involves the use of leader’s own character and other attributes like prestige, self-confidence and popularity.
Transactional leader J. M. Burns introduced the concept of transformational and transactional leadership in the year 1978.
- Decision making: Transformational leaders involve their followers in the decision making process and invite and encourage new ideas. This helps in making an effective decision. On the other hand, transactional leaders are not open to ideas from their followers and therefore follow the regular norms to provide stability but obstructs creative decision making.
- Job satisfaction: Transformational leaders pay attention to individuals and their needs and involve them in important decision-making process. Therefore, their followers have a high rate of job satisfaction. Whereas, transactional leaders neither encourage creativity nor do they involve the followers in decision making process rather they tend to punish the employees who perform less than expected. Therefore, their followers have a lower job satisfaction rate.
- Innovation: Transformational leaders welcome innovative ideas from their followers. This helps the growth of an organization by introducing a break-through technology in the market or by coming up with an innovative way of selling products. On the other hand, transactional leaders block the progress of their organization by discouraging innovative ideas from employees.
- Power: Transformational leadership is based on interaction and influential power whereas transactional leadership is based on directive power.
- Goals: Transformational leadership surpasses everyday issues to concentrate on long term goals whereas transactional leadership concentrates on everyday activities and immediate needs i. e. short term goals of the organization.
- Relationship: In transformational relationship, the leader-follower relationship is enduring but takes time to develop as it is based on influence whereas in transactional leadership, the leader-follower relationship is established quickly but ends when the transaction is complete.
- Locus of control: According to Sanders, Hopkins and Geroy, Transformational leaders show a high internal locus of control whereas transactional leaders show an external locus of control.
- Transformational leadership is the leadership of change whereas transactional leadership is the leadership of status-quo.
Transformational leadership is required for any organization to succeed as in transformational leadership the leader and followers help each other to take the organization to a higher level by combining both of their efforts. I would like to discuss examples of each transformational and transactional leadership, one being the example of a successful airline carrier in U. S and another is an example from my personal experience. Example of transformational leadership: The first example that I would like to quote is of transformational eadership at Southwest Airlines. Herb Kelleher was one of the three founders of southwest Airlines and served initially as its president for around thirty years. Transformational leadership is often derived from servant leadership. In servant leadership, the leaders support the followers and develop a relationship based on trust. Similarly, transformational leadership takes a step forward by motivating and inspiring the followers in such a way that they forget their self-interest and perform in an exceptional way which is more than what is expected from them.
At Southwest Airlines, Kelleher practiced this kind of leadership to help his organization grow. They always maintained that their employees come first and customers second. Their practice of encouraging a two way communication between leaders and employees spurred a lot of ideas which helped southwest gain popularity in this business. Some of these ideas were buying gate space and travelling ticketless. A lot of these ideas improved customer service and increased customer satisfaction. Transformation in an organization does not simply involve the follower aspect of leadership.
A transformational leader also makes many other strategic decisions and these appropriate decisions along with the support of employees result in the success of an organization. Kelleher also introduced some appropriate and important decisions like hiring Hispanics in the southwest region to help customers communicate better, offering sale or low fares very often etc. Kelleher introduced a culture where every employee is happy to help others. He demonstrated this to his followers by staying late in office during crisis situations and practiced participative approach with employees.
The employees are addressed as collaborators while interacting with managers and they are believed to strengthen each other. Therefore, employees of Southwest are capable of handling changes well and facing challenging situations. Example of transactional leadership: In my personal experience, I had an experience of working with the Hospital Superintendent of Ujjain Government Hospital in India. I would describe him as a very successful transactional leader. He used ‘carrot and stick’ policy to run the hospital well and achieve the goals set by the government for the year. He believed that rewards are a motivating factor for the employees.
Therefore, he usually offered the employees a reward according to their needs and asked for the task completion given to that employee. Generally, he used to offer a desired department to a junior nurse during their duty rotation on demonstrating good performance and punished them by placing them in tuberculosis or infection ward on not performing well. Similarly, trainee doctors were transferred to far off villages on not performing well. Although, this type of leadership didn’t make him a popular leader but he achieved the targets and goals set by the government and run the hospital efficiently.
Analysis and Application
One style of leadership cannot be considered best for all types of jobs. Different jobs require different styles of leadership. Generally, this can be divided based on skilled and unskilled jobs. For example- shift supervisors of housekeeping at stores or supervisors involving monitoring of low wage employees should practice transactional leadership whereas skilled jobs should be managed by transformational leaders. This is due to the fact that leaders at high positions need to come up with ideas and proper mergers and acquisitions that can transform the face of the organization.
Transformational leadership skills are required to grow a small business in a short span of time. Therefore, both transactional and transformational leadership styles find place in different level of jobs in an organization. Strengths and Weaknesses Transformational leader: The biggest strength of transformational leaders is that they can influence their followers. Therefore, when an organization is undergoing a major change, these leaders can motivate their employees and orient them towards new organizational goals to achieve maximum productivity and input from them.
It also helps in uniting the employees during a crisis situation. Under their leadership, an enthusiastic environment is created at the workplace and possibility of future leaders emerging from lower hierarchical level is high. The major drawback of transformational leadership is that it requires its leaders to have some skill sets mentioned earlier and employees to be intellectually developed to understand the concepts and act accordingly. Therefore, success can be achieved only if the leaders have the potential and employees are smart and intelligent.
The biggest strength of transactional leadership is that its theories are simple and concepts are easily understood by the followers. Unlike transformational leadership it is quick and effortless for the leaders to work with rewards and punishment theory as it does not involve influencing followers. This leadership uses tested and proven theories and maintains stability in the organization. Transactional leadership is not dependent on factors like intelligence, emotions, or task complexity. Transactional method can be very efficient when the work is time bound.
The drawback of transactional leaders is that they ignore emotions and social values and believe that employees are motivated by rewards and punishment. It can be used to exploit people and does not allow employee’s talents and ideas to flourish and therefore the employees are not able to give their best. It hinders the possibility of emergence of future leaders from lower levels of hierarchy. All this in turn harms the growth of an organization.
Transactional style has been the most practiced style of leadership. According to Maslow, every individual has a hierarchy of needs ranging from physiological to self-actualization.
A transactional leader takes advantage of these hierarchical needs to present an exchange favor to their subordinates. A transformational leader on the other hand takes advantage of the highest need i. e self-actualization need to influence their followers. So, is there a particular style of leadership is more successful in an organization? Do leaders need to know their own style and do followers need to know their leader’s style of leadership? In my opinion, both transformational and transactional leaders are required at different positions and situations in an organization.
A leader at the higher level e. g CEO of an organization needs to be a transformational leader to encourage creativity and have a long term vision and goal. He can also inspire and retain good employees of the organization. However, the head of security department needs to be a transactional leader to execute daily operations effectively. Similarly, military needs to operate on specific norms. It is often seen that a successful leader of an organization is not so successful at another organization. This happens when a follower-centered leader joins a leader-centered organization or vice-versa.
Therefore, it is very important for the leaders to understand their own leadership style and adjust or join organizations accordingly. Similarly, it is required by the followers to understand the leadership style of their leaders. If an employee working in follower-centered environment joins a leader-centered organization, his creative ideas would not be valued there. In conclusion, I would like to say that a successful organization requires the right mix of transformational and transactional leaders at different positions and intellectual and other skilled employees in proper groups with appropriate leaders.
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