Leadership Styles: Transactional and Transformational

The tension between transactional and transformational approaches represents one of the biggest theoretical divides in the world of leadership and management. Let’s take a look at the key features of these opposing ideas, and how they apply to professional contexts.

Transactional leadership

Order

Rather than making significant structural changes, the aim of transactional leadership is to maintain order through good organisation. Focus is placed on increasing the efficiency of existing processes, making them faster, cheaper and more effective.

Instead of challenging current attitudes to pursue new objectives, activities are decided in line with organisational culture.

Compliance

According to the transactional approach, leaders are in a position of authority because their knowledge and skills are superior to the rest of their team.

As such, transactional models promote leaders making decisions, planning tasks, and then allocating those tasks to employees. Specific goals are set, with clear benchmarks for good and bad performance, and explicit agreements are made concerning tasks and expectations.

Reward and punishment

Transactional leaders believe that the way to get staff to perform is by putting clear rewards and punishments in place. This assumes that subordinates will only work out of self interest, rather than from a sense of purpose.

Constructive feedback is offered throughout projects, so that employees know when they are performing tasks adequately, and when improvement is needed.

Transactional leadership is ideal for organisations that have been established for a long time, and have found processes that produce the desired results. In contexts like this, there is often a specific set of pre-agreed objectives that need to be fulfilled, and the challenge is completing tasks more efficiently.

Transformational leadership

Inspiration

Transformational leaders believe that motivation through reward produces the minimum effort required. For example, an employee whose reward is his salary will only work hard enough to keep his job and maintain that salary.

Instead of using simple rewards and punishments as motivators, the aim is to help team members understand and share the need to succeed. With a vision of the goal in mind, employees will feel driven to achieve it. The project then becomes a journey, rather than a mere process.

Collaboration

In contrast with the transactional view that the leader is the expert, transformational adherents regard each member of the team as an expert in his or her own right.

Rather than being employed to take orders, team members have been selected because of their particular area of expertise, which contributes to the overall proficiency of the team. As such, each team member is expected to contribute to the planning and decision-making process.

Change

The clue is in the name: transformational leaders aim to “transform”, not maintain the status quo. Repeating the same processes produces the same results, so new ways of thinking are required to meet bigger and better objectives.

Transformational leaders encourage thinking outside of the box, so that innovative ways of working can be found. This can involve challenging the current culture of the organisation, and introducing new values and attitudes.

Transformational leadership is most effective in new organisations, or in organisations where old methods have gone stale, and are no longer producing results.

So, what’s the most effective leadership style? Join the debate here, and win a copy of Vlatka Hlupic’s influential book, The Management Shift.

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