Transactional vs Transformative Leadership
The concept of leadership is quite simple: a leader is one that aims to motivate and guide others to achieve an agreed objective. However, when we consider the diversity of leaders, it starts to become a little more complicated. Immediately we start to notice vast differences in how each person leads.
Commonly known as leadership styles, it refers to a leader’s behavioral characteristics when directing, motivating, mentoring, and achieving work expectations. Fortunately, researchers have delved deep into this topic to ascertain how to better communicate and motivate teams. As a result, different theories and frameworks were developed to help identify and understand the various leadership styles.
Most leadership styles tend to be either transactional or transformative. Generally, each of these types of leadership has different ways to influence attitudes and motivation among the employees.
Transactional leadership
As the name suggests, the transactional leadership style views a leader-employee relationship as a transaction. Leaders who adopt this highly directive style base leadership on a system of rewards and penalties in order to motivate the employees. For example, higher pay given in an exchange for increased productivity. Transactional leaders use a pragmatic approach to tackle problems, think of solutions, and drive people to get things done. As a result, employees receive definite and clear commands and are often carefully monitored to ensure that these expectations are met.
Pros
- Transactional leadership tends to be most effective when problems are straightforward and clear. This style also works better for crisis situations where a solution is needed immediately.
- As the leader is in command, it removes room for confusion and guesswork errors.
- Transactional leadership creates clearly defined roles. Employees know what they are told to do and what they can achieve in exchange for their performance.
- As this leadership is based on different sources of motivation, employees are motivated to perform well and achieve these rewards.
Cons
- A transactional approach discourages out-of-the-box thinking and creative input from the employees because of its straightforward leadership.
- There is a lack of focus on building relationships within the work environment. Because of the strict focus on using rewards to motivate employees, transactional leaders may not consider the working environment and tend to miss an attempt to build relationships with their employees.
Transformational leadership
Transformational leadership is a leadership style that directs positive changes to the employees. Not only do these leaders aim at achieving team objectives, but they also do so by focusing on employee needs and encourages them to reach their full potential. Unlike transactional leaders, transformational leaders find solutions by brainstorming and encouraging creativity among everyone in the team through an approach that inspires, nurtures, and develops the employees.
Pros
- Research shows that this style of leadership is associated with positive effects on career employee development, satisfaction, and wellbeing as their needs are considered when expectations are to be met.
- Employee creative input is encouraged and valued.
- The experience is considered purposeful and enjoyable by the employees as their own needs and growth are highlighted in the process.
- Leaders are value-driven and ethics-focused which encourages a shared group vision.
Cons
- Employees may experience confusion as transformational leaders tend to take more risks in their approach to meeting expectations.
- Transformational leadership tends to become too conceptual as proper task focus may lack for those employees that need proper guidance.
Research has shown that employees are also more likely to feel inspired, empowered, and stimulated to be part of the team and exceed in their team responsibilities when they receive leadership that is transformational. As a result, employees led by a transformative leader are more satisfied and often report higher levels of individual and team performance.
Whether you learned about leadership styles after reading this blog, it is likely that you are already applying some of the elements of transactional and transformative leadership. Here are some questions that you can use as a start to reflect on if you are leading with components of transformational leadership within your professional work: These questions were adapted from and inspired by Carless, Wearing, and Mann’s (2000) work.
- Creative: Do I encourage people to think outside the box? Do I ask questions or simply take policies and procedures at face value?
- Interactive: Do I encourage and recognize my employees for the work they are doing? Do I make myself accessible?
- Visionary: Do I articulate a clear vision of the future for my employees?
- Empowering: Do I actively work to build trust and foster teamwork?
- Passionate: Do I show enthusiasm for the work I am doing? Do I provide extra encouragement when my employees seem discouraged?
- Relationship builders: Do I take the time to get to know my employees personally?
- Influence agents: Do I strive to be a good role model to my employees?
To sum up the difference between transactional and transformative leadership: transactional leadership looks at how to get things done through the use of rewards and punishments, and transformational leadership looks at how to inspire and motivate people to do things.