Transformational vs. Transactional leadership – Which is better?







Despite leaders being defined by a number of key qualities, almost all these individuals are fundamentally classified as either a transformational, or transactional leader. Although both styles were introduced as mutually exclusive by James MacGregor Burns, today’s contemporary leaders conceive these styles to “exist on a spectrum”.

Transactional leaders are defined by their emphasis on chain of command and responsibility within the organization. Such individuals hold designations of authority within the organization and are tasked with managing order and overlooking the performance of subordinates whilst facilitating team performance. These individuals are result oriented, and gauge organizational success based on clearly defined rewards and penalties. Accordingly, performance appraisals are the go-to methods for these individuals when measuring the performance of their employees. Notably, this style of leadership is best suited for employees who are highly motivated by a system of reward and penalty. Note, whilst transactional leaders are publicly denounced within today’s corporate spectrum, this approach is still considered the most effective within highly urgent scenarios where innovation is not required. Steve Jobs is a good example of transactional leader.

A transformational leader on the other hand, is one that fosters change within social systems and employees. At its core, transformational leadership instils positive and valuable change within subordinates with the objective of moulding these individuals into leaders. Accordingly, transformational leaders utilize a multitude of mechanisms to uplift motivation, performance, and engagement of their followers. Some of the key responsibilities of a transformational figurehead include incorporating their employee’s identity with the mission and overall goals of the organisations; acting as mentors for their followers; understanding their follower’s strengths and weaknesses and allocating tasks that best compliment the skillsets of their followers. Bill Gates is a prime example of a transformational leader.

Accordingly, transformational, and transactional styles of leadership have their perks to an organisation. Whilst relationships founded on trust, and curiosity at an intellectual level creates a highly cohesive and coordinated workforce, with greater potential for innovation, the notion of a reward and rules system can also prove to be a powerful source of motivation. Ultimately, the most effective leaders will adopt a unique blend of characteristics that best compliment the needs of the organization.


References

Judge, T.A. and Piccolo, R.F. (2004) Transformational & transactional leadership: A meta-analytic test of their relative validity. Journal of Applied Psychology, 89(5), pp. 755-768.


 


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