Transactional Leadership Vs. Transformational Leadership


Number of Leadership theories evolved on the basis of Trait, Behavioral, Transformational, Situational, Charisma. Researchers and thinkers made efforts linking some of the theories across these leadership islands. But each model has its own pros, cons, assumptions & limitations. Latest researches are conducted on Situational & Transformational leadership styles. Leadership gurus presented new models as variations to the already existing models. Max Weber, MacGregor Burns, Bernard M.Bass, Warren Bennis & Nanus are few important researchers in the area of transformational leadership.

Understanding the difference between transactional and transformational leadership is vital in getting the whole concept of transformational leadership theory.

As a starting point, let us review our everyday life. In general, a relationship between two people is based on the level of exchange they have. Exchange need not be money or material; it can be anything. The more exchange they have the more stronger the relation. Your manager expects more productivity from you in order to give good rewards. In this way, if something is done to anyone based on the return then that relation is called as ‘Transactional’ type. In politics, leaders announces benefits in their agenda in exchange to the vote from the citizens.  In business, leaders announces rewards in turn to the productivity. These relation is all about requirements, conditions and rewards (or punishment). Leaders who show these kind of relationship are called ‘Transactional Leaders’.

In life, at one point of time, things happen without expectation from other side. Say, mom’s dedicated service to her kid. Mom doesn’t expect anything from the child and the service she provides in raising the child is  unconditional, dedicated, committed. Mom plays a major role in shaping up the kid’s future life. This type of relation is called as ‘Transformational’. Leaders do exist in this world with these behaviors. Transformational Leaders work toward a common goal with followers; put followers in front and develop them; take followers’ to next level; inspire followers to transcend their own self-interests in achieving superior results.

Transactional Leader:

approaches followers with an eye to exchanging one thing for another … Burns

pursues a cost benefit, economic exchange to met subordinates current material and psychic needs in return for “contracted” services rendered by the subordinate …. Bass

Transformational Leader:

“recognizes and exploits an existing need or demand of a potential follower… (and) looks for potential motives in followers, seeks to satisfy higher needs, and engages the full person of the follower” … Burns

The leader who recognizes the transactional needs in potential followers “but tends to go further, seeking to arouse and satisfy higher needs, to engage the full person of the follower … to a higher level of need according to Maslow’s hierarchy of needs” … Bass

 “Transformational Leader facilitates a redefinition of a people’s mission and vision, a renewal of their commitment and the restructuring of their systems for goal accomplishment. It is a relationship of mutual stimulation and elevation that converts followers into leaders and may convert leaders into moral agents. Hence, transformational leadership must be grounded in moral foundations”….(Leithwood, as cited in Cashin et al., 2000, p.1)

As exactly said by Bass – “the transactional leaders work within the organizational culture as it exists; the transformational leader changes the organizational culture”.

Following table shows difference of transactional and transformation leadership[1].

Transactional Leadership Transformational Leadership
* Leaders are aware of the link between the effort and reward

* Leadership is responsive and its basic orientation is dealing with present issues

* Leaders rely on standard forms of inducement, reward, punishment and sanction to control followers

* Leaders motivate followers by setting goals and promising rewards for desired performance

* Leadership depends on the leader’s power to reinforce subordinates for their successful completion of the bargain.

* Leaders arouse emotions in their followers which motivates them to act beyond the framework of what may be described as exchange relations

* Leadership is proactive and forms new expectations in followers

* Leaders are distinguished by their capacity to inspire and provide individualized consideration, intellectual stimulation and idealized influence to their followers

* Leaders create learning opportunities for their followers and stimulate followers to solve problems

* Leaders possess good visioning, rhetorical and management skills, to develop strong emotional bonds with followers

* Leaders motivate followers to work for goals that go beyond self-interest.

Initial studies portrayed Transactional Leadership and Transformational Leadership as mutually exclusive, but Bass viewed the transactional & transformational leadership as continuum rather than opposites. The transformational leadership style is complementary to the transactional style and likely to be ineffective in the total absence of a transactional relationship between leaders and subordinates.

Based on detailed studies of various works in Transformational Leadership reveals following broader characteristics of Transformational Leader which includes (not limited to) [3], [4]

  •     Clear sense of purpose, expressed simply
  •     Value driven (e.g. have core values and congruent behavior)
  •     Strong role model
  •     High expectations
  •     Persistent
  •     Self-knowing
  •     Perpetual desire for learning
  •     Love work
  •     Life-long learners
  •     Identify themselves as change agents
  •     Enthusiastic
  •     Able to attract and inspire others
  •     Strategic
  •     Effective communicator
  •     Emotionally mature
  •     Courageous
  •     Risk-taking
  •     Risk-sharing
  •     Visionary
  •     Unwilling to believe in failure
  •     Sense of public need
  •     Considerate of the personal needs of employee
  •     Listens to all viewpoints to develop spirit of cooperation
  •     Mentoring
  •     Able to deal with complexity, uncertainty and ambiguity

References:

1. Comparison studies of different transformational authors – Bass, Cacioppe, Gronn, Hughes.et.al, Popper & Zakkai by Vanisha Balgobind in “The impact of Transformational Leadership on Subordinate Job satisfaction” dissertation work – June 2002.

2. Transformational Leadership by Colonel Mark A. Homrig, 21 Dec 2001. Retrieved from http://leadership.au.af.mil/documents/homrig.htm as on Aug 1st 2008.

3.Transformational Leadership: Characteristics and Criticisms by Iain Hay. Retrieved from http://www.leadingtoday.org/weleadinlearning/transformationalleadership.htm as on 1st Apr 2012.

4. Bass (1990a); Cox (2001); Epitropaki; Hall, Johnson, Wysocki & Kepner (2002); Lussier & Achua (2004); Stone, Russell & Patterson (2003); Tichy & Devanna (1986); and University of Regina.

My Other posts on Transactional & Transformational Leadership:

1. Is anything called transactional leadership exists?

2. What are the components of Transformational Leadership?

52 thoughts on “Transactional Leadership Vs. Transformational Leadership

  1. As an educational leadership student, I have come to realize that, it is best to practice different types of leadership styles and not necessarily maintain one style. But let’s keep changing the styles to suit the situation at hand and that will make us good leaders.

    • It is a continuum theory – i.e. at one end Transactional is there and another end Transformational is there & some more stages in between. As I admire Situational Leadership, I recommend using transactional or transformational based on situation (followers competency, commitment & current situation) instead of sticking to one leadership always.

      • I agree with you sir. I like your idea for “Situational Leadership” All theories are applicable based on the situation. I’d like to use it for my dissertation.

    • I think that both transformational and transactional leadership can work together, but I do think that one way is better. I think that transactional leadership can instill a “this for that” mentality in the minds of employees and create culture where rewards are expected rather than appreciated. Most people want to be developed rather than enticed or controlled through incentives, and I think that is part of the difference between transformational and transactional leadership.

      I wrote an article on this very same topic here: http://artofbusinessmanliness.com/transactional-leadership-no-good/

  2. Dear Mr. Babou,

    I am Giang, lives in HoChiMinh City – Vietnam. I am doing thesis about affect of transactional and transformational leadership on employee commitment. I am trying to review background theory about transactional and transformational theory.

    I am finding works of Bass 1985 and Burn 1978 about two concept. Please kindly help to share me these theories if it is available.

    I am really thankful for your support. I will share findings of mine for your reference if you are interested in this field in Vietnam context.

    Best regards,
    HuongGiang

    • Hi Giang,

      Thanks for your comment.

      Bass published a paperback book – “Transformational Leadership (Second Edition) BY Bernard M. Bass, Ronald E. Riggio, Lawrence Erlbaum Associates, Inc.,2006

      I refer this book for my studies. This book is available all leading bookshops. This gives in-depth detail of Bass’s work & best reference material.

      Burns also wrote a book called “Transforming Leadership”.

      Regards,
      S.Babou

      • thanks a lot for your great efforts in that field, but here I need help to answer this question: What are the Similarities and Differences between Transactional and Transformational Leadership and the appropriateness of each style dependent upon situational factors.
        Thanks in advance.
        Sanad Haider

  3. Pingback: Transactional vs Transformational Leadership « QSP Leadership

    • Hi Tes, This is really a very interesting question. Straight forward answer is understanding and following components of Transformational Leadership. Transformational leaders shows following 5I’s:

      1. Idealized Attributes (IA)
      2. Idealized Behaviors (IB)
      3. Inspirational Motivation (IM)
      4. Intellectual Stimulation (IS)
      5. Individualized Consideration (IC)

      Earlier, IB & IA where termed as single component called Idealized Influence but later it was divided to add more clarity. In idealized influence (attributes), followers identify with and emulate leaders seen to have attainable vision. Idealized influence (behavior) refers to that behavior that results in people wishing to follow leaders (Barnett, McCormick & Conners, 2001)

      I presented explanation of each components in this post – http://leadershipchamps.wordpress.com/2008/09/10/components-of-transformational-leadership/
      I also wrote my idea on how to practice Transformational Leadership in Social Networks like facebook in following blog post – http://leadershipchamps.wordpress.com/2011/01/20/how-do-we-practice-transformational-leadership-in-facebook/

      These article will give you overall understanding on how to develop yourself as Transformational Leader.

  4. Pingback: 1. THEORIES AND MODELS OF LEADERSHIP AND MANAGEMENT « culcprem

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  6. I have been working for some time training and developing sales managers in their leadership capabilities. Recently someone asked me if we focus on developing leaders (individuals) rather than leadership capability (function?). My question is are we asked to deliver leadership development or leader development? What should be the focus for developing transformational leaders?

    • Leaders are the one who show leadership qualities. Leadership development is understanding different leadership theories, traits, qualities of other leaders. Once different leadership styles are introduced, an individual need to analyze their personal style and adapt one/or combination of the existing leadership styles. Individuals become leaders when they are accepted by a group of individuals called followers.

      In turn a leader can develop another leader based on his interactions with that individual. For training, you can perform leadership development & leader development is more on the individuals hand & their self awareness.

      • Thank you for responding Babou. I agree with your sumary—leader development certainly should be the responsibility of the individual after exposure to theory—opportunity to practice, etc. I have another query:
        The pharmaceutical environment is heavily regulated and the pace and type of change has become relentless. It has begun to take a toll on personnel—especially customer-facing sales staff. I think the transformational leadership style is best in this type of environment—leaders who demonstrate these skills are better suited to keep employee engagement high, encourage sharing discretionary effort to meet goals and make sure talent doe not flee. Please share your thoughts.

        Valerie

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  8. Hello! Can any identify me examples of transformational and transactional leaders in the world today? I need it for my assignment. Thank You so much.

    • Hi Hollison, Currently, I don’t see any transformational leaders in politics. Even I think I get leader names belongs to either religious leaders or leadership teaching coaches.

  9. many thanx to u Babou…for your clarification..anyway can you guys

    identify a transactional leader and transformational leader and mentioned why you consider them to be so?….

    any clarifications on that?…

  10. grt effort babou explanation was lucid.Can i ask for ur insight over SIGNIFICANCE of each type of leadership esp. in context to PUBLIC SERVICES/OFFICES with a few case study.Thnx

  11. Pingback: Transactional Leadership Vs. Transformational Leadership « Smart Tech

  12. transactional leadership also helps in to change the organizational culture it is to some how playing a role as like of transformational leadership::

    • Hi Maro, I liked your question very much.

      Transactional leadership occurs when the leader rewards the team member, depending on the adequacy of the team member’s performance. Transactional leadership depends on contingent reinforcement, either positive contingent reward (CR) or the more negative active or passive forms of management-by-exception (MBE-A or MBE-P). [1]

      Here are some situations I can think of.

      * Use CR – when you found team member is motivated with some kind of reward & you can arrive a mutual agreement with your team member on reward he is getting after the work done is expected fashion.

      * Use MBE-A – when you don’t want a mistake/error done by your team member propagates further that may jeopardize the project. You actively get the statuses, problems, challenges, develop processes, ensure adherence of project processes, conduct reviews, etc so that no error goes beyond certain time period. This really required when you manages a critical project & have time to do micro management. This is used when team member is having less experience in the work area. MBE-A may be required and effective in some situations, such as when safety is paramount in importance[2].

      * Use MBE-P – when you don’t really care much about the errors or deviance as soon as it occurred. You have some time to correct them & they are not critical. This is followed when team member is having good experience in the area of working.
      Leaders sometimes must practice passive MBE when required to supervise a large number of subordinates who report directly to the leaders[2]

      I can mention a lot of situations to practice transformational leadership. One simple example is school teacher. Let me put the whole answer here as separate post with situations for transformational leadership.

      Thank you once again for coming up with this valuable question.

      Reference:
      1. Significant Behaviors of Transactional Leadership – http://leadershipchamps.wordpress.com/2008/09/19/significant-behaviors-of-transactional-leadership/
      2. Transformational Leadership (Second Edition) BY Bernard M. Bass, Ronald E. Riggio, Lawrence Erlbaum Associates, Inc.,2006

  13. great article! Which between d two should be adopted. My lecturer says transactional leader is best 4 efficiency and effectiveness. How true is this? Thanks a thousand bucks!

    • Hi Daniel,

      Thanks for your comments.

      To best of my knowledge, I agree with the existence of both leadership styles in everyone. As we exposed & practiced transactional leadership for many decades – it was considered as the best approach, but there is no complete truth in that. One need to evaluate the situation and decide whether to go with Transactional or Transformational & should not stick on to one always in any situation.

      You lecturer says so because he practiced transactional in many (appropriate) situations & found to be producing results. Also transactional is practiced by teachers a lot – “praise the student who gets high grade and punish the one who takes lesser. As they get good results from their class, they will get good name from principal”. They will understand the actual taste of teaching if they start practicing Transformational.

  14. Hi,
    Very informative article. I would like to inquire what are the limitations of both the transactional and transformational leadership styles and what challenges does the implementation of each pose for leaders in terms of resistance to these two styles of leadership.

    Thanks

    • Hi Lisa,

      Thanks for your comments. Both Transactional & Transformational has its own advantages & disadvantages which is based on situation. Bass dealt challenges in Transactional & Transformational Leadership in organizations in very detailed manner in his book (Transformational leadership: industrial, military, and educational impact By Bernard M. Bass).

    • Hi this is Hariom. since leader has to deal with very dynamic-human factor.As i write so dynamic aspect itself brings a lot of uncertainty say limitation so in regard to LIMITATION of each leaership style it can b said Transactional leader can b effective temporarily with no permanent motivation.Therefore challenge inherent seems to be lacking permanent source of motivation and every need is not visibly always practically fulfilled-a constant source of irritation to leader.Transformational style is appreciable but more desired then done since unquestionably its demanding timewise where organisation and situation find it dificult to afford it but then every organisation should vie for it whenever found feasible for it has most desired advantage – evolved,commited manpower.will try find more idea.

  15. first,i want to thank you for the information provided in this precious web site.my question is that?:does transactional based on the idea of exchange and what followers get in return.if yes how.
    thank you

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