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?