Transformational vs Transactional LeadershipBy dlldixon | Studymode.comTransformational versus Transactional Leadership This document is intended to compare and contrasts Transformational and Transactional Leadership and discusses how they are used in management of organizations by managers. Before we can delve into the comparison or contrast, we first need to define what we mean by each of these terms we are comparing and contrasting. Transformational Leadership Defined This type of leadership can best be defined as a process in which "leaders and followers help each other to advance to a higher level of morale and motivation". This style of leadership is intended to create significant changes in the life of people and organizations. This leadership style redesigns perceptions and values, and changes expectations and aspirations of employees. Unlike in the transactional approach, it is not based on a "give and take" relationship, but on the leader's personality, traits and ability to make a change through example, articulation of an energizing vision and challenging goals. Transforming leaders are idealized in the sense that they are a moral exemplar of working towards the benefit of the team, organization and/or community. The extent, to which a leader is transformational, is measured first, in terms of his influence on the followers. The followers of such a leader feel trust, admiration, loyalty and respect for the leader and because of the qualities of the transformational leader are willing to work harder than originally expected. These outcomes occur because the transformational leader offers followers something more than just working for self- gain; they provide followers with an inspiring mission and vision and give them an identity. The leader transforms and motivates followers through his or her idealized influence or (charisma), intellectual stimulation and individual consideration. In addition, this leader encourages followers to come up with new and unique ways to challenge the status quo and to alter the environment to support being successful Now 30 years of research and a number of meta-analyses have shown that transformational and transactional leadership positively predicts a wide variety of performance outcomes including individual, group and organizational level variables. The full range of leadership introduces four elements of transformational leadership: 1. Individualized Consideration the degree to which the leader attends to each follower's needs, acts as a mentor or coach to the follower and listens to the follower's concerns and needs. The leader gives empathy and support, keeps communication open and places challenges before the followers. This also encompasses the need for respect and celebrates the individual contribution that each follower can make to the team. The followers have a will and aspirations for self-development and have intrinsic motivation for their tasks. 1

2. Intellectual Stimulation the degree, to which the leader challenges assumptions, takes risks and solicits followers' ideas. Leaders with this style stimulate and encourage creativity in their followers. They nurture and develop people who think independently. For such a leader, learning is a value and unexpected situations are seen as opportunities to learn. The followers ask questions, think deeply about things and figure out better ways to execute their tasks. 3. Inspirational Motivation the degree to which the leader articulates a vision that is appealing and inspiring to followers. Leaders with inspirational motivation challenge followers with high standards, communicate optimism about future goals, and provide meaning for the task at hand. Followers need to have a strong sense of purpose if they are to be motivated to act. Purpose and meaning provide the energy that drives a group forward. The visionary aspects of leadership are supported by communication skills that make the vision understandable, precise, powerful and engaging. The followers are willing to invest more effort in their tasks; they are encouraged and optimistic about the future and believe in their abilities. 4. Idealized Influence Provides a role model for high ethical behavior, instills pride, gains respect and trust. Transactional Leadership Defined Also known as managerial leadership focuses on the role of supervision, organization, and group performance; transactional leadership is a style of leadership in which the leader promotes compliance of his followers through both rewards and punishments. Unlike Transformational Leadership, leaders using the transactional approach are not looking to change the future; they are looking to merely keep things the same. Leaders using transactional leadership as a model pay attention to followers' work in order to find faults and deviations. This type of leadership is effective in crisis and emergency situations, as well as when projects need to be carried out in a specific fashion. Transactional leaders use reward and punishments to gain compliance from their followers. They are extrinsic motivators that bring minimal compliance from followers. They accept goals, structure, and the culture of the existing organization. Transactional leaders tend to be directive and action-oriented. Transactional leaders are willing to work within existing systems and negotiate to attain goals of the organization. They tend to think inside the box when solving problems Transactional leadership is primarily passive. The behaviors most associated with this type of leadership are establishing the criteria for rewarding followers and maintaining the status quo. Within transactional leadership, there are two factors, contingent reward and management-byexception. Contingent reward provides rewards for effort and recognizes good performance. Management-by-exception maintains the status quo, intervenes when subordinates do not meet acceptable performance levels, and initiates corrective action to improve performance.

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Transactional vs. Transformational LeadershipTransactional and Transformational are the two modes of leadership that tend to be compared the most. One writer distinguished between transactional leaders and transformational by explaining that: transactional leader are leaders who exchange tangible rewards for the work and loyalty of followers. Transformational leaders are leaders who engage with followers, focus on higher order intrinsic needs, and raise consciousness about the significance of specific outcomes and new ways in which those outcomes might be achieved. Transactional leaders tend to be more passive as transformational leaders demonstrate active behaviors that include providing a sense of mission. Transactional Leadership is responsive Works within the organizational culture VS. Transformational Leadership is proactive Works to change the organizational culture by implementing new ideas Employees achieve objectives through higher ideals and moral values Motivates followers by encouraging them to put group interests first Individualized consideration: Each behavior is directed to each individual to express consideration and support. Intellectual stimulation: Promote creative and innovative ideas to solve problems.

Employees achieve objectives through rewards and punishments set by leader Motivates followers by appealing to their own self-interest Management-by-exception: maintain the status quo; stress correct actions to

Management-by-exception: maintain the status quo; stress correct actions to improve performance.

Both of these leadership styles can be seen in the activities of managers as these activities relate to the employees they manage. The more managers interact with those they manage, the more they know about their subordinates and the closer the bond between them become. In transactional leadership, the parties involved in the relationship get rewarded for the returns gained; for example, in politics, voters are promised that the agendas are actualized when they elect him or her to office. This is an example of transactional leadership; it can also be applied in business where the managers promise promotions to the staff as a result of the productivity of their units. On the other hand, transformational leadership is not hooked to the performance of the juniors; this is the typical relationship experienced in life where the one does not expect any return for what they offer to the other party. A perfect example of this relation is a mother to her child. Mothers do not need or more still expect anything from their children for the care they extend to them. Mothers take care and protect their kids unconditionally, with great commitment, and with total dedication. Even if the child does not appreciate the effort that the mother is making she 3

does not stop caring for her child. This form of relation best describes transformational leadership. This form of leadership is taken up by leaders focused in ensuring that their followers are engaged to a similar goal as them and ensure that they take their followers to the next level in order to achieve a superior result together. The two forms of leaderships have notable characteristics; most of the transactional leaders are believed to be charismatic. While on the other hand, transformational leaders are concerned about the gains for the whole group as a block. The other difference between the two forms of leadership is that transformational leaders are recognized by the inspiration they give to the individuals and the intellectual stimulation they give to the followers. On the other hand, transactional leaders are focused on setting up goals to their followers. Another contrast between the two groups is that a transactional leader depends on the powers to reinforce their juniors to finish their assignment successfully and meet their bargain. For a transformational leader, they are focused on motivating the ability of their juniors to work to a certain goal as a group. Still yet another difference is that transactional leaders are more concerned about personalized output of their juniors while transformational leaders are visionary, rhetorical and have management skills that are geared towards creating a strong emotional bond between the juniors. Concluding, transformational leaders are focused on ensuring that there is an overall improvement in terms of performance and output without basing emphasis on the returns gained from the relation. Transactional leadership is based on conditions, if there are no returns from a relationship then it is considered a failed assignment, the mode is materialistic and short sighted.

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