Transactional vs Transformational Leadership
Leadership is a quality that is found in only a few individuals but these are the people who play a vital role in any organization as they provide direction to the subordinates. Thus, they are like rudders of a boat in a water body. With the passage of time, organizational structures and technologies may have changed, but the role of a leader remains as important as ever. Transactional and transformational leadership theories are two of the many different leadership theories proposed and practiced by people in different organizations and circumstances. There are differences between the two leadership styles that will be enumerated in this article. Understanding these differences can be helpful for all those pursuing management courses.
This is a style of leadership where the leader takes help of rewards and punishments to motivate employees to reach the goals of the organization. Employees tend to receive rewards when they are seen working hard to achieve the goals set by the leader while they are punished for violation of goals and expectations of the leader. The rewards may take the shape of bonus, incentive, and praise from the leader. On the other hand, demotion, withholding bonus etc. can be used as punishment by the leader. However, the leader has to understand that rewards and punishments are only tools to achieve the goals of the organization, and there is a limit to which these tools can be utilized. The reason why this style is called as transactional is because of use of rewards in exchange for performance.
This style of leadership is fruitful in normal circumstances so as to allow for smooth flow of day to day operations but found to be lacking in times when there is a need for guiding the organization or to provide a sense of direction to the employees. Transactional leadership is ideal to make sure that everything keeps running smoothly. Leaders lacking in authority have found this style of leadership to be very effective. Also, leaders in transition employ this style to remain in control.
A leader who practices transformational theory of leadership looks ahead of just managing day to day operations and has a desire to change his subordinates while leading this transformation. This is a style that requires charisma, intellect, inspiration, and individual consideration from the leader. The leader tries to connect with the employees in a bid to form an emotional bond. The leader tries to develop relationships with employees despite treating them equitably. He provides encouragement to employees who place their trust and faith in the leader. The focus in this style of leadership is not on rewards and punishments but upon building of a team through collaboration and motivation of the subordinates.
What is the difference between Transactional and Transformational Leadership?
• Transformational leadership is based upon relations whereas transactional leadership is based upon exchange of rewards and punishments.
• Transactional leadership style suits leaders having little authority whereas leaders having charisma and influence make best use of transformational leadership.
• For leaders in transition and for those who just want to ensure smooth day to day operations, transactional leadership is ideal.
• Transformational leadership desires change in the employees for the good of the organization and uses inspiration and charisma to effect this change.
• Both styles of leadership have their own advantages and disadvantages and a leader must make use of both at times to achieve the goals of the organization.