Transactional vs. transformational leadership is not a question of a good vs. bad, right vs. wrong approach to leadership. While they are in fact opposite approaches to leadership, both offer advantages and are important styles of leadership to understand and apply in certain types of situations.
Transactional leadership is a task-oriented style of leadership based on a system of reward and punishment (i.e. extrinsic motivation). A transactional leader will clearly specify their expectations for performance and hold their employees accountable for meeting those expectations; good performance is recognized and rewarded, poor performance is reprimanded.
While transactional leadership has been shown to be effective, the big downside to it is that it doesn't drive extra role behavior (i.e. going above and beyond the basic requirements of the role). Under this style employees will do their jobs but you're unlikely to get any extra effort.
Transformational leadership is a relationship-oriented style of leadership. Transformational leaders motivate and inspire their employees to move in the right direction by creating a compelling vision for the future, helping them to see the purpose in their work, and helping them to learn and grow.
Studies have shown that employees of transformational leaders are more likely to engage in extra role behavior - that is, put in effort above and beyond what is required for their role.
Both transactional and transformational leadership are effective in achieving intended results.
Transactional leaders focus on organizational performance and employee supervision. These leaders are not looking much toward innovating for the future, but rather maximizing productivity in the present. They focus on making the day-to-day business of an organization flow smoothly.
Transformational leaders focus on organizational change and employee development. These leaders devote more time to developing a strategy for the future of their team or organization, then motivating and inspiring employees to buy into that vision. This leadership is most effective in organizations or teams that need a leader to guide them towards positive change.
The transformational leadership style has clear advantages when it comes to promoting growth, innovation and creativity within individuals, teams and an organization as a whole.
A study in Frontiers in Psychology found that transactional leadership led employees “to perceive the culture as more goal, than innovation, oriented,” whereas transformational leadership led employees to see the organizational culture as more innovative. Employees feel they are encouraged to develop as professionals, growing their base of skills and knowledge.
A key part of the overall strategy of a transformational leader is to encourage innovation and creativity in the workplace. The focus on employee development is important to cultivating the future leaders an organization needs, as employees grow into the shoes of their leaders and emulate their style.
In developing, adapting and applying these two styles of leadership, it’s important to consider both the advantages and disadvantages of each, along with the current work situation your team and organization may be functioning in.
Transactional Leadership: While it’s the best approach for maximizing operational efficiency, transactional leadership can fall short in the areas of innovation, long-term strategy creation and employee development.
Transformational Leadership: While best for creating strategy and fostering organizational change, transformational leadership sometimes lacks the attention to detail, as these leaders are less concerned about daily workflow and processes. It also relies on having the type of leader who can sustain both a great deal of motivation and passion for a long period of time.
If there is anything that organizational leaders have learned, it is that change is happening faster than ever, and those efficient processes and goals need constant evaluation.
You can help motivate your team and successfully lead them through transformation, confidently driving your organization toward positive change with transformational leadership.
