Transactional and Transformational Leadership

In this blog, I have been talking about different leadership theories, Great Men, Trait, behavioral, and Contingency (Situational) theory. The last two theories that I want to discuss are Transactional and Transformational. In my classes, we use and talk about Transformational leadership as a great leader model. There are significant different between Transactional and Transformational leadership. The image above demonstrates them. In this image, there are one leader, three followers, and one objective that they are trying to achieve (moving the cart). However, the top half and bottom half show totally different leadership style. We can consider the top half one as Transactional leadership, and the bottom half one as Transformational leadership. Here are some characteristics of each leadership:

Transactional Leadership

• Leadership is responsible

• Works within the organizational culture

• Transactional leaders make employees achieve organizational objectives through rewards and punishment

• Motivates followers by appealing to their own self-interest

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 Leadership

• Leadership is proactive

• Work to change the organizational culture by implementing new ideas

• Transformational leaders motivate and empower employees to achieve company's objectives by appealing to higher ideals and moral values

• Motivates followers by encouraging them to transcend their own interests for those of the group or unit

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

Summary of Differences Between Transactional and Transformational Leadership

1. Transactional leadership reacts to problems as they arise, whereas transformational leadership is more likely to address issues before they become problematic.

2. Transactional leaders work within existing an organizational culture, while transformational leaders emphasize new ideas and thereby "transform" organizational culture.

3. Transactional leaders reward and punish in traditional ways according to organizational standards; transformational leaders attempt to achieve positive results from employees by keeping them invested in projects, leading to an internal, high-order reward system.

4. Transactional leaders appeal to the self-interest of employees who seek out rewards for themselves, in contrast to transformational leaders, who appeal to group interests and notions of organizational success.

5. Transactional leadership is more akin to the common notions of management, whereas transformational leadership adheres more closely to what is colloquially referred to as leadership.

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Examples from my actual experience...

-Is this manager a Transactional leader or Transformational leader?-

Manager1 who had not had any management position tried to figure out things day in and day out. It seemed this manager always were dealing with problems since there was an issue after an issue. Since he was new, he just accepted the culture and system which had already existed, and focused on being successful as a manager by making bigger profit for the organization. He told us that people who did good performance would have get more hours, and people performed poorly would get less hours.

Example of a Transactional leader

Manager2 who had us have "all staff meeting" every month to share goals of the month, celebrate team's accomplishments, and remind us what our vision was and where we wanted to go as a team. This manager was open to new ideas to improve the organization and he listened to everyone and valued each voice. He let us be creative and make our own judgements and take actions based on them, for instance, I was allowed to give complemental things to the guests if I needed to.

Example of aTransformational leader