Differences between transformational and transactional leadership

Many, many people around the globe deliver lectures or write articles and books about leadership every day.

Leadership is a very complicated term to be precisely defined by putting it into words. Many forms of leadership have been witnessed in the past. Some exceptional leaders have manifested themselves and have gone on to create history in their own spheres. Each of them has had a different style of leadership, different level of intimacy with their teams and stark different personalities and beliefs.

In this article, we look at the differences between transformational and transactional leadership. Let us first understand the two types of leadership and then move on to the difference.

Transformational leadership is a style of leadership where the leader, along with his/her team, is able to identify the challenges ahead, resources available and build a long term vision for the team but constantly engaging and involving the employees to perform to the best of their abilities and grow professionally and personally in the process.

The most important aspect of transformational leadership is that the leader is not only bothered about his/her performance or deliverables but also consciously tries to guide his/her subordinates and uses his/her experience and expertise to give a good professional career to the subordinates.

Transactional leadership involves appealing to employees by targeting their personal interests in the task at hand. The authority that a leader has is derived from the position that he/she holds. The subordinate is expected to obey the instructions of the team leader because of the higher position and title that the leader holds!

The leader in this case uses a combination of rewards and punishment to get the employees to do the job. If an employee performs as per expectations or exceeds it, then he/she is rewarded and an underperformance will lead to a punishment.

A reading of the definitions in itself will make a few differences clear, but let us have a look at the a few more subtle ones.

Problem recognition and solving starts in transformational leadership much before the problem even arises. The leader foresees the problem takes adequate steps to solve them. In transactional leadership, the leader reacts after the problem has arisen. He gets a clear understanding of what the problem and then goes about devising steps to tackle it.

Transformational leaders are generally seen altering the culture of the organization and building a new vision for it. This is best suited when a major rebuilding of a brand and its image is required. Transactional leaders on the other hand prefer to work within the existing company culture and follow the rules, regulations and general practices that have been followed over the past years. They are not concerned about changing the framework within which they work.

Transactional leadership is also many a time branded as being very bureaucratic in nature because of the set rules and procedures that the leader follows. Transformational leadership on the other hand is very charismatic where the leader’s personality plays a major role.

Transformational leaders may or may not operate as the sole leader. There may be more than one transformational leader whereas there is only one transactional leader who operates as the leader because of his/her designation.

An important difference is that in transactional leadership, a leader uses rewards and punishment to get the subordinates to do their duty whereas a transformational leader uses his charisma to gather followers and garner respect.

A transactional leader is more concerned about short term planning and execution whereas a transformational leader is responsible for the long term vision of the organization and its innovation.

In a turbulent and unstable business environment the best suited leadership style in transformational whereas a settled environment where the processes and practices are in place can have a transactional leader. These are the major differences between a transformational and transactional leaders.