Difference between Transactional and Transformational Leadership

Transnational and transformational leadership is a trait of influencing the behavior of individuals, in order
to fulfill organizational objectives. A number of leadership theories have been propounded by various
management experts considering behaviour, traits, nature, etc. namely, Authoritarian, Laissez-faire,
Transactional, Transformational, Paternalistic and Democratic. Transactional Leadership or otherwise
known as management leadership, refers, to a leadership style which lays emphasis on the transaction
between leader and its subordinates.

On the other hand, Transformational Leadership is a type which becomes are reasons for the
transformation (change) in the subordinates. In this style, the leader works with the subordinates to
ascertain the desired change in the organization.

Many people have trouble understanding the difference between transactional and transformational
leadership.

Content: Transactional Leadership Vs Transformational Leadership

Comparison Chart

BASIS FOR COMPARISON TRANSACTIONAL LEADERSHIP TRANSFORMATIONAL LEADERSHIP

Meaning A leadership style that employs rewards A leadership style in which the leader
and punishments for motivating employs charisma and enthusiasm to
followers is Transactional Leadership. inspire his followers is Transformational
Leadership.

Concept Leader lays emphasis on his relation Leader lays emphasis on the values,
with followers. ideals, morals and needs of the followers.

Nature Reactive Proactive

Best suited for Settled Environment Turbulent Environment

Works for Developing the existing organizational Changing the existing organizational
culture. culture.

Style Bureaucratic Charismatic

BASIS FOR COMPARISON TRANSACTIONAL LEADERSHIP TRANSFORMATIONAL LEADERSHIP

How many leaders are there Only one More than One
in a group?

Focused on Planning and Execution Innovation

Motivational tool Attracting followers by putting their Stimulating followers by setting group
own self interest in the first place. interest as a priority.

Definition of Transactional Leadership

A leadership style whereby the objectives and goals are predefined and the leader uses reward and
punishment to motivate his followers is known as Transactional Leadership. It focuses on improving the
current situation of the organisation by framing the steps and controlling the organisational activities. The
basic purpose of this type of leadership is to revamp the existing corporate culture and to enhance current
policies & procedures.

In 1947, the style was first proposed by Max Weber followed by Bernard Bass in the year 1981.

In this leadership style, the leader uses his authority and responsibility as his power as well as the style
has a formal approach. Prize and penalties are the two primary tools employed by the leader to inspire
his subordinates i.e. if an employee achieves the target within the stipulated time he is given initiative for
his work, whereas if the task is not completed within the required time, then he will be penalised for the
same.

Definition of Transformational Leadership

The style of leadership in which the leader uses his influencing power and enthusiasm to motivate his
followers to work for the benefit of the organisation. Here, the leader seeks the requirement for a change
in the existing organisation culture, gives a vision to his subordinates, incorporates mission and implement
the change with the dedication of his followers.

In transformational leadership, the leader acts as a role model and as a motivator too who offers vision,
excitement, encouragement, morale and satisfaction to the followers. The leader inspires his people to
increase their abilities and capabilities, build up self-confidence and promotes innovation in the whole
organisation.

James MacGregor Burns first proposed the concept of this leadership style in the year 1978. The main
idea of this leadership style is that both the superior and subordinate work for lifting each other for
improving their morale and motivation.
Key Differences Between Transactional and Transformational Leadership

The following are the major differences between transactional and transformational leadership:

1. Transactional Leadership is a type of leadership whereby rewards and punishment are used as a
basis for initiating the followers. Transformational Leadership is a leadership style in which the
leader uses his charisma and enthusiasm to influence his followers.
2. In transactional leadership leader, is lays stress on his relationship with followers. Conversely, in
transformational leadership leader lays stress on the values, beliefs and needs of his followers.
3. Transactional Leadership is reactive whereas Transformational Leadership is proactive.
4. Transactional Leadership is best for a settled environment, but Transformation is good for the
turbulent environment.
5. Transactional Leadership works for improving the present conditions of the organisation. On the
other hand, Transformational Leadership works for changing the present conditions of the
organisation.
6. Transactional Leadership is bureaucratic while Transformational Leadership is charismatic.
7. In Transactional Leadership, there is only one leader in a group. In contrast to transformational
leadership, in which there can be more than one leader in a group.
8. Transactional Leadership is focused towards planning and execution as compared to
transformational leadership which promoted innovation.

Conclusion

According to some researchers, transactional leadership is best while some think that transformational
leadership is better. So the debate is never ending, for the two leadership styles. In my opinion, there is
no standard leadership style which is best suited to all the circumstances. So, an organisation should not
rely on a single leadership style. It must employ the requisite leadership style as per its needs and
prevalent conditions.

If you are searching for the best leadership style between transactional and transformational leadership,
then you will end up saying that both are having its merits and demerits. It depends on the situation which
leadership style will be most appropriate to it.
Transformational leadership focuses on the leader as the followers source of inspiration to exceed
expectations (Northouse, 2016). They have a charming personality and magnetism that draws followers
to them, and they provide encouragement and support that inspires followers to want to meet their goals
(Northouse, 2016).

There are four main factors of transformational leadership. One is idealized influence or charisma, which
describes leaders who are charming, and who have a compelling presence and an allure that attracts
followers to want to be like them and help them achieve their goals (Northouse, 2016). Another factor is
inspirational motivation, which describes how leaders incentivize followers to participate in the
achievement of their vision by convincing them their input is vital and irreplaceable (Northouse, 2016).
An additional factor is intellectual stimulation which describes how leaders incentivize followers by
challenging them to think outside the box, encouraging creative expression and supporting them in all
their endeavors to meet team goals (Northouse, 2016). The final factor is individualized consideration,
which describes leaders who are attentive to followers needs, who are sympathetic, and who provide an
understanding atmosphere to them (Northouse, 2016).

Transactional leadership, in contrast focuses strictly on the interchange between leaders and followers,
specifically what is the benefit to each party to complete the goal (Northouse, 2016).

There are two factors of transactional leadership. One factor is contingent reward, which means that the
leader requests a task be completed, and a predetermined reward is given to followers upon completion
of that task (Northouse, 2016). The other factor is management by exception which involves the leader
only giving feedback, in a negative manner, as a corrective measure (Northouse, 2016). Management by
exception can take the form of the leader closely observing followers and providing negative feedback
when they make mistakes, or generally ignoring them until they make a mistake and only then providing
negative feedback (Northouse, 2016).