Transactional Leadership Vs. Transformational Leadership

Transactional Leadership Vs. Transformational Leadership

Number of Leadership theories evolved on the basis of Trait, Behavioral, Transformational, Situational, Charisma. Researchers and thinkers made efforts linking some of the theories across these leadership islands. But each model has its own pros, cons, assumptions & limitations. Latest researches are conducted on Situational & Transformational leadership styles. Leadership gurus presented new models as variations to the already existing models. Max Weber, MacGregor Burns, Bernard M.Bass, Warren Bennis & Nanus are few important researchers in the area of transformational leadership.

Understanding the difference between transactional and transformational leadership is vital in getting the whole concept of transformational leadership theory.

As a starting point, let us review our everyday life. In general, a relationship between two people is based on the level of exchange they have. Exchange need not be money or material; it can be anything. The more exchange they have the more stronger the relation. Your manager expects more productivity from you in order to give good rewards. In this way, if something is done to anyone based on the return then that relation is called as ‘Transactional’ type. In politics, leaders announces benefits in their agenda in exchange to the vote from the citizens. In business, leaders announces rewards in turn to the productivity. These relation is all about requirements, conditions and rewards (or punishment). Leaders who show these kind of relationship are called ‘Transactional Leaders’.

In life, at one point of time, things happen without expectation from other side. Say, mom’s dedicated service to her kid. Mom doesn’t expect anything from the child and the service she provides in raising the child is unconditional, dedicated, committed. Mom plays a major role in shaping up the kid’s future life. This type of relation is called as ‘Transformational’. Leaders do exist in this world with these behaviors. Transformational Leaders work toward a common goal with followers; put followers in front and develop them; take followers’ to next level; inspire followers to transcend their own self-interests in achieving superior results.

Transactional Leader:

approaches followers with an eye to exchanging one thing for another … Burns

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 Leader:

“recognizes and exploits an existing need or demand of a potential follower… (and) looks for potential motives in followers, seeks to satisfy higher needs, and engages the full person of the follower” … Burns

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

As exactly said by Bass – “the transactional leaders work within the organizational culture as it exists; the transformational leader changes the organizational culture”.

Following table shows difference of transactional and transformation leadership.

	Transactional Leadership		Transformational Leadership
* Leaders are aware of the link between the effort and reward * Leadership is responsive and its basic orientation is dealing with present issues * Leaders rely on standard forms of inducement, reward, punishment and sanction to control followers * Leaders motivate followers by setting goals and promising rewards for desired performance * Leadership depends on the leader’s power to reinforce subordinates for their successful completion of the bargain.		* Leaders arouse emotions in their followers which motivates them to act beyond the framework of what may be described as exchange relations * Leadership is proactive and forms new expectations in followers * Leaders are distinguished by their capacity to inspire and provide individualized consideration, intellectual stimulation and idealized influence to their followers * Leaders create learning opportunities for their followers and stimulate followers to solve problems * Leaders possess good visioning, rhetorical and management skills, to develop strong emotional bonds with followers * Leaders motivate followers to work for goals that go beyond self-interest.