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.

Managerial Grid

The managerial grid model (1964) is a behavioral leadership model developed by Robert Blake andJane Mouton. This model originally identified five different leadership styles based on the concern for people and the concern for production. The optimal leadership style in this model is based on Theory Y.

The grid theory has continued to evolve and develop. Robert Blake updated it with (?) in (?) (Daft, 2008). The theory was updated with two additional leadership styles and with a new element, resilience. In 1999, the grid managerial seminar began using a new text, The Power to Change.

The model:

The model is represented as a grid with concern for production as the X-axis and concern for people as the Y-axis each axis ranges from 1 (Low) to 9 (High). The resulting leadership styles are as follows:

§ The indifferent (previously called impoverished) style (1,1) : evade and elude. In this style, managers have low concern for both people and production. Managers use this style to preserve job and job seniority, protecting themselves by avoiding getting into trouble. The main concern for the manager is not to be held responsible for any mistakes, which results in less innovative decisions.

§ The accommodating (previously, country club) style (1,9): yield and comply. This style has a high concern for people and a low concern for production. Managers using this style pay much attention to the security and comfort of the employees, in hopes that this will increase -performance The resulting atmosphere is usually friendly, but not necessarily very productive.

§ The dictatorial (previously, produce or perish) style (9,1): control and dominate. With a high concern for production, and a low concern for people, managers using this style find employee needs unimportant; they provide their employees with money and expect performance in return. Managers using this style also pressure their employees through rules and punishments to achieve the company goals. This dictatorial style is based on Theory X of Douglas McGregor, and is commonly applied by companies on the edge of real or perceived failure. This style is often used in case of crisis management.

§ The status quo (previously, middle-of-the-road) style (5,5): balance and compromise. Managers using this style try to balance between company goals and workers' needs. By giving some concern to both people and production, managers who use this style hope to achieve suitable performance but doing so gives away a bit of each concern so that neither production nor people needs are met.

§ The sound (previously, team) style (9,9): contribute and commit. In this style, high concern is paid both to people and production. As suggested by the propositions of Theory Y, managers choosing to use this style encourage teamwork and commitment among employees. This method relies heavily on making employees feel themselves to be constructive parts of the company.

§ The opportunistic style: exploit and manipulate. Individuals using this style, which was added to the grid theory before 1999, do not have a fixed location on the grid. They adopt whichever behaviour offers the greatest personal benefit.

§ The paternalistic style: prescribe and guide. This style was added to the grid theory before 1999. In The Power to Change, it was redefined to alternate between the (1,9) and (9,1) locations on the grid. Managers using this style praise and support, but discourage challenges to their thinking.

Limitations of the Managerial Grid.

- There are more dimensions of leadership that can be relevant.

- The model basically neglects the significance of the internal and external constraints, context, circumstances and situation.

Grid theory breaks behavior down into seven key elements:

Element	Description
Initiative	Taking action, driving and supporting
Inquiry	Questioning, researching and verifying understanding
Advocacy	Expressing convictions and championing ideas
Decision Making	Evaluating resources, choices and consequences
Conflict Resolution	Confronting and resolving disagreements
Resilience	Dealing with problems, setbacks and failures
Critique	Delivering objective, candid feedback

Leadership and Trait Theory

Leadership

A simple definition of leadership is that leadership is the art of motivating a group of people to act towards achieving a common goal.

Put even more simply, the leader is the inspiration and director of the action. He or she is the person in the group that possesses the combination of personality and skills that makes others want to follow his or her direction.

In business, leadership is welded to performance. Effective leaders are those who increase their companys' bottom lines.

Leadership vs. Management

What is the difference between management and leadership? It is a question that has been asked more than once and also answered in different ways. The biggest difference between managers and leaders is the way they motivate the people who work or follow them, and this sets the tone for most other aspects of what they do.

Many people, by the way, are both. They have management jobs, but they realize that you cannot buy hearts, especially to follow them down a difficult path, and so act as leaders too.

Subject	Leader	Manager
Essence	Change	Stability
Focus	Leading people	Managing work
Have	Followers	Subordinates
Horizon	Long-term	Short-term
Seeks	Vision	Objectives
Approach	Sets direction	Plans detail
Decision	Facilitates	Makes
Power	Personal charisma	Formal authority
Appeal to	Heart	Head
Energy	Passion	Control
Culture	Shapes	Enacts
Dynamic	Proactive	Reactive
Persuasion	Sell	Tell
Style	Transformational	Transactional
Exchange	Excitement for work	Money for work
Likes	Striving	Action
Wants	Achievement	Results
Risk	Takes	Minimizes
Rules	Breaks	Makes
Conflict	Uses	Avoids
Direction	New roads	Existing roads
Truth	Seeks	Establishes
Concern	What is right	Being right
Credit	Gives	Takes
Blame	Takes	Blames

Trait Theory

Trait theory tries to describe the characteristics associated with effective leadership.

Early History

The search for the characteristics or traits of leaders has been ongoing for centuries. History's greatest philosophical writings from Plato's Republic to Plutarch's Lives have explored the question of "What qualities distinguish an individual as a leader?" Underlying this search was the early recognition of the importance of leadership and the assumption that leadership is rooted in the characteristics that certain individuals possess. This idea that leadership is based on individual attributes is known as the “trait theory of leadership”.

This view of leadership, the trait theory, was explored at length in a number of works in the previous century. Most notable are the writings of Thomas Carlyleand Francis Galton, whose works have prompted decades of research. In Heroes and Hero Worship (1841), Carlyle identified the talents, skills, and physical characteristics of men who rose to power. In Galton's (1869) Hereditary Genius, he examined leadership qualities in the families of powerful men. After showing that the numbers of eminent relatives dropped off when moving from first degree to second degree relatives, Galton concluded that leadership was inherited. In other words, leaders were born, not developed. Both of these notable works lent great initial support for the notion that leadership is rooted in characteristics of the leader.

For decades, this trait-based perspective dominated empirical and theoretical work in leadership. Using early research techniques, researchers conducted over a hundred studies proposing a number of characteristics that distinguished leaders from non leaders: intelligence, dominance, adaptability, persistence, integrity, socioeconomic status, and self-confidence just to name a few

The Rise of Alternative Leadership Theories

In the late 1940s and early 1950s, however, a series of qualitative reviews of these prompted researchers to take a drastically different view of the driving forces behind leadership. In reviewing the extant literature, Stogdill and Mann found that while some traits were common across a number of studies, the overall evidence suggested that persons who are leaders in one situation may not necessarily be leaders in other situations. Subsequently, leadership was no longer characterized as an enduring individual trait, as situational approaches (see alternative leadership theories below) posited that individuals can be effective in certain situations, but not others. This approach dominated much of the leadership theory and research for the next few decades.

The Reemergence of the Trait Theory

New methods and measurements were developed after these influential reviews that would ultimately reestablish the trait theory as a viable approach to the study of leadership. For example, improvements in researchers' use of the round robin research design methodology allowed researchers to see that individuals can and do emerge as leaders across a variety of situations and tasks. Additionally, during the 1980s statistical advances allowed researchers to conduct meta-analyses in which they could quantitatively analyze and summarize the findings from a wide array of studies. This advent allowed trait theorists to create a comprehensive and parsimonious picture of previous leadership research rather than rely on the qualitative reviews of the past. Equipped with new methods, leadership researchers revealed the following:

§ Individuals can and do emerge as leaders across a variety of situations and tasks

§ Significant relationships exist between leadership and such individual traits as:

§ Intelligence

§ adjustment

§ extraversion

§ conscientiousness

§ openness to experience

§ general self-efficacy

Current Criticisms of the Trait Theory

While the trait theory of leadership has certainly regained popularity, its reemergence has not been accompanied by a corresponding increase in sophisticated conceptual frameworks^.

Specifically, Zaccaro (2007) noted that trait theories still:

1. Focus on a small set of individual attributes such as Big Five personality traits, to the neglect of cognitive abilities, motives, values, social skills, expertise, and problem-solving skills

2. Fail to consider patterns or integrations of multiple attributes

3. Do not distinguish between those leader attributes that are generally not malleable over time and those that are shaped by, and bound to, situational influences

4. Do not consider how stable leader attributes account for the behavioral diversity necessary for effective leadership