Transactional and Transformational Leadership

Harry works in a coal mine laboratory. At the start of each shift, Harry checks the work book which his supervisor completes, where clear instructions are given as to what task is required. Generally each task listed is the same each shift, and every task has a written procedure that must be followed in order to meet Quality Assurance Standards. At the end of each shift, Harry completes his shift report which is generally the same too. Harry has worked here for 25 years under the same supervisor. He knows the work isn’t stimulating but it pays well.
The supervisor is always happy with Harry because he completes the tasks that are set, and never deviates from what is expected. Harry’s supervisor is a transactional leader – a rule follower who likes procedures with no deviations and expects nothing more than those written in the work book. Carly is a new employee at the laboratory. At the start of each shift she too checks the work book in hope that maybe something new or contrary to the norm has been written. Most days she will look for something extra to do but is often reprimanded for doing something that the next shift would do.
Carly detests the supervisor, wishing the supervisor offered more. Carly dreams of a supervisor who is motivational, encouraging, one who appreciates an employee who goes above and beyond what is required and would appreciate suggested improvements to age old methods. Carly dreams of a transformational leader to provide inspiration, charisma, vision and promote intelligent thinking to an otherwise mundane regulated workplace. So what is transactional and transformational leadership and what can be expected from each style?

The transactional leader works with the present cultural work environment within their organisation, following existing rules, procedures, expected outcomes and operating norms (Lindgreen, A et al. 2009). They have an exchange relationship (Erkutlu 2008) with their followers/subordinates/employees, where guidance and motivation is given to ‘their followers in the direction of established goals by clarifying role and task requirements’ (Robbins et al. 2011, p. 342). It can take the form of contingent reward, management by exception (active and passive) and laissez-faire (Xirasagar 2008).
Contingent reward refers to an exchange of rewards (whether verbal or tangible) for effort and good performance (Xirasagar 2008). Management by exception (active) is taking corrective action when a follower deviates from established rules and standards (Robbins et al. 2011). Management by exception (passive) is intervention taken by the transactional leader ‘only if standards are not met’ (Robbins et al. 2011, p. 342). A transactional leader of laissez-faire character is one who ‘abdicates responsibility’ and ‘avoids making decisions’ (Robbins et al. 2011, p. 342).
As transactional leadership focuses on established norms and protocols, and ‘results in expected outcomes’ (Erkutlu 2008, p. 711), followers will not extend themselves by going ‘above and beyond the call of duty’ (Robbins et al. 2011, p. 343). In comparison, the transformational leader is ‘capable of having a profound and extraordinary effect on followers’ (Robbins et al. 2011, p. 342) through their charismatic, visionary, inspirational, intellectually stimulating characteristics and their concern for their followers (Erkutlu 2008). They are able to inspire their followers to rise above their own self-interests.
Transformational leadership consists of four sub-constructs (individualised consideration, intellectual stimulation, inspirational motivation, idealised influence) which transformational leaders can use to invoke behaviour of followers that exceeds expectations ‘for the sake of the organisation’ (Robbins et al. 2011, p. 343). Individualised consideration is displayed to the follower by ‘giving personal attention’ (Robbins et al. 2011, p. 342) to their development needs, support and coaching (Erkutlu 2008). Intellectual stimulation ‘promotes intelligence, rationality and careful problem solving’ (Robbins et al. 2011, p. 342).
Transformational leaders are able to demonstrate idealised influence by providing vision and a sense of mission, instilling pride and gaining respect and trust (Robbins et al. 2011) along with inspirational motivation by communicating ‘high expectations’ (Robbins et al. 2011, p. 342). Although a distinction between the two could be categorised as a difference in leadership flexibility, Robbins et al. (2011) maintains that each leadership style does not actually oppose the other; rather transformational leadership builds upon transactional leadership where levels of follower effort and performance exceed that of transactional leadership alone.
However each style of leadership has its own individual strengths and weaknesses. Transformational leadership appears to be heralded as the superior leadership style; although transactional leadership does have its strengths. As ‘transactional leadership results in expected outcomes’ (Erkutlu 2008, p. 711), it is effective in organisations where the desired outcome is measured against ‘clear and precise financial measures, such as revenues per customer segment or the dollar volume of cross-selling’ (Lindgreen et al.2009, p. 26).
Research conducted by Liu et al. (2011) has found that in occupations of low emotional labour, transactional leadership has made a positive contribution to team innovation. Whilst Wells & Peachey (2011, p. 5) have found that there is a negative relationship ‘between transactional leadership and voluntary organizational turnover intentions’. The application of equity theory’s procedural justice (‘the perceived fairness of the process used to determine the distribution of rewards’ (Robbins et al. 2011, p.191) and distributive justice (‘perceived fairness of the amount and allocation of rewards among individuals’ (Robbins et al. 2011, p. 191) may explain this negative relationship (Wells & Peachey 2011). Conversely, transactional leadership is not without its weaknesses.
Subordinates of transactional leaders may feel a lower sense of organisation commitment and job satisfaction or commit sabotage against the organisation (Erkutlu 2008). As transactional leadership relies upon defined outcomes with leaders possibly dealing with deviations from the norm ‘with harsh criticisms’ (Liu et al.2010, p. 284), subordinate performance beyond what the leader has requested should not be expected; nor the discovery of new methods of problem solving as subordinates continue using tried and tested solutions ‘for fear of reproach’ (Liu et al. 2010, p. 284).
Innovation amongst employees employed in high emotional labour positions is also likely to be depressed under a transactional leader (Liu et al. 2010). Transactional leadership doesn’t allow for followers’ self-actualisation needs to be met; therefore followers may not reach their full ‘potential and self-fulfilment’ (Robbins et al.2011, p. 177).
Where transactional leadership has clear weaknesses in respect of followers performance, transformational leadership builds upon this and bolsters followers’ willingness to perform above what is required. Transformational leadership can be thought of what transactional leadership is not. Transformational leaders are acutely aware of the organisations present culture but have a definite vision for the future. They enable this vision by changing the fundamental ‘values, goals, and aspirations of followers’ (Lindgreen et al. 2009, p.15) as the followers embrace the leader’s values.
The result is that the followers perform their respective duties not because they expect to be rewarded, but because it is in agreement with their new found values (Lindgreen et al. 2009). By strategically using positive emotions, the leader is able to encourage ‘optimism and positive approaches to group tasks’ (Mitchell & Boyle 2009, p. 463). Followers of transformational leadership experience heightened motivation through their leaders’ inspirational motivation and individualised consideration.
Mitchell & Boyle’s (2009, p.462) research states that this ‘increases their cognitive flexibility to accept new ideas and comments from others’. Transformational leadership has proven advantageous where customer relationship development is important, for example formal customer introductions and personal selling (Lindgreen et al. 2009). Research conducted by Camps & Rodriguez (2011) established that employees working under a transformational leader within an organisation that fostered employee learning and skill improvement did not drive the follower to seek employment elsewhere because of their increased skill set.
‘On the contrary, they see this as a commitment to the employer that has trusted and invested in them’ (Camps & Rodriguez 2011, p. 437). Although flaunted as the preferred leadership style in comparison to transactional leadership, there are weaknesses of transformational leadership. The charismatic elements of transformational leaders are difficult to reproduce if not naturally present in the personality of the leader. Therefore, organisations seeking applicants to lead in a transformational fashion are instantly subjected to a limited pool of suitable applicants (Muijs 2011).
Even when the applicant is of strong transformational personality, a poor organisation fit will fail the applicant. So too will organisational structures that impede ‘the extent to which leaders can be truly transformational’ (Muijs 2011, p. 50). Over zealous transformational leaders can also incite passive resistance from subordinates. In this situation, the subordinates will simply wait for the leader to ‘move on’ (Muijs 2011, p. 51). This type of resistance is prevalent in organisations that have ‘rapid management turnover’ (Muijs 2011, p.51).
Transactional and transformational leadership are two contemporary styles of leadership that have their own strengths and weaknesses. Transactional leadership focuses on providing followers clarified tasks requirements in order to achieve desired outcomes, whereas transformational leadership involves the ability of the leader to motivate, inspire, influence and consider their followers in order for the follower to take on the leader’s vision and perform above and beyond what is expected.
Transactional leadership is effective in organisations where the desired outcome is definitive however is not conductive in promoting innovation amongst high emotional labour employees or allowing for self-actualisation needs to be met. Transformational leadership is effective in empowering followers and producing results such as employees performing above and beyond what is required. However it can be overbearing for employees who have not embraced transformational leadership exercising passive resistance to such a contemporary style of leadership.

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