Transactional Leadership

This theory of leadership was

first described in by sociologist
Max Weber, and further
explored by Bernard M. Bass
in the early 1980s.
Transactional Leadership
also known as managerial leadership, focuses on the role of supervision, organization,
and group performance; transactional leadership is a style of leadership in which the
leader promotes compliance of his followers through both rewards and punishments.
Transactional Leadership
Leaders using the transactional approach are not looking to change the future, they are
looking to merely keep things the same
Leaders using transactional leadership as a model pay attention to followers' work in
order to find faults and deviations
Assumptions
People are motivated by reward and punishment.
Social systems work best with a clear chain of command.
When people have agreed to do a job, a part of the deal is that they cede all authority to
their manager.
The prime purpose of a subordinate is to do what their manager tells them to do.
This theory bases leadership on a system of rewards and punishments. Transactional
leadership is often used in business; when employees are successful, they are rewarded;
when they fail, they are reprimanded or punished.

The leader views the relationship between managers and subordinates as an exchange
- you give me something for something in return.
When subordinates perform well, they receive some type of reward. When they perform
poorly, they will be punished in some way.
Rules, procedures and standards are essential in transactional leadership. Followers are
not encouraged to be creative or to find new solutions to problems.
Advantages
Transactional leaders focus on increasing the efficiency of established routines and
procedures and are more concerned with following existing rules than with making
changes to the structure of the organization.
Thus, they operate most effectively in organizations that have evolved beyond the
chaotic, no-rules stage of entrepreneurial development that characterizes so many new

companies.
Transactional leadership establishes and standardizes practices that will help the
organization reach maturity, emphasizing setting of goals, efficiency of operation, and
increase of productivity.
Disadvantages
While transactional leadership can be effective in some situations, it is generally
considered an insufficient and may prevent both leaders and followers from achieving
their full potential.
Transactional leadership is primarily passive. The behaviors most associated with this
type of leadership are establishing the criteria for rewarding followers and maintaining
the status quo.
The main limitation is the assumption of 'rational man', a person who is largely motivated
by money and simple reward, and hence whose behavior is predictable.
Transformational Leadership
Transformational Leadership
The concept of transformational leadership was initially introduced by leadership expert
and presidential biographer James MacGregor Burns.
According to Burns, transformational leadership can be seen when "leaders and followers
make each other to advance to a higher level of moral and motivation."
Later, researcher Bernard M. Bass expanded upon Burns' original ideas to develop what
is today referred to as Bass Transformational Leadership Theory.
According to Bass, transformational leadership can be defined based on the impact that it
has on followers. Transformational leaders, Bass suggested, garner trust, respect, and
admiration from their followers.
Transformational Leadership
Transformational leadership enhances the motivation, morale, and job performance of
followers through a variety of mechanisms.
Through the strength of their vision and personality, transformational leaders are able to
inspire followers to change expectations, perceptions, and motivations to work towards
common goals.
Includes:
connecting the follower's sense of identity and self to the project and the collective
identity of the organization
being a role model for followers that inspires them and makes them interested
challenging followers to take greater ownership for their work
understanding the strengths and weaknesses of followers
Components of Transformational Leadership
Intellectual Stimulation Transformational leaders not only challenge the status quo; they
also encourage creativity among
followers. The leader encourages followers to
explore new ways of doing things and new opportunities to learn.

Individualized Consideration Transformational leadership also involves offering

support and encouragement to individual followers. In order to foster supportive
relationships, transformational leaders keep lines of communication open so that
followers feel free to share ideas and so that leaders can offer direct recognition of the
unique contributions of each follower.
Inspirational Motivation Transformational leaders have a clear vision that they are able
to articulate to followers. These leaders are also able to help followers experience the
same passion and motivation to fulfill these goals.
Idealized Influence The transformational leader serve as a role model for followers.
Because followers trust and respect the leader, they emulate this individual and
internalize his or her ideals.
Assumptions
People will follow a person who inspires them.
A person with vision and passion can achieve great things.
The way to get things done is by injecting enthusiasm and energy.
The extent to which a leader is transformational, is measured first, in terms of his
influence on the followers.
The followers of such a leader feel trust, admiration, loyalty and respect for the leader
and because of the qualities of the transformational leader are willing to work harder than
originally expected.
The leader transforms and motivates followers through his or her idealized influence
(earlier referred to as charisma), intellectual stimulation and individual consideration.
In addition, this leader encourages followers to come up with new and unique ways to
challenge the status quo and to alter the environment to support being successful.
Advantages
Research evidence clearly shows that groups led by transformational leaders have higher
levels of performance and satisfaction than groups led by other types of leaders (Riggio)
Transformational leaders help followers grow and develop into leaders by responding to
individual followers' needs by empowering them and by aligning the objectives and goals
of the individual followers, the leader, the group, and the larger organization.
Disadvantages
One of the traps of Transformational Leadership is that passion and confidence can easily
be mistaken for truth and reality. Whilst it is true that great things have been achieved
through enthusiastic leadership, it is also true that many passionate people have led the
charge right over the cliff and into a bottomless chasm. Just because someone believes
they are right, it does not mean they are right.
Transformational Leaders often have large amounts of enthusiasm which, if relentlessly
applied, can wear out their followers.

Transformational Leaders also tend to see the big picture, but not the details, where the
devil often lurks. If they do not have people to take care of this level of information, then
they are usually doomed to fail.
Finally, Transformational Leaders, by definition, seek to transform. When the
organization does not need transforming and people are happy as they are, then such a
leader will be frustrated.
Transactional vs. Transformational
Transactional and transformational are the two modes of leadership that tend to be
compared the most. James MacGregor Burns distinguished between transactional leaders
and transformational by explaining that: transactional leader are leaders who exchange
tangible rewards for the work and loyalty of followers.
Transformational leaders are leaders who engage with followers, focus on higher order
intrinsic needs, and raise consciousness about the significance of specific outcomes and
new ways in which those outcomes might be achieved.
Transactional leaders tend to be more passive as transformational leaders demonstrate
active behaviors that include providing a sense of mission.
Theory X and Y
Douglas McGregor's Theory Y and Theory X can also be compared with these two
leadership styles.Theory X can be compared with Transactional Leadership where
managers need to rule by fear and consequences. In this style and theory, negative
behavior is punished and employees are motivated through incentives
Theory Y and Transformational Leadership are found to be similar, because the theory
and style supports the idea that managers work to encourage their workers. Leaders
assume the best of their employees. They believe them to be trusting, respectful, and selfmotivated. The leaders help to supply the followers with tool they need to excel
THE END.
Transactional
Leaders...

Transformational Leaders...

Leadership is
responsive

Leadership is proactive

Motivates followers by
asking them to appeal
to their own self
interest

Motivates followers by
asking them to appeal to the
groups' interest

Employees achieve
objectives through
rewards and
punishments

Employees achieve
objectives through higher
ideals and moral values

Works within the

organizational culture

Works to change the

organizational culture by
encouraging new ideas