Transformational vs Transactional leadership



What is Leadership?
A brief definition of leadership is as “the ability of encouraging a set of subordinates to perform towards the achievement of a common goal”. If expanded, then leadership is in fact a persuasion process, so that subordinates perform the tasks which are needed for the accomplishment of organizational objectives, as well as an inspired effort to be communicated to others.
Transformational leadership

Transformational leadership
The idea of transformation leadership was initially coined by Downton 1973 the first  to invent the word "Transformation leadership“ a definition further defined by presidential biographer and leadership expert James MacGregor Burns 1985.
Transformational leadership is a leadership style in which leaders encourage, inspire and motivate employees to innovate and create change that will help grow and shape the future success of the company.
According to Bass (1999) Suggested four dimensions of transformational      leadership style which includes idealized influence, inspirational motivation, intellectual stimulation and individualized consideration.

Transactional leadership
Transactional leadership focuses on results, conforms to the existing structure of an organization and measures success according to that organization’s system of rewards and penalties. Transactional leaders have formal authority and positions of responsibility in an organization. This type of leader is responsible for maintaining routine by managing individual performance and facilitating group performance.
According to the Daft (2012) Transactional leaders clarify the role and task requirement of subordinates, initiate structure, provide appropriate rewards, and try to be considerate to and meet the social needs of subordinates.

Difference between Transactional and Transformational Leadership
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: a transactional leader is a leader who exchanges 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.

Source: Author developed

Source: You tube

Relationship between Leadership Styles and Organizational Performance
There is a considerable impact of the leadership styles on organizational performance. The leadership style influences the culture of the organization which, in turn, influences the organizational performance.

Transformational leadership style and organizational performance
Transformational leadership style focuses on developing the followers and considering their needs. The managers that focus on transformational leadership focus particularly on developing the overall value system of the employees, development of moralities, skills and their motivation level. The transformational leadership acts as a strong bridge between the followers and leaders, to develop clear understanding associated with the motivational level, values and interests. Transformational leadership has a significant impact on the performance of the organization.

Transactional leadership style and organizational performance 
Transactional leadership was not found to have a direct impact on the performance of the organization. This leadership style does not encourage creativity and innovation among the employees and hence, the employees do not perform as per the expectations of the organization.

Conclusion
Transformational leadership has four I’s dimensions such as Idealized Influence, Inspirational Motivation, Intellectual stimulation and Individual Consideration Dimension. There are four dimensions of transactional leadership such as Contingent reward, Active management by exception, Passive management by exception and Laissez-faire.



References


Bass. B.M, (1999).’Two Decades of Research and Development in Transformational Leadership’. EUROPEAN JOURNAL OF WORK AND ORGANIZATIONAL PSYCHOLOGY. Volume, 8 (1), pp. 9–32
Daft. L.R, (2012).’New Era of Management’.10 edition. India: Cengage learning, P.453

White, (2018).CIO. What is transformational leadership? A model motivating innovation [Online]
https://www.cio.com/article/3257184/what-is-transformational-leadership-a-model-for-motivating-innovation.html [Accessed 19th June 2020]

Asaar. H, (2018). ‘Impact of Leadership Styles on Organizational Performance’. Journal of Human Resources Management Research. UAE. IBIMA. Vol. 2018, Article ID 687849, 10  pages, ISSN : 2166-0018

http://youtube.com/watch?v=HvS4OfxsbQU





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