Transactional vs Transformational Leadership

When mentioning leadership, what often come to people minds are an individual leader, extreme power, high responsibility, orders and respect from others. In most documentation, leadership is considered to be a broad term that involves leaders, followers, influence process, goals, tasks, people and changes. “The world is changing, and so is our concept of leadership” (Machines S & Traveling, T 2007).

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They informed that a “consensus” has been reached from thirty eight Mounties that “leadership is about influencing, motivating and enabling others to contribute towards the effectiveness and success of the organizations of which they are members. ” However, there is no “universal” definition on leadership, Lousier and ACH argued, it depends on the purpose of the study. This report is focused on transactional and transformational forms of leadership. Thus, it turns the focus more on the leaders and the relationships between them and the above component factors of leadership.

According to Cox (cited in Hay, 1 2006) leadership can fall into one of the two disagrees, either transactional or transformational. 2. Transactional Leadership From the view points of Machines & Traveling, transactional leadership focuses on leaders’ behavior: “managing” – including controlling, motivating, organizing, planning- using reward systems and adopting leaders’ behaviors to improve employee performance and satisfaction. A clearer definition in term of the transitory relationships between leaders and followers is provided by Bass (cited in Brenner, S et al 2007).

The concept was defined as an “economic exchange” of tangible rewards where leaders and lowers enter a “contractual arrangement” that benefits both leaders and followers. 3. Transformational Leadership Slouch, JAW & Hellfire D said that transformational leadership involves “anticipating future trends”, “inspiring’, “developing” self-leadership and “embracing new vision of possibilities” while Lousier et al focus transformational leadership on the ‘transforming abilities” of the leaders who move and change things “in a big way’.

On the other hand, as Machines & Traveling viewed transactional leadership as “managing”, they defined transformational leadership s “about ‘leading’ – changing the organization’s strategies and culture so that they have a better fit with the surrounding environment”. However, Machines & Traveling get it clear and most persuasive when concluding that a leader is considered transformational when they successfully bring about changes, not when they engage in transformational behaviors. Transformation process According to Machines and Traveling, there are four steps of the transformation process. Creating a strategic vision which is to create a realistic and attractive future Communicating vision which is to bring their scions to the employees via systems of symbols, metaphors and stories… Modeling the vision means the leaders not only talk but also plan activities to make the practice consistent with the vision. Building commitment towards the visions is to involving employees into the visions. 4. Transactional leadership versus transformational leadership I Criteria I Transactional leadership Transformational leadership I Leading I I Nature I Managing I Exchange of needs I Transforming the organization to fit the environment Contractual arrangement I Leaders characteristics I Task and reward-oriented

Charismatic I Visionary and inspirational I I(Lousier, Ran & ACH, CB 1 12007) Influential and daring Passive I Leading Methods influence by exception I Contingent reward I Structured I Idealized I I(Hulk, G 2006) I Active management I Individualized consideration I Passive management by exception I Leaders Favor I Stability changes, opportunities existing structures, strategies and I culture” performance CB 2007) Inspirational motivation I Intellectual stimulation I I Leaders act for I Make changes Challenges, I “strengthen the characteristics I Task and reward-oriented I Better Lousier, RAN & ACH, I I Leaders I Charismatic & ethical I Visionary & Inspirational I Influential & Daring I I(Lousier, Ran & ACH, CB I Structured I I Leaders Action I Create vision on what can be accomplished I Make use of available resources I Passive I Clarify tasks I Allocating resources I Inspire followers to do their best I Set performance expectation performance by enhancing self motivation performance using rewards and punishments allowing self-leadership, self I Enhance I Manage Change followers by I Change followers by providing feedback I Followers reaction I development

I (Kananga, RAN 2001) I Compliance I(Hulk, G 2006) I Commitment I(Limas, K & Gunplay, SO 2007) behaviors I I Changes in Followers I Followers’ I Followers’ attitudes Rewards for followers I Physical needs ( money, promotion … ) Initialization & personal identification & Gunplay, SO 2007) (Yuk G, 2006) I Leaders’ success I When goal is achieved I(Limas, K I When changes are successfully brought Short I Lasting time I “Enduring” I(Lousier, RAN & ACH, CB Relationship ends or redefines once a transaction is done I Changing, active I I Environment to use I Stable, passive 5. Effective and situational aspects of transactional and transformational leadership A research of Judge and Piccolo (cited in From, M) showed that leader effectiveness and follower satisfaction relates more to transformational leadership.

And although transformational leadership increase follower motivation and performance and is more favored by employees then transactional leadership, it is suggested by many today authors ( Yuk, Hughes, Gannett & Church, Lousier & ACH, Machines & Traveling) that an effective leaders must own the skills of both transactional and transformational leadership. Transactional leadership improves organizational efficiency and ensures clear expectation and well-defined direction. Complimentarily to that, transformational leadership will bring the companies into a “better course of action” (Machines & Traveling) It is also widely concluded that leadership styles depends on the situation.

Transactional leadership is more appropriate in a stable environment and when there is a need to tighten the disciplines. On the other hand, transformational leadership is best used in organizations which involves fast changing environment and requires adaptive attitudes.