Part of growing and learning as a leader means establishing and developing your own unique leadership style. This is a process that unfolds over time, involving careful reassessment and adaptation tailored to your team’s specific needs and challenges.
When it comes to leadership styles, there’s no shortage of options to choose from and make your own. Among the most common are transformational and transactional leadership — and understanding the differences between the two (as well as when to use each) could help you become a stronger and more confident leader. Below, we compare and contrast transactional vs. transformational leadership in depth.
What Is Transformational Leadership?
Transformational leadership is an approach that focuses on inspiring change, employee development, and long-term success. In other words, transformational leaders strive to motivate team members to align their own goals with those of the organization.
Core Components of Transformational Leadership
Key aspects of the transformational leadership style include:
- Idealized influence – Leaders strive to be seen as role models among team members.
- Inspirational motivation – Leaders are able to inspire, motivate, and encourage team members to be part of the organization’s overall vision and mission.
- Intellectual stimulation – Leaders help encourage team members to be the best versions of themselves, working toward continuous improvement and development.
- Individualized consideration – Leaders tailor their strategy to meet the needs of individual team members, offering personalized support along the way.
Advantages of Transformational Leadership
A transformational leadership approach may be ideal for a number of reasons, ranging from increased team member engagement to improved innovation and creativity.
Inspires High Levels of Employee Engagement
Transformational leaders may be successful in driving employee engagement, especially when they take an individual approach to helping team members transcend to become the best versions of themselves. When team members feel like their ideas matter, they may become more engaged in their work.
Encourages Innovation and Adaptability
Likewise, when team members feel supported and encouraged in their work, they may be more willing to share their thoughts and ideas. This, in turn, could lead to greater innovation that could drive organizational growth and success.
Strengthens Organizational Culture
Transformational leaders may also be able to cultivate a more positive workplace culture, bolstered by supportive teams where individuals feel a true sense of belonging. This type of organizational culture could promote better professional relationships among team members, along with more open and honest communication.
Promotes Leadership Development
When employees engage with transformational leaders, they can build their own skills and confidence. Over time, this could result in team members who are prepared to move into more advanced roles, including supervisory and leadership positions within the company.
What Is Transactional Leadership?
Another popular leadership type is the transactional leadership style, which tends to focus on structure, performance, monitoring, and short-term results above all else. Transactional leaders aim to maintain compliance and a sense of control, offering rewards in exchange for performance.
Core Components of Transactional Leadership
The key components of transactional leadership include:
- Contingent reward – Transactional leaders offer rewards (whether in the form of monetary compensation or praise and recognition) in exchange for performance outlined by clear standards and expectations.
- Management by exception (active) – These leaders keep a close eye on team members’ performance indicators, getting involved when corrective action is needed.
- Management by exception (passive) – These types of leaders only get involved when major issues arise, taking a more passive approach.
- Structured processes – Transactional leaders have clear systems in place, where team members understand their roles, responsibilities, and expectations.
Advantages of Transactional Leadership
In the right context, transactional leadership can drive positive organizational change, yielding several distinct benefits:
Provides Clear Structure and Expectations
With transactional leadership, team members can easily understand their expectations and responsibilities. There’s no confusion as to what each team member’s roles entail, thus creating a structured environment for everyone involved.
Enhances Operational Efficiency
Because transactional leaders focus on performance metrics and other clear-cut data, they can gain a better understanding of when processes need to be streamlined or when corrective action is necessary. This can thereby result in better operational efficiency and productivity.
Ensures Accountability Through Rewards and Consequences
Under a transactional leadership style, clear expectations ensure accountability among team members. Because each individual understands their exact responsibilities and roles as well as what will happen when they meet (or don’t meet) expectations, everybody can stay on the same page.
Supports Short-Term Goal Achievement
Given a greater focus on short-term projects and smaller goals, a transactional leadership approach supports immediate achievements — which can make it an ideal strategy for completing specific tasks or smaller projects.
What’s the Difference Between Transformational and Transactional Leadership?
Despite their similar-sounding names, transactional and transformational leadership approaches lie on rather opposite ends of the spectrum. When comparing transactional vs. transformational leadership, the latter tends to be more focused on the bigger picture and looking at the greater organizational vision. Meanwhile, transactional leadership is more centered on achieving short-term goals through a system of clear rewards and consequences.
When to Use Each Leadership Style
Ultimately, there’s no singular “winner” between transactional vs. transformational leadership. It all boils down to context and knowing your organization well enough to decide when to leverage each style.
Use Transformational Leadership When:
Generally, a transformational approach is ideal for situations where leaders are trying to encourage team members to align their own goals with organizational objectives — relying on intrinsic motivation over external rewards. Operating as a transformational leader can be suitable for:
- Achieving big-picture goals
- Improving innovation
- Preparing for changes
- Creating a shared sense of ownership and purpose among team members
Use Transactional Leadership When:
Transactional leadership, on the other hand, may be the better option when leaders need to work toward smaller or shorter-term goals. This is more likely to be the case in certain industries where success is driven by performance metrics. A transactional leadership style may also be suitable when leaders need to create a stronger sense of accountability among team members.
Can Leaders Use Both?
More often, effective leadership is less about deciding between leadership styles and more about blending styles to suit their unique organizational needs. Depending on the situation, leaders may choose to pivot between approaches, leaning more heavily on one type of leadership when the need arises. At the end of the day, successful leaders tend to be those who know how to adapt and be flexible — including when to use different tools and techniques to achieve their goals.
Final Thoughts: Leadership With Purpose and Strategy
Both transactional and transformational leadership styles have their place in the contemporary workplace. The key is for leaders to continuously assess changing organizational needs and adapt as needed. If you don’t feel like your current approach is yielding the results you expected, now could be a fitting time to reflect on your own leadership style and consider whether a hybrid approach to leading your team could help you improve.
Discover More in an Organizational Leadership Degree Program
Being a more effective leader starts with knowing how to adapt and tailor your leadership style to suit the needs of your organization. No matter if you opt for a more transactional approach, transformational approach, or something in between — a Master of Business Administration (MBA) in Organizational Leadership from Johnson & Wales University Online can help you build essential management, leadership, and self-assessment skills. Plus, with its flexible online format, this program empowers you to pursue an advanced degree without having to put other aspects of your life on hold. Get in touch to learn more, or get started by completing your application for admission.
For more information about completing your degree online, complete the Request Info form, call 855-JWU-1881, or email [email protected].
