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Transformational vs Transactional
Understanding the differences between transactional and transformational leadership styles, their strengths and weaknesses and their applications.
Transformational vs Transactional
Table of contents
1.4. Bernard Bass
Burns' Transforming and Transactional leadership styles 
James MacGregor Burns, who studied political leaders like Roosevelt and Kennedy, first described these two distinct styles of leadership in his 1978 book, Leadership. He used the word 'transforming' rather than 'transformational'. Both terms are used here, and they mean the same. Below are the descriptions and differences of the two styles:
Where the leader taps into his followers' higher needs and values, inspires them with new possibilities that have strong appeal and raises their level of confidence, conviction and desire to achieve a common, moral purpose.
Where the leader causes a follower to act in a certain way in return for something the follower wants to have (or avoid). For example, by offering higher pay in return for increased productivity; or tax cuts in exchange for votes.
Many political leaders demonstrate the transactional style. Mahatma Gandhi was an exemplar (a typical example) of someone who leads using the transforming or transformational style. The transformational leadership style therefore can have an overlap with theservant leader leadership philosophy.
There are three main differences between the two styles of transformational and transactional leadership.
- The first involves purpose
- The second involves morality
- The third involves the timescale or time horizon
|A shared higher, more stretching purpose is central to transformational leadership.||No shared purpose binds follower and leader, other than perhaps maintaining the status quo.||Burns said there is always a moral aspect to transforming leadership.*||There is no explicit moral side to transactional leadership - the leader's aims may be moral or immoral.||Transforming leadership centres on longer-term, more difficult (often more inspiring) aims.||Transactional leadership usually focuses on leaders' and followers' shorter-term needs.|
* So although Hitler transformed Germany in the 1930s, under Burns' definition he would not be a transforming leader. Some scholars have used the term 'pseudo-transformational leaders' for those who pursue immoral aims.
So, while the defining feature of transactional leadership is a two-way exchange ("I'll give you this if you give me that"), the main features of transforming leadership are inspiration, mobilisation and moral purpose. Indeed, MacGregor Burns summarised transforming leadership: "Such leadership occurs when one or more persons engage with others in such a way that leaders and followers raise one another to higher levels of motivation and morality." When he talked about morality, he meant leadership that "...can produce social change that will satisfy followers' authentic needs." Of the two styles, transforming leadership is more likely to achieve major change than transactional leadership - mainly because, by definition, the former goes after more ambitious goals.
Bernard Bass (author of Leadership and Performance Beyond Expectations, 1985) built on MacGregor Burns' ideas. He used the term 'transformational leadership' instead of 'transforming leadership' and since then most authors have followed his lead. Bass also strengthened the idea that transformational leaders have the greater impact when he wrote: "Transactional leaders work within the organizational culture as it exists; the transformational leader changes the organizational culture."
Bass argued that there are four keys to successful transformational leadership:
1. Trust - building a high degree of trust between leaders and followers by setting a high moral and ethical example. He called this idealised influence.
2. Inspiration - providing a vision or goals that inspire and motivate followers to act because they feel the direction they are going in is significant and worthwhile. This he called inspirational motivation.
3. Creativity - giving people the big picture and a way of working that allows them to question conventional wisdom and come up with fresh solutions to old problems. He called this intellectual stimulation.
4. Personal growth - paying attention to followers as individuals with their own needs and ambitions, offering them coaching and mentoring, enabling them to grow and feel fulfilled. This he called individual consideration.
Although we are referring to two different styles of leadership, it wouldn't be correct to say that someone must be either a transformational leader or a transactional leader. It is possible to combine both styles. (It is also reasonable to suggest that no leader need be confined to one or other of these two styles, because as we shall see, other styles certainly exist, and this is before we consider the potential influence of philosophies and models upon any leader's chosen methods and development.)
That said, while we are presently concerned with transformational and transactional styles, consider this example of 'style switching': While leaders in transformational mode would normally try to attain the backing of followers by appealing to their values and offering an inspirational vision, the leader may meet resistance. At times like this, a leader may adopt the transactional style to create more of a traditional exchange by trading something that the leadership can offer (desired by followers) in return for something the leadership seeks from the followers.
The transactional leadership style often works well - provided everyone knows and agrees on the goals, priorities and methods. However, the transactional style may not work when the situation calls for a big change in direction, or circumstances demand creative problem solving. In such a climate, a transformational style is often required and tends to be more successful.
You will notice that the transformational leadership style overlaps with the leadership philosophies:
- authentic leadership - in its appeal to values
- ethical leadership - in its insistence on morality, and as already mentioned
- servant leadership - in helping followers to achieve bigger aims and personal potential
To a far lesser degree, transformational leadership can be a limited feature within aspects of leadership models which allow and respond to the growth of followers, for example, we can recognise transformational elements in:
- Tannenbaum and Schmidt Continuum - latter stages involving high trust and serious responsibility delegation
- Situational Leadership® - the 'Delegating' (M4) mode of leadership enabling followers to self-lead
As suggested several times previously, we see demonstration that these various ideas on leadership may be distinct, but they are not necessarily separate from each other.