Transformational and Transactional Leadership Styles

Subject: Leadership Styles
Pages: 6
Words: 1621
Reading time:
6 min
Study level: PhD


The ever-changing business environment has compelled organizations to change the way business is done to stay relevant and compete successfully. While in the past, managers simply maintained the status quo and still managed to get things done, the contemporary competitive business setup needs a radical approach if success has to be realized in the long run. In the present world, leaders must be people with a vision and able to rally followers toward the achievement of common goals. In addition, the leaders must be learners and teachers at the same time for their impact to be felt (Singh, Nadim & Ezzedeen, 2012). Besides having the ability to foresee paradigm changes in an organization or society, leaders of today are expected to have a strong sense of ethics. As a result, they must work hard to build a high level of integrity in their organizations or society.

Leadership is defined differently by various scholars. While some scholars see and define leadership as a transformational process, others consider it to be a transactional process (Murari, 2011). Even though many leadership styles exist, research indicates that they are interrelated in so many ways. A bureaucratic style of leadership, for example, maybe covered under transactional while ethical leadership may be considered under the transformational leadership style.


Generally, a leader is an agent of change and one who can rally people behind him toward a common course (Murari, 2011). Leadership is about lifting the ambitions of followers and motivating them to excel. A good example is how Mahatma Gandhi came up with a vision to liberate the people of India and in the process, managed to raise their hopes. A skilled leader builds the confidence of his or her followers and encourages them to face challenges with determination.

Arguably, many leaders do not understand the effect of leadership on the general performance of the organization. As noted by Wang, Shieh, and Tang (2010), poor leadership is what affects the performance of employees. It is thus imperative for organizations to dedicate enough time to understand the effect of leadership on delivery and devise strategies that will lead to the realization of better results.

Leadership Styles

An understanding of leadership and the various styles of leadership is vital for success. While some leaders are successful, others face challenges and are hated by their followers. In the same way, some leaders are more respected than others. Ironically, there are some leaders who despite being successful, are not liked by followers. To a large extent, the reaction a leader receives from his or her followers depends on the leadership style adopted. It is thus important for organizations to understand the relationship between leadership styles and organizational performance. Whereas some leadership styles motivate followers to do their very best in what they do, others can be quite discouraging.

Ostensibly, there are as many leadership styles as there are leaders. Among the leadership styles that have been described by scholars are charismatic leadership, democratic leadership, participative leadership, abusive leadership, ethical leadership, transcendental leadership, holistic leadership, transactional leadership, and transformational leadership. Though they may appear distinct, these styles are interrelated in many ways. Transformational and transactional leadership styles are discussed in the following subsections.

Transformational Leadership Style

Transformational leadership comprises idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration. On the contrary, transactional leadership is characterized by rewards, management by execution, and laissez-faire management. Arguably, transformational leadership enhances subordinates’ satisfaction and trust in leadership, as well as employees’ effective commitment (Barling, Slater & Kelloway, 2000). Other names used to refer to transformational leadership include exalting, preaching, exhorting, and uplifting. From these synonyms, it follows transformational leadership is encourages both leaders and followers to be more accountable for their actions. Generally, transformational leaders empower others to work toward becoming their best and offer all the necessary support to help them do so. Transformational leaders also serve as role models, support optimism, and mobilize commitment. They also focus on the followers’ need for growth.

According to Murari (2011), transformational leadership can be directive, participative, as well as task, and relation-oriented. The classification may, however, be based on the leader’s characteristics or a given situation. Transformational leadership is also associated with the performance of business units in an organization. Research findings indicate that there is a very high correlation between the transformational style of leadership and other styles such as democratic, relation-oriented, and task-oriented. Transformational leadership is also similar to transcendental leadership in that it uses values, attitudes, and behaviors to motivate followers and to create positive organizational outcomes. The style encourages followers to form strong ties and thus strengthens work relations.

Transformational leadership creates adaptive, entrepreneurial, innovative, and flexible organizations. The personal and professional image of transformational leaders makes it possible for them to successfully lead people in a complex work environment. Transformational leadership acts as a good stimulus for change and ensures that change can be realized effectively. A transformational leader has several key dimensions including clarity, communication, consistency, caring, creating opportunities, self-confidence, and vision. Transformational leadership provides a long-term vision to entrepreneurial endeavors by bringing meaning to disconnected activities. It also provides a healthy motivational counterbalance to the instrumental focus of transactional leadership. Supplying inspiration, vision, and deeper meaning through transformational leadership promotes incremental growth in organizations.

Transformational leaders are also known to be charismatic in several ways. First, they are intellectual leaders who can transform society by providing a clear vision for their followers. Ordinarily, ambiguous visions lead to confusion and poor delivery. Transformational leaders also help to change society by choosing to only address a single moral issue at any given time. Using personal charm to engineer sweeping and widespread changes, transformational leaders can easily bring changes in a society or an organization. They also dedicate themselves to explicit goals that require substantial social change.

Transactional Leadership Style

Transactional leadership involves the use of authority to ensure that followers do what they are asked to with minimal or no resistance at all. This is in contrast to transformational leadership which creates room for leaders and followers to work closely in encouraging each other to be work responsibly. In other words, transformational leadership emphasizes morality while transactional leadership does not. Under transformational leadership, employees are encouraged to work hard by giving rewards. The transactional leader sets metrics used to monitor performance to ensure that no one deviates from what is expected. It is the responsibility of the leader to make everything clear to the followers.

Leadership styles that are related to the transactional style include bureaucratic and autocratic leadership. To some extent, transactional leaders also can influence others much as opinion leaders do. They also tend to hold positions of power over their followers and thus can control how they behave and perform. Transactional leaders may also be likened to executive leaders with numerous powers. Similar to bureaucratic leaders, transactional leaders focus on consistency, predictability, stability, and efficiency. Under transactional leadership, a leader exercises power over his or her subjects. Often, followers are never free to make suggestions even though they may have ideas that may benefit an entire team or organization. Considering that many people do not like restrictions, some aspects of transactional leadership cause fear and make followers hide from their leaders. Transactional leadership may, however, be advantageous in situations where control is deemed necessary.

According to Jaroslav (2013), followers under transactional leadership make a commitment to be obedient to their leaders and to do as they are told. Central to the application of transactional leadership is the fact that followers get rewards whenever they do a good job. Transactional leadership also gives leaders the liberty to demand performance from their followers in order to ensure that standards are met. According to Warrick (1981), the transactional leadership style focuses more on performance rather than relationships, and followers are often driven by fear to deliver excellent results. In cases where followers fail to comply with the set requirements, the leader has the authority to demand a repeat of the work until everything is done to the agreed standard.


As has been explained in this paper, leaders must understand that their leadership styles can affect the performance of the organization either positively or negatively. Unfortunately, very few managers are aware of the relationship that exists between their approach to leadership and performance. It is important to note that employees may be encouraged or discouraged depending on how they are led. Although the use of punishment and rewards enables leaders to control the behavior of their followers, it may have negative repercussions that leaders must be familiar with. The style of leadership can thus affect an employee’s delivery in his or her job. In a worst-case scenario, leadership styles may have a great effect on the employee’s social life, away from the workplace. If left unchecked, the effect on one single individual will lead to poor performance which in turn interferes with the performance of the whole organization.

Most people prefer transformational over transactional leadership. Among other benefits, transformational leadership inspires followers to deliver to a high degree of excellence. The style also benefits both the leaders and followers and cultivates integrity. Transactional leadership on the other is preferred in situations where an organization needs to realize short-term goals rather than long-term ones.

However, scholars recommend a mix of both styles of leadership. While each style has its strengths, there are shortcomings too. The use of both transformational and transactional leadership styles thus enables organizations to reap benefits associated with both styles. For example, better results are realized from routine work when transactional leadership is used. On the other hand, transformational leadership tends to focus more on innovation that leads to value addition and thus encourages employees to be creative.


Barling, J., Slater, F. & Kelloway, E. K. (2000). Transformational Leadership and Emotional Intelligence: An Exploratory Study. Leadership & Organizational Development Journal, 21(3), 157 – 161.

Jaroslav, B. (2013). The Leadership Style and the Productiveness of Employees in the Banking Sector in Slovakia. Journal of Competitiveness, 5(1), 39 – 52.

Murari, K. (2011). Just! Five Distinct Leadership Styles. International Journal of Research in Commerce and Management, 2(12), 30 – 36.

Singh, P., Nadim, A. & Ezzedeen, S. R. (2012). Leadership styles and gender: An extension. Journal of leadership studies, 5(4), 6 – 19.

Wang, F. J., Shieh, J. & Tang, M. L. (2010). Effect of Leadership Style on Organizational Performance as Viewed from Human Resource Management Strategy. African Journal of Business Management, 4 (18), 3924 – 3936.

Warrick, D. D. (1981). Leadership Styles and their Consequences. Journal of Experiential Learning and Simulation, 4, 155 – 172.