Transactional leadership versus transformational leadership

The distinction between a transactional and transformational leader is an important one in leadership jargon. Transactional leaders, as the name implies, rely on some form of "exchange" with their followers to achieve the organization's goals. A transactional relationship between the leader and follower is one of mutual dependence (Kellerman, 1984), and therefore the leader must ensure that the followers' needs are being met consistently. Not all transactions are equal, and transactional relationships based on intangible exchanges like trust or emotional bonds are stronger than transactions based on tangible goods and rights (Landy, 1985). Since tangible or lower-order transactions depend on physical resources, a leader loses bargaining power when they don't have the ability to provide such resources. These transactions are therefore dependent on the leader's "position" in the organization. Higher- order transactions on the other hand continue to be in the control of the leader since they are based on intangible exchanges (Kuhnert and Lewis, 1987).  But irrespective of the quality of the transactions, the primary mode of leadership here is through exchange or quid pro quo.

Transformational leadership on the other hand arises from the core values of the leader. These are values considered non-negotiable by them under any circumstances. For example, justice could be considered one such value. Since the vision for the organization arises from the deep personal conviction of the leader, they are able to unite their followers, and even change (transform) them to achieve results beyond expectations (Bass, 1985; Burns, 1978). The personal characteristics of the leader are therefore the crucial elements in transformational leadership, unlike the goods being exchanged in transactional leadership. Charisma is an important but not sufficient component of transformational leaders. Charisma involves  influencing others, but transformational leaders influence with the purpose of achieving a higher moral ground for their followers and organizations. Therefore Adolf Hitler could be considered charismatic, but not transformational.

Transformational leaders by virtue of their core values transcend their self -interests for the greater common good, and are able to influence their followers to do the same. The influence process however occurs through internal transformation of the followers rather than through coercion. The leader is also transformed in the process, and therefore the leader and followers are bound together in creating positive change. Transformational leaders may sometimes use transactional methods, but it is always as part of the larger schema, rather than as their primary form of influence.

Transformational leadership is clearly a theory in tune with the times. Its focus on the mutual transformation of the leader and follower, empowerment rather than control of followers, and intrinsic motivation than external rewards reflects the needs of today's knowledge workers and highly skilled teams. Transformational leadership thus is at the forefront of leadership research today, and will be discussed in greater depth in the following posts.    



References

Bass, B.M (1985). Leadership and performance beyond expectations. New York: Free Press.

Burns, J.M. (1978). Leadership. New York: Harper & Row.

Kellerman, B. (1984). Leadership: Multidisciplinary perspectives. Englewood Cliffs, NJ: Prentice Hall.

Kuhnert, K.W., & Lewis, P. (1987). Transactional and transformational leadership: A constructive/development analysis. Academy of Management Review, 12(4): 684-657.

Landy, F.L. (1985). Psychology of work behavior. Homewood, IL: Dorsey Press.

Northhouse, P.G (2013). Leadership. Sixth edition. Thousand Oaks, California: Sage Publications, Inc.


Picture credit (transactional)
Picture credit (transformational)