Transactional v’s Transformational Leaders

There is no one blue print for making a great leader

Are all leaders are created equal? No. Are there commonalities in the skills required to make great leaders of every age and stage? Yes. Are there important deliverables from different types of leadership styles? Yes. Do we need different things from our leaders as our career develops? Yes. Does that impact the different ways we are required to lead? Absolutely.

The environment we live in has never been more complex, volatile and unpredictable and I’d like to explore the difference in Transactional Leaders and Transformational Leaders – both vital to securing business success and complimentary to how they fit in the development function of our businesses, processes, and people. Transactional leaders leverage the most left-brain action of planning, organising, and efficiency while transformational leaders are best versed to visualise and articulate the strategy.

Both types of leadership must go hand in hand and there is a constant balancing act for us to be able to provide the right ingredients for growth, innovation an opportunity. There are arguably many different approaches to the ‘why and where for’ of the differences between both. Here’s a summary describing each style and an interesting comparison I read on recently.

Transactional Leadership

Transactional leadership promotes compliance with existing organisational goals and performance expectations through supervision and the use of rewards and punishments. Transactional leaders are task- and outcome-oriented. Especially effective under strict time and resource constraints and in highly-specified projects, this approach adheres to the status quo and employs a form of management that pays close attention to how employees perform their tasks.

Transformational Leadership

Transformational leadership focuses on increasing employee motivation and engagement and attempts to link employees’ sense of self with organisational values. This leadership style emphasises leading by example, so followers can identify with the leader’s vision and values. A transformational approach focuses on individual strengths and weaknesses of employees and on enhancing their capabilities and their commitment to organisational goals, often by seeking their buy-in for decisions.

Comparing Leadership Types

Transactional and transformational leadership exhibit five key differences:

  1. Transactional leadership reacts to problems as they arise, whereas transformational leadership is more likely to address issues before they become problematic.
  2. Transactional leaders work within existing an organizational culture, while transformational leaders emphasize new ideas and thereby “transform” organizational culture.
  3. Transactional leaders reward and punish in traditional ways according to organizational standards; transformational leaders attempt to achieve positive results from employees by keeping them invested in projects, leading to an internal, high-order reward system.
  4. Transactional leaders appeal to the self-interest of employees who seek out rewards for themselves, in contrast to transformational leaders, who appeal to group interests and notions of organizational success.
  5. Transactional leadership is more akin to the common notions of management, whereas transformational leadership adheres more closely to what is colloquially referred to as leadership.

Source: Boundless. “Transactional Versus Transformational Leaders.” Boundless Management.

Helen Clarks recent interview for the UN secretary-general candidates debate was an exceptional example of a transformational leader. Helen clearly articulated her vision for the UN, her strengths that complement the values of the organisation and rationale pragmatic approaches to the challenges the UN faces. Her organisation might be the UN, but her stakeholders are every man, woman and child – she took us all on the journey of inspiration that would drive her success should she be appointed.

We wish Helen every success and are so proud that our nation is being represented so articulately on a global stage.

‘As New Zealanders, we’ve been in on the United Nations from the very beginning, played a role in the drafting of the charter – it means a lot to us that those processes are followed.’ Helen Clark

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