Transactional leadership styles are more concerned with maintaining the normal flow of operations. Transactional leadership can be described as “keeping the ship afloat. ” Transactional leaders use disciplinary power and an array of incentives to motivate employees to perform at their best. The term “transactional” refers to the fact that this type of leader essentially motivates subordinates by exchanging rewards for performance.
A transactional leader generally does not look ahead in strategically guiding an organization to a position of market leadership; instead, these managers are solely concerned with making sure everything flows smoothly today. Transactional leadership motivates followers by setting up social or financial transactions that persuade them to act. For example, a transactional leader might offer bonuses to her sales staff for exceeding quotas. The bonus is a form of financial transaction.
Transactional leadership often is set in opposition to transformational leadership, which is a leadership style that relies on convincing followers that a particular vision of what the organization can achieve is worth working toward. Transformational leadership A transformational leader goes beyond managing day-to-day operations and crafts strategies for taking his company, department or work team to the next level of performance and success. Transformational leadership styles focus on team-building, motivation and collaboration with employees at different levels of an organization to accomplish change for the better.
Transformational leaders set goals and incentives to push their subordinates to higher performance levels, while providing opportunities for personal and professional growth for each employee. Transformational leadership might sound preferable because the leader doesn’t cynically harness the self-interest of her followers, as the transactional leader does. But there’s a problem. A transformational leader might not be forthright with her followers. For example, a business owner might motivate her workforce with stirring speeches about the nobility of hard work, while her real aim is to increase production for personal gain.
This type of transformational leader might be called inauthentic. Advantages Both leadership styles are needed for guiding an organization to success. Transactional leaders provide distinct advantages through their abilities to address small operational details quickly. Transactional leaders handle all the details that come together to build a strong reputation in the marketplace, while keeping employees productive on the front line. Transformational leadership styles are crucial to the strategic development of a small business.
Small businesses with transformational leaders at the helm shoot for ambitious goals, and can they achieve rapid success through the vision and team-building skills of the leader. Applications Different management styles are best suited to different situations. When it comes to front-line supervisors of minimum-wage employees, for example a transactional leadership style can be more effective. Shift supervisors at a fast food restaurant will be much more effective if they are concerned with ensuring all of the various stations run smoothly, rather than spending their time thinking up better ways to serve hamburgers.
On the other hand, CEOs or sales managers can be more effective if they are transformational leaders. Executive managers need the ability to design and communicate grand strategic missions, passing the missions down to transactional leaders for implementation of the details. Organizations emphasize the concept of leadership in training managers or group leaders to propel a team or the organization forward. Within leadership, the effectiveness of the transformational versus transactional leader is often debated.
Transactional leadership relies more on a “give and take” understanding, whereby subordinates have a sense of duty to the leader in exchange for some reward. Transformational leadership, on the other hand, involves a committed relationship between the leader and his followers. In 1985, industrial psychologist Bernard Bass identified and wrote about four basic elements that underlie transformational leadership. Idealized Influence Transformational leaders act as role models and display a charismatic personality that influences others to want to become more like the leader.
Idealized influence can be most expressed through a transformational leader’s willingness to take risks and follow a core set of values, convictions and ethical principles in the actions he takes. It is through this concept of idealized influence that the leader builds trust with his followers and the followers, in turn, develop confidence in their leader. Inspirational Motivation Inspirational motivation refers to the leader’s ability to inspire confidence, motivation and a sense of purpose in his followers.
The transformational leader must articulate a clear vision for the future, communicate expectations of the group and demonstrate a commitment to the goals that have been laid out. This aspect of transformational leadership requires superb communication skills as the leader must convey his messages with precision, power and a sense of authority. Other important behaviors of the leader include his continued optimism, enthusiasm and ability to point out the positive. Intellectual Stimulation
Transformational leadership values creativity and autonomy among the leader’s followers. The leader supports his followers by involving them in the decision-making process and stimulating their efforts to be as creative and innovative as possible to identify solutions. To this end, the transformational leader challenges assumptions and solicits ideas from followers without criticizing. She helps change the way followers think about and frame problems and obstacles. The vision the leader conveys helps followers see the big picture and succeed in their efforts.
Individualized Consideration Each follower or group member has specific needs and desires. For example, some are motivated by money while others by change and excitement. The individualized consideration element of transformational leadership recognizes these needs. The leader must be able to recognize or determine through eavesdropping or observation what motivates each individual. Through one-on-one coaching and mentoring, the transformational leader provides opportunities for customized training sessions for each team member.
These activities allow team members to grow and become fulfilled in their positions. The Benefits of Transformational Leadership Motivation A transformational leader uses her belief in the vision of the company to inspire the staff to be more productive and work towards company goals. The drive behind a transformational leader is to find ways in which she can get the entire staff on board with corporate strategy and planning. When the entire company is on the same page with the corporate vision, it can make achieving that vision easier.
Planning Inspirational managers do not focus their energy solely on motivating the staff. A good transformational leader has broad visions for the company’s future, and those visions can become instrumental in company planning. Whether it is refining the overall business plan or affecting individual marketing programs, the transformational manager has ideas and visions for the future of the company that he wants to share with the management team and work to turn those plans into reality.
Retention The idea of transformational leadership is to reach out to each employee and bring out the best in them. An inspirational manager spends time with each employee discussing ways to make the employee’s job easier, and helping to create plans for developing the employee’s career. This individual attention that is offered by transformational leaders helps to create a strong bond between the manager and his employees that will reduce employee turnover.
Growth A manager that is not intimately involved in the growth of the company and the development of her staff can start to struggle with managing her department as the company grows. A transformational leader is constantly involved with the growth of the company and the ongoing development of employees. As the company grows, the transformational leader maintains that close contact to the company and employees and can make the process of growing a more involved experience for new and veteran employees.