Practical Implications of Transactional and Transformational Leadership
Leadership Styles:
Practical Implications of Transactional and Transformational Leadership
Leadership is a skill that is often described as a form of social influence because it is the process of influencing an individual or organizing a group of people with the aim of reaching a common goal. Early research in leadership considered only the leader’s traits as determinants of successful leadership, but modern research recognizes several factors that enable leaders to influence their followers. Rather than observing leadership as a natural and fixed occurrence, contemporary theories and research on effective leadership state that it is a skill which can be learned by developing various cognitive and behavioral patterns common to all effective leaders. Most importantly, environmental influences determine the practical implication and benefits of each leadership style. Transformational and transactional leadership styles are the most common contemporary examples of leadership styles that leaders can use to achieve their objectives under different circumstances.
Some of the earliest theories regarding leadership focused on identifying individual characteristics that distinguished people between effective and ineffective leaders. The trait theory of leadership states that individual traits are responsible for effective leadership. Some theories that focus on character traits as determinants for effective leadership suggest that leadership is inherited along with the character traits from ancestors. However, further research in the field of leadership suggested that situational factors significantly impact the effectiveness of leadership. Rather than observing leadership through the trait theory, researchers began developing other theories to understand all determinants involved in leadership. For example, behavioral theories, style theories, the transactional theory, the transformational theory, the situational theory, and the functional theory are some of the most common contemporary theories in leadership research.
Transformational leadership is a form of leadership that emphasizes the influence on motivation and performance in followers. After several decades of research, scientists have concluded that four main elements are included in transformational leadership. Those elements include individualized consideration, intellectual stimulation, inspirational motivation, and idealized influence. When all elements are implemented simultaneously, organizations will most likely experience positive outcomes after transitional periods of changes. In practical implication, Bass (1990) suggests that transformational leaders encourage high employee performance, improved employee recruitment, improved workplace communication, and better organizational development than companies that do not practice transformational leadership.
There are several examples when a transformational leadership style is useful in practical implication, but developing ideas, visions, goals, and connecting them to strategies that will be used to realize the common goal are some of the most common situations when transformational leadership can prove useful because they aim at changing the workplace environment. For example, during the 1970s, Lee Iacocca became the CEO of Chrysler and introduced various changes within the organization by using the transformational model (Tichy & Ulrich, 2007). Iacocca changed the internal processes and policies the company used; the organization changed its management practices completely; instead of suffering from bankruptcy, the company became profitable. From one perspective, it is possible to argue that transformational leadership can change the entire organizational structure by changing the core statements, values, priorities, and culture within the organization (Tichy & Ulrich, 2007). However, transformational leadership is useful only when changes are necessary, so transactional leadership is more appropriate than transformational leadership in maintaining routines and processes.
Transactional leadership is a style that emphasizes the reward and punishment system to stimulate performance and motivate followers. In contrast to transformational leadership, which is proactive and relies on improvements within the organization, transactional leadership is more passive and responsive. Transactional leadership is a style used to carry out regular routines because it does not focus on implementing changes in a working system. Furthermore, it is also effective when an organization is in a crisis. Overall, transactional leadership aims to influence followers through task-focused mechanisms. In practice, transactional leaders will make their expectations clear, set straightforward rules, and emphasize fair relationships within the organization (DeHoogh, DenHartog, & Koopman, 2005).
Transactional leadership is applicable in various scenarios. It is the most common form of leadership in military organizations, especially during war, because it is based on the reward and punishment system. However, each organization is liable to face a crisis, so business management often requires strict and ruthless leadership during times of crisis. Punishing deviations from orders and rewarding efficient performance is an example of a working system in times when errors should not be allowed because the entire organization is liable and has to work as one entity to overcome a crisis. While transactional leadership is still in practice today, various researchers emphasize the importance of transitional leadership because its proactive approach allows organizations to adapt to external influences more effectively than transactional leadership (Bass & Avolio, 1994). However, rather than choosing only one of those leadership styles, they complement each other, so it is possible to utilize the best characteristics from both approaches and gain a competitive edge on the market.
Although transformational and transactional leadership are often depicted as opposite styles, it is possible to use them together often and achieve positive outcomes within the organization. While most of the modern research focuses on transformational leadership as the superior model, most researchers agree that transformational and transactional leadership styles are equivalent (as cited in DeHoogh et al., 2005). For example, transactional leadership is responsive, so passive leaders will often wait for the problem to occur and fix it later. On the other hand, transformational leadership encourages an active approach to solving problems by detecting possible issues before they manifest. It is possible to combine the proactive approach in detecting issues while practicing transactional leadership by maintaining the daily routine or rewarding problem prevention. According to Bass (1997), transactional leaders have the ability to set specific policies, provide better appraisals, and rewards to employees while transformational leaders have the ability to motivate the employees to extend their performance and productivity. Although each leadership style is more suitable in a different environment, combining both styles simultaneously is applicable during all stages of organizational development and under all situational circumstances.
Various factors influence the leader’s ability to influence followers, and it is evident that organizational dynamics and environmental influences are some of those factors, so it is not possible to proclaim any single theory or style as an absolute leadership mechanism. Current research indicates that both transformational and transactional styles are applicable in different circumstance, and it is also possible to apply them together in all circumstances to achieve the organization’s common objectives. There is no correct or wrong leadership style, so leaders must be able to determine when the circumstances require a particular leadership style to maintain workplace morale, productivity, and performance levels within an organization.
References
Bass, B. M. (1990). From transactional to transformational leadership: Learning to share the vision. Organizational Dynamics, 18, 19-31.
Bass, B. M., & Avolio, B. J. (Eds.). (1994). Improving organizational effectiveness through transformational leadership. Thousand Oaks, CA: Sage Publications.
Bass, B. M. (1997). Does the transactional-transformational leadership paradigm transcend organizational and national boundaries? American Psychologist, 52(2), 130-139.
DeHoogh, A. H. B., DenHartog, D. N., & Koopman, P. L. (2005). Linking the Big Five-Factors of personality and charismatic and transactional leadership: Perceived dynamic work environment as a moderator. Journal of Organizational Behavior, 26, 839-865. doi:10.1002/job.344
Tichy, N. M., & Ulrich, D. O. (2007). The leadership challenge: A call for the transformational leader. In J. S. Ott, S. J. Parkes, & R. B. Simpson (Eds.), Classical readings of organizational behavior (4th ed.) (pp. 65-73). Belmont, CA: Wadsworth. (Original work published 1984).
