Introduction
Leadership is defined as the art and science of moving people from one point to another. This means that leadership refers to a situation where a person prepares the minds of his or her followers in order to work to attain a certain set of goals as a team or group. Leading brings people together for the attainment of results and the conduct of active work. Leadership might be construed as a process “by which one individual consistently exerts more impact than others on the nature and direction of group activity”.
Leading in the context of businesses and companies come with numerous implications and elements. The concept of work in the modern world is defined within the context of Protestant work ethics, where people form organizations, pool resources and conduct a business activity which involves the breakdown of work and the specialization of different units. This was deeply proliferated and became common by the Industrial Revolution which led to the utilization of technology to manufacture large quantities of products and services to members of the public. Throughout most of the 20th Century, leadership of companies was done within the context of rigid management which involved transactional leadership. However, in the 21st Century, there is a new form of leadership steeped in transformational leadership which involves an advanced form of leadership which is interpersonal and positive.
Studies of New York conducted within a context of larger businesses showed that in the leadership was fundamentally based on an exchange of wages for labor in over 90% of businesses in the first half of the 20th Century. This is known as transactional leadership. The opposite is transformational leadership where a company goes beyond just paying workers into tying the company’s growth to the betterment of the workers. In the past 25 years, the vast majority of firms in America have applied some elements of transformational leadership to their business models. This shows there is a general trend towards the utilization of transformational leadership rather than transactional leadership.
The purpose of this argumentative essay is to prove that transformational leadership is superior to transactional leadership and as businesses grow, they need transformational leadership to survive since transactional leadership destroys businesses. In order to attain this end, the research will examine the case of small businesses in New York City and how they can benefit from these two types of leadership in the next decade. This will present parameters and contexts within which the different business types can be critiqued and analyzed in order to formulate conclusions.
Leadership in Modern and Old Generations
It is apparent that the kind of leadership and worldview people had 100 years ago is very much different from what people have in today’s world. This is mainly due to fundamental differences in the timelines and the dominant cultures and themes that existed in the different periods and eras. This forms the basis for the presentation of the arguments.
In the 20th Century, there was a patriarchal system whereby the dominant rich people were White males. These were the people who owned businesses in New York City and they were mainly persons of Anglo-Saxon origins who migrated from the east coast inland. Such persons started small businesses and acted as the entrepreneurs and managers in New York City. In that period, many White women were given low-engaging jobs – as typists and administrators. Most other women were excluded in totality. Only the ordinary White male was given the leadership role. A few minorities like European migrants were given working class roles. And with the protection granted to the White Anglo-Saxon males, they were the ruling class and they automatically became the leaders by way of being entrepreneurs, managers and/or supervisors. They were the bosses and they developed their own unique class of leadership.
In the 21st Century though, a lot have changed in America and this is evident in the city of New York City. First of all, the US economy has developed significantly due to America’s role as leader of the world and the only superpower on the planet. Due to that, there is a lot of wealth and many small businesses in the 1950s have now grown to become large national or multinational corporations. These entities have given way for small businesses and entities to be formed. And these entities are strongly influenced by new developments including various policies like civil rights and other forms of human rights that have ensured that people are to be respected. There are many laws against discrimination that have been made which ensures that the workplace is diverse and there is the opportunity for different classes of excluded people to become legitimate members of the society. In order to achieve this, there are many regulations that prevent discrimination and other negative practices as a means of encouraging diversity.
The nature of new rules and regulations in promoting civil rights, equality and inclusion, there are many options for people in terms of work. This is tantamount to a degree of autonomy and deregulation. The implication is that the use of rules and informal arrangements to ensure that certain people remained servants who had no choice but to work in harsh conditions is gone. Therefore, it is necessary for people and companies to generate a method of leadership that fits the context.
Transactional Leadership versus Transformational Leadership
This essay addresses a fundamental ethical problem and its related challenges. The essence of the thesis statement is to deduce which approach to leadership is the most appropriate to the current time. This is to compare and contrast between two different approaches to leadership and show which one is appropriate for a small business in New York today.
Transactional leadership is defined as a form of leadership “based on the setting of clear objectives and goals for the followers as well as the use of either punishments or rewards in order to encourage compliance with these goals.”. This means that transactional leadership involves a system whereby leaders exchange rewards for the attainment of corporate goals. Thus, an employer or manager only thinks of getting the job done and paying the worker for labor. No effort is made to hear about any other thing relating to the worker. It is all about exchanging money for work.
In cases where a worker is not able to achieve the goals, transactional leadership is focused on threatening the worker with punishment. This includes threats of withholding salaries and punishing the worker. The idea is to get the workers to achieve results. Once the results are achieved, there is no claim or no connection the worker has to the company.
Transactional leadership involves seeing the worker as a means to an end. Labor of the worker is just something purchased by the leader. The leader makes no effort to share the results or profits with the worker. There is only one thing – compensation for labor. The rest is done with no support or concern for the worker.
On the other hand, transformational leadership goes a step further than transactional leadership. Transformational leader is defined as a form of leadership where “the leader identifies the needed change, creates a vision to guide the change through inspiration, and executes the change with the commitment of the members of the group”. This is because the leader sets up a vision and a strategy. This is because the company does not only want to produce and make money. The company goes beyond just gaining results, but providing a solution. And this solution is defined in order to show a clear and transparent approach for the achievement of results.
The vision and plan for change is communicated by a transformational leader to the followers. The followers get to understand and appreciate what is going to be done and they are brought on as partners in order to work to the achievement of results. This will help to provide a shared vision and a connection with the follower. The procedure is laid out and this shows the followers a point where they have to cooperate and achieve results. The system of transformational leadership is one where there is no confidentiality and hiding away of the relevant facts. Rather, the worker is converted to an agent who does more than work, but contributes to the achievement of corporate vision.
Transformational leaders inspire and operate with followers in order to achieve corporate goals and objectives. These kinds of leaders avoid just presenting tasks and ordering their workers. Rather, they allow the workers to understand and appreciate what is being done and what the group is to do to make the world a better place. Through this, they are able to operate and work to their best effort in order to achieve the most optimal results as a group and an organization.
Transformational leadership does not only seek the indulgence and commitment of workers. It involves a concern for people. This means that the individual development of the worker or follower is added to the attainment of the corporate goals and vision. This is because the achievement of the corporate goal is seen as a means for the attainment of individual objectives in the process. Hence, there is a procedure for the promotion and achievement of a mutual and symbiotic relationship between the leaders and followers.
Transformational leadership is focused on concern for both concern for people and concern for production. Results are based on what benefits the followers/workers get and the ability to achieve the corporate vision. This is in contrast with transactional leadership which focuses on one sole end – concern for production. Transactional leadership is focused on just working to achieve production targets and goals. This is because there is no room to worry about what the followers want or desire. When followers are able to meet the tasks and obligations presented to them, there are sanctions. For instance, there could be reductions in salary, there could be threats of dismissal and employment of another person and many other possible detriments that will be inflicted on a worker who is not able to complete tasks handed down to them.
Transactional leadership is compared to the role of a slave master. The slave master only knows how to exact results from slaves. These slave masters are told by their employers to get slaves to produce a given volume of results. And they have no choice but to vent out on the slaves and force them to produce the quantities imposed upon them. Transactional leadership is based on the presentation of money and rewards to workers in today’s terms.
Transactional leadership was very common in the 20th Century because the Industrial Revolution and its related activities in the 18th and 19th Centuries came up at a time where feudalism and slavery was common. Thus, the newly formed industries sought to employ workers with absolutely no sensitivity to their conditions. The new industries of the 19th and 20th Century were based on the fact that there were many workers and these workers were willing to offer their services to companies for cheap.
When Taylorism became common in the early 19th Century, there was the breakdown of work in order to get a system of mass production in companies and factories. This meant the work could be broken down and there could be a process whereby tasks are met at each point. This came up with the popular perception of production where factors of production were brought together including:
Entrepreneurship;
Capital
Land and
Labor
Labor as a factor of production under Taylorism between 1900 and 1980 meant that workers were to be given tasks that were specific to various work obligations. Each of these obligations were to be completed within a certain period. And workers are to be paid for the number of hours for which they work and deliver their services. Thus, labor was a mere factor of production and nothing more than that.
However, transformational leadership went one step ahead and provided some sense of belonging and connection to the organization and its vision. This led to deeper sense of personalization where the worker was encouraged to see himself or herself as a part of the organization rather than a hired hand.
Why Transactional Leadership is not appropriate to the 21st Century
In the year 2003, there were 13 million companies in the United States and about two-thirds of these were classified as small companies. It is inferred from these statistics that New York is home to about 800,000 businesses and these companies include some 400,000 small businesses. The issue with businesses in New York is that most of them do not last too long. They fold up at an alarming rate. Forbes magazine identifies that about 90% of startups in the United States fold up. This means there is a problem with leadership and other variables that make it impossible and almost difficult for companies to continue.
In most situations, New York small businesses are tempted to view workers as a means to an end. So they seek to cut down costs by offering workers very little revenue and forcing them to work to achieve a lot of revenue. This means that the workers might feel hostile to the company because they have no share and no future in the company. Hence, they will have to provide services and do what is required of them.
One can argue that if a company is small and has no revenue, the workers must work hard. So transactional leadership might be the most appropriate and the most important method. However, this is problematic because transactional leadership means that the worker will always be seen as an outsider. Hence, although he might work hard and give off his best, he might not do that wholeheartedly.
Furthermore, if a person is not communicated with the vision and goals of the company. That individual might be working mechanically. This will be done like a machine and there will be no passions or emotions invested in the work and effort of a worker under a transactional supervisor.
Transactional leadership fails because it views human beings as an end. A worker who knows that his future is not guaranteed and a small business is going to grow and forget him will always have divided attention and divided commitment. Such a worker will be willing to do other things and focus on other results. So in spite of all the stress and pressure that will be placed on such a person, no matter how much supervision a person like that will get, that individual might not work so well.
Furthermore, a small company that seeks to pay in return for labor is likely to lose its workers to a rival company that is ready to go further. This is because in 21st Century New York, losing your job is not like it used to be in the 1950s. In the 1950s, people lived in classes and expected a certain standard of living. Once you were in the working class and you lost your job, word would go around town and it would be difficult to get another job. Most jobs also required references and this meant a worker who left one job was going to have a tough time. However, in today’s world, a worker can be fired from a job in the morning and get another job in the evening.
Thus, it is just not wise to go the route of threats and punishment. This is because people are free today than ever and can skip jobs easily without issues. A company will have to find ways of transformational leadership and this means that a worker will have to be treated with more dignity. Concern for people in the workplace must be balanced with concern for production and results. So transactional leadership is outmoded and is a system of leadership that is not applicable in today’s world and situation.
Why Transformational Leadership is best for the 21st Century
Small businesses are better off in New York with transformational leadership than with transactional leadership. Transformational leadership involves defining the vision. Once there is a vision, workers can be identified that there is more to life than just working for pay. A worker who understands the vision of a company will work towards attaining the vision wholeheartedly. This is done by doing more and working hard. This is because when a person understands the broader vision, he is likely to view the company as an organic structure working for the same goal. Such a person will understand his role and work towards attaining his own role and goal.
Transformational leadership does what transactional leadership does not do. Transactional leadership is about keeping workers in a small space and preventing them from coordinating affairs with others. Transformational leadership eliminates tensions and strife. Therefore, it is meant to promote cooperation and the attainment of a common goal as opposed to competing and working hard.
Also, small businesses in New York need sacrifice. This is because New York is a very competitive place to do business. There are taxes and there is the need for innovation on a day-to-day basis. Therefore, leaders or entrepreneurs require the indulgence and the goodwill of the workers not as a luxury but as a necessity. Transformational leadership is about sharing the vision and making the worker understand that any sacrifice s/he makes is for the attainment of something for humanity. This is not like a worker is just doing the work as a necessary evil to pay his or her bills. Furthermore, transformational leadership gets a worker to understand that the profits a company is making is not just to line the pockets of the owners. Therefore, leadership in the 21st Century will have to get the worker to understand his or her share and position in the betterment and results that will be gained.
Research and statistical correlations show that workers are willing and able to do more where they have or feel they have a transformational leader over them in an organization. This means that transformational leadership in itself provides a degree of motivation and positive results that helps a business to work to attain common goals and objectives.
Conclusion
There is an inherent problem with leadership throughout the generation. Leadership has traditionally treated a human being as a means to an end. Therefore, transactional leadership which worked for several generations in the past worked to get people to provide results and their services for little or no results. Transactional leadership refers to the provision of labor in return for wages, failure of which leads to threats and punishment.
Transformational leadership is the best form of leadership because it involves creating a vision and sharing it with the followers and encouraging them to work to achieve the results. Transformational leadership is appropriate for New York in the 21st Century because of competition and the need for sacrifice from workers. This includes the need to get workers to work hard and provide extra effort for the attainment of the survival of a company.
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