Transformational Vs Transactional Leadership Theory Management Essay

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Number of Leadership theories evolved on the basis of Trait, Behavioral, Transformational, Situational, Charisma. Researchers and thinkers made efforts linking some of the theories across these leadership islands. But each model has its own pros, cons, assumptions & limitations. Latest researches are conducted on Situational & Transformational leadership styles. Leadership gurus presented new models as variations to the already existing models. Max Weber, MacGregor Burns, Bernard M.Bass, Warren Bennis & Nanus are few important researchers in the area of transformational leadership.

Understanding the difference between transactional and transformational leadership is vital in getting the whole concept of transformational leadership theory.

As a starting point, let us review our everyday life. In general, a relationship between two people is based on the level of exchange they have. Exchange need not be money or material; it can be anything. The more exchange they have the more stronger the relation. Your manager expects more productivity from you in order to give good rewards. In this way, if something is done to anyone based on the return then that relation is called as 'Transactional' type. In politics, leaders announces benefits in their agenda in exchange to the vote from the citizens.  In business, leaders announces rewards in turn to the productivity. These relation is all about requirements, conditions and rewards (or punishment). Leaders who show these kind of relationship are called'Transactional Leaders'.

In life, at one point of time, things happen without expectation from other side. Say, mom's dedicated service to her kid. Mom doesn't expect anything from the child and the service she provides in raising the child is  unconditional, dedicated, committed. Mom plays a major role in shaping up the kid's future life. This type of relation is called as 'Transformational'. Leaders do exist in this world with these behaviors. Transformational Leaders work toward a common goal with followers; put followers in front and develop them; take followers' to next level; inspire followers to transcend their own self-interests in achieving superior results.

Transactional Leader:

approaches followers with an eye to exchanging one thing for another … Burns

pursues a cost benefit, economic exchange to met subordinates current material and psychic needs in return for "contracted" services rendered by the subordinate …. Bass

Transformational Leader:

"recognizes and exploits an existing need or demand of a potential follower… (and) looks for potential motives in followers, seeks to satisfy higher needs, and engages the full person of the follower" … Burns

The leader who recognizes the transactional needs in potential followers "but tends to go further, seeking to arouse and satisfy higher needs, to engage the full person of the follower … to a higher level of need according to Maslow's hierarchy of needs" … Bass

As exactly said by Bass - "the transactional leaders work within the organizational culture as it exists; the transformational leader changes the organizational culture".

Following table shows difference of transactional and transformation leadership[1].

Transactional Leadership

Transformational Leadership

Leaders are aware of the link between the effort and reward

Leadership is responsive and its basic orientation is dealing with present issues

Leaders rely on standard forms of inducement, reward, punishment and sanction to control followers

Leaders motivate followers by setting goals and promising rewards for desired performance

Leadership depends on the leader's power to reinforce subordinates for their successful completion of the bargain.

Leaders arouse emotions in their followers which motivates them to act beyond the framework of what may be described as exchange relations

Leadership is proactive and forms new expectations in followers

Leaders are distinguished by their capacity to inspire and provide individualized consideration, intellectual stimulation and idealized influence to their followers

Leaders create learning opportunities for their followers and stimulate followers to solve problems

Leaders possess good visioning, rhetorical and management skills, to develop strong emotional bonds with followers

Leaders motivate followers to work for goals that go beyond self-interest.

Charismatic Leadership



Charm and grace are all that is needed to create followers.

Self-belief is a fundamental need of leaders.

People follow others that they personally admire.


The Charismatic Leader gathers followers through dint of personality and charm, rather than any form of external power or authority.

The searchlight of attention

It is interesting to watch a Charismatic Leader 'working the room' as they move from person to person. They pay much attention to the person they are talking to at any one moment, making that person feel like they are, for that time, the most important person in the world.

Charismatic Leaders pay a great deal of attention in scanning and reading their environment, and are good at picking up the moods and concerns of both individuals and larger audiences. They then will hone their actions and words to suit the situation.

Pulling all of the strings

Charismatic Leaders use a wide range of methods to manage their image and, if they are not naturally charismatic, may practice assiduously at developing their skills. They may engender trust through visible self-sacrifice and taking personal risks in the name of their beliefs. They will show great confidence in their followers. They are very persuasive and make very effective use of body language as well as verbal language.

Deliberate charisma is played out in a theatrical sense, where the leader is 'playing to the house' to create a desired effect. They also make effective use of storytelling, including the use of symbolism and metaphor.

Many politicians use a charismatic style, as they need to gather a large number of followers. If you want to increase your charisma, studying videos of their speeches and the way they interact with others is a great source of learning. Religious leaders, too, may well use charisma, as do cult leaders. 

Leading the team

Charismatic Leaders who are building a group, whether it is a political party, a cult or a business team, will often focus strongly on making the group very clear and distinct, separating it from other groups. They will then build the image of the group, in particular in the minds of their followers, as being far superior to all others.

The Charismatic Leader will typically attach themselves firmly to the identify of the group, such that to join the group is to become one with the leader. In doing so, they create an unchallengeable position for themselves.

Alternative views

The description above is purely based on charisma and takes into account varying moral positions. Other descriptions tend to assume a more benevolent approach.

Conger & Kanungo (1998) describe five behavioral attributes of Charismatic Leaders that indicate a more transformational viewpoint:

Vision and articulation;

Sensitivity to the environment;

Sensitivity to member needs;

Personal risk taking;

Performing unconventional behaviour.

Musser (1987) notes that charismatic leaders seek to instil both commitment to ideological goals and also devotion to themselves. The extent to which either of these two goals is dominant depends on the underlying motivations and needs of the leader.


The Charismatic Leader and the Transformational Leader can have many similarities, in that the Transformational Leader may well be charismatic. Their main difference is in their basic focus. Whereas the Transformational Leader has a basic focus of transforming the organization and, quite possibly, their followers, the Charismatic Leader may not want to change anything.

Despite their charm and apparent concern, the Charismatic Leader may well be somewhat more concerned with themselves than anyone else. A typical experience with them is that whilst you are talking with them, it is like being bathed in a warm and pleasant glow, in which they are very convincing. Yet afterwards, ask the sunbeam of their attention is moved elsewhere, you may begin to question what they said (or even whether they said anything of significance at all).

The values of the Charismatic Leader are highly significant. If they are well-intentioned towards others, they can elevate and transform an entire company. If they are selfish and Machiavellian, they can create cults and effectively rape the minds (and potentially the bodies) of the followers.

Their self-belief is so high, they can easily believe that they are infallible, and hence lead their followers into an abyss, even when they have received adequate warning from others. The self-belief can also lead them into psychotic narcissism, where their self-absorption or need for admiration and worship can lead to their followers questioning their leadership.

They may also be intolerant of challengers and their irreplaceability (intentional or otherwise) can mean that there are no successors when they leave.

Laissez-faire leadership


Laissez-faire leadership, also known as delegative leadership, is a type of leadership style in which leaders are hands-off and allow group members to make the decisions. Researchers have found that this is generally the leadership style that leads to the lowest productivity among group members.

Characteristics of Laissez-Faire Leadership

Laissez-faire leadership is characterized by:

Very little guidance from leaders

Complete freedom for followers to make decisions

Leaders provide the tools and resources needed

Group members are expected to solve problems on their own

Benefits of Laissez-Faire Leadership

Laissez-faire leadership can be effective in situations where group members are highly skilled, motivated and capable of working on their own. While the conventional term for this style is 'laissez-faire' and implies a completely hands-off approach, many leaders still remain open and available to group members for consultation and feedback.

Downsides of Laissez-Faire Leadership

Laissez-faire leadership is not ideal in situations where group members lack the knowledge or experience they need to complete tasks and make decisions. Some people are not good at setting their own deadlines, managing their own projects and solving problems on their own. In such situations, projects can go off-track and deadlines can be missed when team members do not get enough guidance or feedback from leaders.

Situational Leadership - Introduction

According to Hersey and Blanchard (1996), situational leadership theory is based on the interaction among the dimensions of task behavior and relationship behavior, as well as follower readiness/maturity for performing a certain task. In their view, followers are the most critical factor in leadership proceedings. As followers differ, so does the suitable method of management. Thus, a "one size fits all" style of management does not exist.

Situational leadership examines "how leaders can become effective in many different types of organizational settings involving a wide variety of organizational tasks" (Northouse, 2001, p. 55). Leadership style is "how you behave when you are trying to influence the performance of someone else and is a combination of directive and supportive behaviors" (Blanchard, Zigarmi & Zigarmi, 1985, p. 46). According to Blanchard, Zigarmi and Zigarmi (1985) directive behavior involves "clearly telling people what to do, how to do it, where to do it, and when to do it, and then loosely supervising their performance" while supportive behavior "involves listening to people, providing support and encouragement for their efforts, and then facilitating their involvement in problem-solving and decision making" (p. 46).

According to Blanchard (1991), styles are divided into four primary directive and supportive behaviors:

High directive/low supportive leader is referred to as directing. The leader tells the subordinate what, how, when and where to do various tasks.

High directive/high supportive behavior is referred to as coaching. In this style the leader still provides a great deal of direction, but he/she also attempts to hear the employee's feelings about a decision as well as their ideas and suggestions.

High supportive/low directive leader behavior is called supporting. In this style the leader's role is to provide recognition and to actively listen and facilitate problem-solving/decision making on the part of the employee.

Low supportive/low directive leader behavior is labeled delegating. Employees are allowed greater autonomy because they have both the competence and confidence to do the task on their own" (p. 22).

According to Northouse (2002), "effective leadership occurs when the leader can accurately diagnose the development level of subordinates in a task situation and then exhibit the prescribed leadership style that matches that situation" (p. 73). Blanchard (1991) explains that the key to being a situational leader rests primarily on two variables which are the degree of difficulty of the task and the development level of the person doing the task. Development level is "the degree of competence and commitment an employee has to perform a particular task without supervision. Competence is a function of knowledge or skills which can be gained from education, training or experience; Commitment is a combination of confidence (self-assuredness) and motivation (interest and enthusiasm)" (p. 22). Thus, the amount of direction provided will depend on the development level of the employee and the task at hand.

Potential Benefits of Situational Leadership

Positives of situational leadership reside primarily in its simplicity (which is viewed by some academics as a drawback). It is a straightforward theory to which many managers and leaders can understand and relate. In a 1997 article by Fernandez & Vecchio, it was noted that situational leadership had been implemented in 400 of the Fortune 500 companies and more than a million individuals experience training on situational leadership each year. Within the context of a leadership development experience, it is easy to explain and relate to concrete experience. Further, the theory provides a simple approach to management and encourages leaders and mangers to look at their environment and gauge their response given the context; an important skill for a leader to posses.

A final benefit is that Hersey & Blanchard brought to the forefront the situational nature of leadership and the need for manager flexibility (Graeff, 1983). They brought forth the concept that one style of management cannot possibly fit all situations.

Potential Drawbacks of Situational Leadership

The primary drawback of situational leadership is the conflicting research that has been conducted on the topic (Cairns, Hollenback, Preziosi & Snow, 1998; Blank & Weitzel, 1990; Fernandez & Vecchio, 1997; Graeff, 1997; Goodson, McGee, & Cashman, 1989; Hambleton & Gumpert, 1982; Vecchio, 1987). In addition, Graeff (1997) notes that problems with "all versions is the continued lack of sound theoretical foundation of the hypothesized relationships among variable in the model" (p. 164). In addition, there is a great deal of confusion over multiple versions of the theory (Graeff, 1997).

From an academic standpoint, Perhaps Rost (1993) said it best -"the approach fell apart…when leaders realized that they would have to consult decision trees or wheel charts to find out how to behave."

Situational Leadership & Extensions to Practice

Blanchard (1990) developed tools to help leaders expand their skills as situational leaders. In 1990, Blanchard developed the Situational Leadership® II Leadership Skills Assessment. According to Blanchard, the instrument was developed to "help people know how well they are practicing situational leadership on a day-to-day basis, according to those they manage" (p. 21). In a sense, it is a 360° assessment although it is only completed by a person's subordinates and focuses on the leader's ability to work in all four leadership styles as well as one-minute manager skills of setting goals, monitoring your team performance, and providing team members with feedback. Finally the instrument is designed to let the manager know how comfortable her subordinates feel with her style.

Moreover, The Ken Blanchard Companies offer a two-day course in situational leadership with the following objectives in mind for leaders:

Compare your perception of your leadership style with that of your boss, colleagues, and direct reports.

Learn how to develop competent and committed employees by diagnosing their development level, then managing with the appropriate leadership styles.

Learn how to reach agreements with others about how much direction and support they need from you to reach their goals.

Use case studies, games, instruments, and videotaped situations to apply SLII® to real-life situations (

Finally, The Ken Blanchard Companies has created a number of online resources. These include forms, support tools, and job aids to help learners implement Situational Leadership® II. The eSLII® (online) Tool Kit includes pre-work and resources and interactive tools and resources that take advantage of online technology. Organizations that want to incorporate blended learning (online and classroom), have the option of having session pre-work available for learners to complete online. Further, learners have access to online support tools to help anchor learning into every day practice. (

Situational Leadership - Conclusion

Situational leadership could quite arguably be the most successful theory of leadership from a sales and marketing standpoint. However, it has been all but disregarded in the literature. This may be an example of an excellent extension to practice - unfortunately, if the literature holds true, maybe it was not the best model to hit the big time.

Emotional Intelligence

Emotional Intelligence Research tracking of high performing individuals across a number of industries showed that the contribution of emotional intelligence is twice as important as a success factor than intellect and expertise alone.

Your emotional intelligence can be measured via these five yardsticks:

Your ability to identify and name one's emotional states and to understand the link between emotions, thought and action

Your ability to manage your emotional states - to control your emotions or to shift undesirable emotional states to more reasonable ones

Your ability to enter into emotional states associated with achievement and success

Your ability to read, be sensitive to and influence other people's emotions

Your ability to enter into and to sustain positive interpersonal relationships

These yardsticks were developed by Daniel Goldman - a pioneer in the field of emotional intelligence. According to Daniel Goleman, these five factors work together via a hierarchy.

You must first identify your emotions in order to manage them. Managing your emotions involves entering an emotional state associated with achievement and success. Applying these three abilities to other people allow you to read and influence positively other people's emotions. Once you can do this you have increased your ability to enter and sustain good relationships.

Not everyone agrees with Daniel Goleman:

Some people say it is ridiculous to think of behaviour as an 'intelligence'.

Even Daniel Goleman agrees that the five 'abilities' used to define emotional intelligence may be quite uncorrelated. The argument is then if we can't measure them, how do we know they are related? If we cannot relate the abilities then there is no sound scientific basis for the theory.

Many studies show that emotional instability can interfere with our ability to think, reason, remember, imagine, etc. Critics say that to call this "emotional intelligence" makes the term "intelligence" scientifically meaningless.

Emotional Intelligence Tests

Golemen's position is that IQ and technical skills matter mainly as entry level requirements for executive positions, but that high emotional intelligence is an indispensable part of high performance leadership.

Emotional intelligence and leadership traits can often be identified via a simple emotional intelligence quiz based on Daniel Goleman's emotional intelligence theories.

A good emotional intelligence test will help you establish YOUR emotional intelligence - as long as it is firmly based on emotional intelligence theory.

Awareness of your emotional abilities allows you to improve your emotional intelligence and live a happier, more balanced lifestyle.

Emotional Intelligence Tests rate your ability to regulate your emotions in a healthy and balanced manner. Typically after completing a test you are give an idea of your greatest emotional strengths and weaknesses, with an option to purchase a detailed evaluation of your aptitude in each emotional category.

Emotional intelligence theory can help identify a child's emotional intelligence and provide a good platform for emotional intelligence training.

Obviously if you don't know your Emotional Intelligence strengths and weaknesses to start with, then you cannot expect to be able to develop your Emotional Intelligence skills.  

And of course, the quickest and most convenient way to make a start on developing your Emotional Intelligence Quotient - especially if your career prospects include a need for high performance leadership - is to take an online Emotional Intelligence Test :-)

Emotional Intelligence and Leadership

Characteristics of a high level of emotional intelligence include:

performing well under pressure

setting very high standards for yourself and your team

making the most of your ability and always giving 100%

being a good team player.

In his recent book 'The Emotionally Intelligent Workplace' Daniel Goleman described an emotional intelligence model made up of four domains:

Personal self awareness -  a deep understanding of your emotions, strengths and weaknesses, and an ability to accurately and honestly self-assess

Personal self management - the control and regulation of one's emotions, the ability to stay calm, clear and focused when things do not go as planned, the ability for self motivation and initiative

Social awareness - empathy, including the ability to consider employees' feelings during the process of making individual/group decisions

Relationship management - the ability to communicate, influence, collaborate and work with colleagues.

It is only recently that research has confirmed the huge impact that emotional intelligence has in the workplace. 

Goleman's own research compared star performers with average performers in senior leadership positions. Goleman found that nearly 90% of the difference in their performance profiles was attributable to emotional intelligence factors.

Importance of Leadership

Leadership is an important function of management which helps to maximize efficiency and to achieve organizational goals. The following points justify the importance of leadership in a concern.

Initiates action- Leader is a person who starts the work by communicating the policies and plans to the subordinates from where the work actually starts.

Motivation- A leader proves to be playing an incentive role in the concern's working. He motivates the employees with economic and non-economic rewards and thereby gets the work from the subordinates.

Providing guidance- A leader has to not only supervise but also play a guiding role for the subordinates. Guidance here means instructing the subordinates the way they have to perform their work effectively and efficiently.

Creating confidence- Confidence is an important factor which can be achieved through expressing the work efforts to the subordinates, explaining them clearly their role and giving them guidelines to achieve the goals effectively. It is also important to hear the employees with regards to their complaints and problems.

Building morale- Morale denotes willing co-operation of the employees towards their work and getting them into confidence and winning their trust. A leader can be a morale booster by achieving full co-operation so that they perform with best of their abilities as they work to achieve goals.

Builds work environment- Management is getting things done from people. An efficient work environment helps in sound and stable growth. Therefore, human relations should be kept into mind by a leader. He should have personal contacts with employees and should listen to their problems and solve them. He should treat employees on humanitarian terms.

Co-ordination- Co-ordination can be achieved through reconciling personal interests with organizational goals. This synchronization can be achieved through proper and effective co-ordination which should be primary motive of a leader.