What Is The Difference Between Transactional and Transformational Leadership?

There are no rights and wrongs when it comes down to leadership styles and it’s a popular topic in the Leadership Training that we run.

There’s a need for both styles in any organisation but transactional and transformational leadership are poles apart when it comes to what they are and how they are applied.

Transactional v Transformational Leadership

Transactional leadership, in the main, is focused on the task and the process whereas transformational leadership is focused on the people and inspiring them to make a real difference within the business.

Therefore you can say that transactional leadership is all about getting work done and transformational leadership is all about how to motivate and inspire your people to get work done and to be engaged with their work – it’s all about winning the hearts and minds of your employees.

What is transactional leadership? 

Wikipedia’s definition of transactional leadership is all about promoting compliance from the leader by either offering rewards or serving “punishment.”

It’s predominately a short-term motivational ploy because it’s not sustainable. It’s about the here and the now and getting work completed. It’s not about looking to the future for innovation and change.

Productivity is more important than creativity and the leader will trade tangible rewards or the threat of consequences for the work and the loyalty of their employees.

Traits of transactional leadership include:

• It’s a responsive leadership style
• It’s about following the rules
• It’s about rewards and punishments
• Productivity wins
• Culture fit – work within the culture
• Motivation by “what’s in it for me”
• Management by exception
• It’s a push leadership style

When is transactional leadership effective? 

If your building goes up in smoke and your Fire Marshalls are in control then they need to lead in a transactional way.

This leadership style is excellent for emergency and crisis situations. There can be no creativity with this. Rules need to be following to get everyone out of the building and to safety.

Likewise, if there are strict HR policies that need to be followed in a discipline and grievance hearing then there is no place for bending the rules or innovation. Processes need to be adhered to and policies followed to the letter.

Transactional leadership is therefore appropriate when tasks, procedures, work, projects and policies need to be followed in a particular way with no deviation.

What is transformational leadership?

Let’s turn to Investors in People for their definition of what transformational leadership is. IIP state that it’s all about the needs of your people.

It’s about building the commitment of followers (i.e staff) through motivation and inspiration rather than through rewards and punishment.

Your followers do because they want to do rather than doing because they have to or are forced to.

Traits of transformational leadership include:

• It’s a proactive leadership style
• It’s about winning the hearts and minds of your people
• It’s about motivation and inspiration
• Creativity and long term change wins
• Culture add – people add to the culture through their ideas
• Motivation by “what’s best for the company”
• It’s a pull leadership style

Transformational leadership is not a new concept.

Back in 1978 James MacGregor Burns wrote about this leadership style and later in 1980’s this was expanded by Barnard Bass who added a layer of psychology to the approach.

What are the four elements of transformational leadership? 

The main elements were created by Barnard Bass. He created the concept of the four I’s.

The four I’s are:

• Idealised Influence
• Intellectual Stimulation
• Inspirational Motivation
• Individualised Consideration

Idealised Influence
This is all about role modelling. Does the leader walk the talk and set the example to their followers? Does their behaviour reflect the vision that they have set out? Are they consistent in their behaviour?

The leader needs to act as a role model for the desired high performance behaviours so their followers get engaged with the vision and come with them on the ride.

Inspirational Motivation
This is all about bringing your people with you. It’s about motivating and inspiring your people to win their hearts and minds. You need to create a compelling vision, one worth pursuing and is greater than an individual task.

It’s about getting the best from each of your people through personal development, setting challenging goals and expectations and supporting them in all they do to realise their potential.

Intellectual Stimulation
This is all about challenging the status quo. It’s about creating ideas and innovative processes, products and services to drive the business forward.

Creativity is a key element within this. It’s about thinking “out of the box” and having a growth mindset to see the opportunities before them and to create them if they don’t exist.

Individualised Consideration
This is about treating everyone differently based on their needs, ambitions and fears in life.

It’s about tapping into the world according to your people so you can truly understand what they require and how to tailor your approach to get the best out of each person.

Why is transformational leadership effective?

Many say that it’s effective because it’s a pull leadership style. Does anyone really want to be ruled with a rod of iron each day? Instead, it’s more enjoyable if your employees feel that they are part of something bigger than just the task at hand.

With this, you will get better buy-in from them because they are invested in the cause. If you want to be a senior manager then visionary leadership is key trait that you’ll need. You’ll need to lead more in a transformational way.

Harvard Business Review identified an interesting pattern on what the best transformational leaders did and it’s something that we cover on our Management Development Programmes because it’s all about winning the hearts and minds of your people.

The main differences between transactional and transformational leadership summarised

In closing have a think about your own leadership style. Is it more of a command and control style and focused on the task?

Or are you more focused on the people and bringing them with you on the journey?

Take a look at the table below and for each category take a look at the traits for both styles. See which traits you employ the most.

The work needs to get done through your team for sure. But how you go about it is completely down to you. Your leadership style is critical. You can have two different managers get the same results but go about it in completely different ways. One might leave a trail of destruction behind them and the other might leave a team of motivated and inspired people ready to take on more.
The choice is yours.

At MTD, we offer several different options for your Management Training requirements including a blended approach to learning. Get in touch if you’d like to discuss our Management Skills Training and Leadership Training.

We also have a useful guide on what makes a good team leader that you can tap into and also Adair’s leadership model and Tuckman’s model on forming, storming, norming and performing.

Written by Sean McPheat

CEO of MTD Training and Amazon bestselling author. Sean writes about leadership, business, and personal growth, drawing on 20+ years of experience helping over 9,000 companies improve performance.

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