Transactional and Transformational leadership

Transactional and Transformational Leadership

Look around a successful entrepreneur or a top-tier organization; the essential tactic they use to flourish in the world of business is sound leadership.

Leadership is the core of an organization, a vision, and the dynamic abilities of executives to influence the behavior of workers in the organization, solve its problems, and maintain a competitive edge in an unstable business environment.


There are different leadership styles propounded by various management experts, such as Authoritarian, Delegative, Participative, Transactional, Transformational, Paternalistic, etc. Although all are important in their way, the business community primarily uses transactional and transformational leadership styles to generate company leads.

Also, read Ways To Raise Spirits And Boost Team Morale

What is transactional leadership?

Transactional leadership is mainly based on control, short-term planning, and a strict management structure. A leader who adopts transactional leadership style motivates their workers or followers through a reward and punishment system.

Characteristics of transactional leadership

There are the following main characteristics of transactional leadership:

  1. Transactional leadership is responsive and demands productivity over creativity.
  2.  This leadership style focuses on structured policies, short-term planning, and punishment and reward depending on followers’ work.
  3.  One of the essential traits of transactional leadership is its practicality. These leaders realistically consider all the limitations and obstacles.

What is transformational leadership?   

Transformational leadership is focused on increasing the positive motivation of employees, supporting their personal development, encouraging a new vision of thinking, and promoting innovative ideas.

Characteristics of transformational leadership

There are four important characteristics of transformation leadership commonly termed the four ‘’I’s’’ of the transformational leadership:

Intellectual Stimulation

The main objective of transformational leadership is for their followers to be innovative and creative. The leader encourages his follower to explore new opportunities to learn.

Individualized Consideration

Transformational leaders are also concerned with the personal development of their followers. The leader ensures strong communication so that the follower freely share their ideas. The unique contributions of each individual are also acknowledged.

Inspirational Motivation

The transformational leader imparts a positive vision, high standards, and optimism about future goals in the mindset of followers. These leaders boost the morale and passion of followers to fulfill organizational goals.

Idealized Influence

Transformational leaders set their image as role models for desired high-performance behavior so that the followers engage their minds with the same level of vision, devotion to work, and a solid commitment to future goals.  

Difference between transactional and transformational leadership


Is the transactional leadership style better or transformational?

The primary debate is whether the transactional leadership style is better or transformational. But we cannot conclude as both are equally important. You cannot guess that this particular style will yield more growth for the organization.

The second important factor is the type of organization you lead, as some organizations need strict management and a rigid structured layout. For example, the leadership style that Google will opt for cannot work for military organizations and vice versa. In contrast, other organizations prefer to work in a flexible environment where leadership sets positive motivation and established goals.

In reality, both leadership styles complement each other and might be required at the same time to boost productivity and maximize growth. Transactional leaders ensure smooth attainment of a goal and in-time management of the team. In contrast, transformational leaders ignite a positive spark in the team, encourage innovation and look forward to a better tomorrow.

Closing thoughts   

In a nutshell, transactional or transformational leadership profoundly impacts the organization.  Both styles have their own merits and demerits. The organization shouldn’t depend on a single style, and it is all about the current situation of the work that decides what leadership style should have opted in the organization.

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