Leader can be generally defined as a person who has the ability to make others apply their skills and knowledge in the most efficient way to attain the established goals of the organization (Green, 2005). However, leaders can choose different styles to influence their team, depending on their own traits and nature of the organization. The two leadership styles that have come to the forefront of research in the recent years are transactional and transformational leaderships. Though they differ drastically in their theoretical tenets and practical methods, the two styles are similar in their emphasis on individual interests of the followers.
Transactional leadership style implies compliance of the followers with the standards of the organization, which is promoted through contingent rewards and punishments. Within this theory, the relationship between the leader and his followers can be conceptualized as a series of gratification exchanges that allow the leaders to reach the company objectives and maximize gains, while also enabling the followers to fulfill their self-interest (McClesky, 2014). In contrast to transactional style, transformational leadership involves broader perspective as the leader has to stimulate and inspire the intellectual and moral strivings of the followers, not only their basic safety and security needs.
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"Leadership Styles".
Moreover, a transformational leader seeks to change the organizational culture, not just to comply with it: it is thus more proactive, while transactional leadership is mostly responsive (Odumeru & Ifeanyi, 2013). Instead of using rewards and punishments, a leader of this type fosters goal attainment by appealing to higher values and ideals of the team. In transformational leadership, the priority is placed on group interests, while transactional leaders emphasize the self interest of the followers. Also, transactional leaders use management-by-exception, correcting deviant actions to maintain the status quo, whereas transformational leaders apply individualized consideration to each behavior and promote innovative ideas.
However, despite many differences, there are also notable similarities between the two leadership styles. Primarily, both transactional and transformational styles defy blind subordination to authority and rigid hierarchy. Also, they are designed to account for the individual needs of the followers (whether basic or more elevated), not the goals of the organization only. Both transactional and transformational leaders seek to increase the efficiency of working processes and procedures, though they differ in particular methods they apply. Furthermore, the critical component of both leadership styles is effective communication between the leader and the followers: transformational leaders use various verbal techniques to inspire and stimulate their followers, whereas transactional leaders have to communicate the goals clearly, occasionally reprimanding their followers for deviant actions. As noted by Green, effective communication is important for leaders to establish relations, increase trust and gain respect (2005).
Both transactional and transformational leadership styles have remarkable drawbacks. Thus, the major disadvantages of transactional style are short-term relationships, based on gratification exchange, and disregard for contextual factors, while transformational style has been criticized for lack of clearness in the mechanism of the leader’s influence on the followers (McCleasky, 2014). However, both styles can be highly effective, depending on the type of organization: thus, transactional leadership is more suitable for marketplace structures, while transformational leadership should be preferred in public organizations where innovation and change is of critical importance. Empirical research yields more support to transformational leadership, relating it to improved employee work outcomes and performance (Odumeru & Ifeanyi, 2013). Higher effectiveness of transformational leadership in relation to transactional leadership can be explained with its emphasis on the intrinsic stimuli rather than extrinsic motivation.
Transactional leaders seek to improve the performance of their followers with the help of contingent rewards and management-by-exception, whereas transformational leaders promote innovation though intellectual stimulation and sharing a vision. Nevertheless, the two styles are similar in their focus on individual needs of the followers and effective communication with the team. The effectiveness of each style largely depends on the nature and structure of organization. In most cases, however, transformational leadership is more beneficial as it fosters sincere interest and engagement of the followers with their work.
