Transactional vs Transformational Leadership

Describe about the Brand Leadership for Simon and Schuster?

It is said that the leader is responsible for the creation of more leaders in the organisation (Hargreaves, and Fink 2012). If a leader can handle the employees in the organisation, the employees will follow the footsteps of the leader and might follow the same leadership style in future. There are two types of leadership that are prevalent in the organisations.

The names of the leadership styles define themselves. Transactional leadership is based on ‘transactions’ between the  leader and the employees, that is, under the transactional leadership the employees work, only when they feel that they will be benefitted (Hargreaves, and Fink, 2012). On the contrary, transformational leadership is based in ‘transformation’ or change (Hargreaves, and Fink, 2012). The employees learn new things and learn to take up challenges, which helps the in the growth of the organization as well as the employees.

Transformational leadership promotes a sense of cooperation among the employees, individual development of the employees and aims at the organisational development through the development of the employees (Tannenbaum, Weschler and Massarik, 2013).

Transactional leadership deals to interact through symbols, explains the goals of the employees (Tannenbaum, Weschler and Massarik, 2013). The employees know the goals that they need to achieve in the organisations but cooperation, communications and chances of innovations hugely lack in the organisations.

The write-up will look into the characteristics of the transactional and the transformational leadership. The write-up will give special attention to the statement ‘Transactional leadership has no place in contemporary organisations’ and analyse the statement. It will further evaluate whether the statement is agreeable or non-agreeable in the present context.

Transactional leadership has no place in contemporary organisations is completely agreeable. The contemporary organisations work in an entirely different manner from the way it used to work before. Earlier, after the employees completed work, the leader used to announce the rewards once the employee did work. On the contrary, the employee was being punished if the employee used to commit any mistake. However, the style is gradually diminishing. Nowadays, the organisations are much more informal in nature. The employees at times call the fellow employees ‘friend’ rather than calling them as ‘colleagues’. In such a situation, the transactional leadership, which mainly bases itself on the carrot and stick theory, is gradually becoming obsolete. The carrot and stick theory says that once an employee performs well, the person gets a carrot while the person makes some mistake; he gets a stick that is the person gets punished. On the other hand, the transformational leadership maintains a friendly atmosphere in the organisations. The transformational leader gives the opportunity to the employees where they can develop their ideas and give rise to the innovations that are required for the organisations to stay ahead in the market. Thus, in contemporary organisations, the transactional leadership will not be suitable and transformational leadership will be best suited for the organisation.

In an article by Sophon Shadraconis, ‘Organizational Leadership in Times of Uncertainty: Is Transformational Leadership the Answer?’ Explores the usage of the transformational leadership and the usefulness in the organisations in the present times (Shadraconis, 2013). The contemporary organisations are constantly changing. With the growing competition in the market and the constant change in the organisation, the employees need to keep up with the change. Once the leader implements transactional leadership, the employees will be in the fear of punishment if they do anything wrong. In a situation, when the organisation is under constant change, the fear among the employees is not acceptable in the organisation (Tannenbaum, Weschler and Massarik , 2013). On the other hand, the transformational leadership will help the employees to achieve the goals. Hence, during a time when the organisation is going through constant change, the employees need to be motivated rather than being scared. Hence, transformational leadership will be best suited for the organisations in the society.

Analysis of Transactional and Transformational Leadership

The transformational leadership is considered to be suited for the organisations that are working in the changing environment, mainly because of the four I’s that characterises the leadership style. The four I’s are:

Idealized Influence

Inspirational Motivation

Intellectual Stimulation

Individual Consideration

The first I deals with the influence of the leader on the employees. The leader influences the employees in a positive manner, and under the influence of the leader the employees are able to perform well in the organisations (Hackman, and Johnson, 2013). The second I tells about the inspirational motivation. Both the words ‘inspirational’ and the ‘motivation’ that the leader imposes on the employees show the way the leader handles the employees. The employee gets the inspiration from the leader and the motivated by the leader who adopts the transformational leadership style. The third I that deals with the intellectual stimulation tells about the intelligence of the leader and the techniques that are applied by the leader to handle the employees (Goleman, Boyatzis and McKee, 2013). The leader needs to handle the employees intelligently and stimulate with the challenges when the time requires the leader to do so. Finally, the individual consideration makes the leader consider the growth of the employees. Along with the growth of the organisation, a transformational leader thinks about the growth of the employees and tries to understand the individual characteristics of the employees. A transformational leader aims at the development of the members by making them understand the importance of leadership and teach them to become better leaders in the future.  The transformational leader thinks about the organisation as well as the employees who are working in the organisation (Boyatzis and McKee, 2013). In this way, the leader thinks about the organisation as a whole.

The situational leadership theory by Hershey and Blanchard is important in explaining the transformational and transactional leadership.

Figure: Hershey and Blanchard model of situational leadership

(Source: Blanchard and Hersey, 1997)

The model mainly talks about the fact that the leadership styles should be applied according to the maturity level of the employees. In ‘telling’ and ‘selling’ stage the employees are immature. The leader mainly tells the employees what they should do in the ‘telling’ and ‘selling’ stage. This part portrays a transactional leadership. Eventually, the employees mature and they learn to participate. Thus, the ‘participating’ and the ‘delegating’ stage mainly deals with the transformational leadership where the development of the employee is given more attention.

Instances of the effectiveness of the transactional leadership can be seen in organizations in present day as well. The organisations, which are stable and would not change with the change in the environment or the market, can effectively implement the transactional leadership. The governmental organisation can implement the transactional leadership because the competency level of the employees will not be tested in the governmental organisations. The employees will work according to the demand of the government and might change according to the conditions of the government. The government would not pay the employees according to the performance of the employees; the pay might change if the government becomes unstable. In addition to this, there are lesser chances that the governmental organisations will change their style of working (Wagner et al., 2012). It can be said that transactional leadership would not be able to make the employees understand the value of change and hence it is important transformational leadership is used in the private firms and the transactional leadership is kept for the governmental organisations (Gaines, 2012).

However, according to Contingency leadership theory by Fiedler, a leadership style cannot be called the best leadership style for any organisation (Fiedler and Chemers, 1967). A leader might have to change the style of leadership according to the demand of the organisation.  An intelligent leader can implement both the transformational and the transactional leadership. The leader can handle the employees and motivate them to perform a certain work in the form of transformational leadership (Rodd, 2012). The same leader can take the test of the employees by giving them a challenge and announcing a price for the one who completed the task. In this way, the leader can implement transactional leadership but in a different manner (Aaker and Joachimsthaler, 2012). It is important for the leader to carry out a test to see the learning of the employees. Hence, a transformational leader can change the style to study the employees and evaluate the work of the employees. Fiedler has also introduced a model that will help the leader to understand whether the employees are happy working in the organisation (Hargreaves and Fink, 2012). The leader can carry out the test by asking them to give their feedback regarding the way they work with the co-employees. In this way, the leader will be able to know the reason behind the failure of the employees in the organisation (Spillane, 2012).

Conclusion

After the evaluation of the transactional and the transformational leaderships styles, the statement ‘Transactional leadership has no place in contemporary organisations’ is entirely agreeable. It has been evaluated that transactional leadership styles is suitable for the organisation, which does not go through any change. One of the most important examples is the governmental organisation. On the other hand, the transformational leadership is best suited for the organisation that is updated with the latest happenings in the market and undergoes changes for the betterment of the organisation as well as the employees. A transformational leader will be able to handle the employees by letting them know the pros and cons of the change. In the contemporary society where the organisations are going through constant changes, in such a situation it would not be feasible for any organisation to implement the transactional leadership in the organisation as it follows the old method of regarding and punishing the employees. In the present situation, where the organisations are becoming more informal, transformational leadership style is best suited for those organisations.

References

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