Transactional vs Transformational

A popular discussion within scholarly circles revolves around defining the clear difference one would find between two types of leaders exhibited in most organizations today: Transactional leaders and Transformational leaders.

In academia, many theories of leadership stress how to be effective within the status quo—or what we would call transactional leadership. A transactional leader is one who can bring about anticipated results and outcomes by both recognizing the role that the “follower” must play in achieving what the leader wants and needs, and recognizing what the “follower” needs and how those needs will be fulfilled according to satisfactory performance and effort. Thus, a transaction is created between the leader and the follower. “If you do this, I will do that.” These leaders can be very influential, but they change very little. To use a popular expression, these people are good at “rearranging the deck chairs on the Titanic", but they can’t keep the ship from sinking.

A transactional leader will employ two forms of “manipulation” to achieve a successful transaction between themselves and the follower. First, they will demonstrate positive inducement or contingent reinforcement. This means that when a “follower” achieves their goals, based on what the leader desires, then they are praised and rewarded for their effective performance, by the leader. On the other hand, when this is not achieved, the leader will demonstrate management-by-exception, which means that a leader will only intervene when things go awry and the follower doesn’t live up to their desired performance. This management-by-exception usually takes on the form of either a type of feedback that might be typically regarded as negative, or averting reinforcement, which withholds positive inducement or negative inducement, which usually involves the reprimand or disapproval of a leader.

Unfortunately, many organizations are light on transformational leaders, with the vast majority of the leaders inside organizations being transactional. As a result, we see organizations decline as there is an increasing disconnect between “the way things should be done” and “the way we do things here,” along with the inability of the organization to experience change on a cultural level.

Transformational leadership, on the other hand, is about implementing new ideas. These leaders are striving to continually change themselves by learning, improving and growing from their core. They stay flexible and adaptable to improvements, while continually striving to improve those around them and help raise others to a level that they themselves are trying to attain.
A transformational leader attempts and most of the time succeeds in raising “followers” to a greater level of awareness.

According to Bernard Bass, one might say the father of Transformational Leadership Theory, a transformational leader exhibits the “Four I’s: Idealized influence (charisma), Inspirational motivation, Intellectual stimulation, and Individualized consideration. In a macro sense, the transformational leader is truly concerned about the good that can be achieved for the individual, organization and even society as a whole.

When a leader exhibits idealized influence or charisma, followers identify with the leader’s aspirations and want to emulate the leader’s high moral and ethical standards. Inspirational motivation engages the follower in challenges and opportunities that share the planning and achieving of goals. Intellectual stimulation, when exhibited, helps followers to grow and develop at their core by questioning assumptions and generating more creative solutions to problems, while thinking outside of the box. Individual consideration, when exhibited by the leader, treats each individual as unique and provides coaching, mentoring and growth opportunities.

Obviously, this transformational leadership requires someone with vision, self-confidence, inner strength and solid ethics and morals to successfully assert what they see as right or good, not for what might be popular or is acceptable according to the established wisdom of the time or the status quo of the organization. They are concerned with raising the level of “goodness” in themselves, the individual or follower, the organization and the environment around them.
The two theorists most associated with its modern leadership theory are Bernard Bass and James Burns.

In many articles and in his book, Improving Organizational Effectiveness Through Transformational Leadership, Bass talks about the fundamental theoretical qualities that define transformational leadership from it's polar opposite, transactional leadership, and it’s false self Pseudo-transformational leadership. Before Bass, James Burns wrote a Pulitzer Prize winning book titled Leadership, in which he described the qualities transformational leaders possess in varied fields and endeavors.