Transformational Vs Transactional Leadership: Commonly Asked Qs

Find out the Differences of These 2 Types of Leadership

From their first introduction in the 1970s by James MacGregor Burns, transformational vs transactional leadership have been widely studied leadership styles. Because of the work of Bernard M. Bass that started in the 1980s, we now have some psychological explanations of the leadership styles. Unlike Burns, Bass believed that both leadership styles can exist in the same person.

There is still scholarly research being done today to compare transformational and transactional leadership in different workplace settings. But what defines these leadership styles? How do we differentiate between transactional and transformational leadership? Which is better – transactional or transformational leadership? So, let’s take some time to answer these common questions below.

What is Transformational Leadership?

Transformational leadership is where the leader helps their team member with positive change that is focused on selflessness, maturity, and self-actualisation. The leader is concerned with the team performance as a whole and how it affects the organization. And, the leader is an active participant on the team.

Transformational leadership is characterized by four elements, according to Bass & Bass (2008):

  • Individualized Consideration – how a leader listens, shows empathy and respects the contributions of their team.
  • Intellectual Stimulation – the degree to which a leader encourages their team’s creativity and tries new things based on teammates’ ideas.
  • Inspirational Motivationhow a leader energizes and inspires their team and articulates a vision that they can work toward.
  • Idealized Influence – the ways in which the leader models ethical behavior and gains the trust and respect of the team.

What is an Example of a Transformational Leader?

If you do a simple Google search, you can find the names of those who are thought to be transformational leaders. But what does that really tell us? What makes a person a transformational leader?

Think of a transformation leader as someone who picks the most talented people to join their team. Then gives them a voice as well as the space to try something new and possibly fail. The leader is not afraid to try something new or to roll up their sleeves and get involved in the work. In turn, the team members work hard because they admire, trust, and respect the leader. The mission and vision become a shared one – a recipe for success.

Positive discussions that lead to positive outcomes

What Does it Look Like in Practice?

On a large scale, it could be a CEO or founder of a tech startup company. Someone who has big ideas to challenge the status quo and move towards sustainability or easier access to resources for all. That CEO would then hire a strong, talented, and diverse team and continue toward the goal with transparency. That transparency creates buy in from the team, and the team works hard toward the shared mission.

On a small scale, it could be a learning and development leader who has been tasked with building both a learning function and team. The leader hires the most talented people in the industry. Then, brings them together to discuss what new and emerging technologies they might use to bring new learning experiences to their organization. Knowing that they could try some of the technologies and have a failed result. Also, they offer to both help and try the technologies with the team and help to sell the ideas throughout the rest of the organization.

What is Transactional Leadership?

Business is easier when you involve technology

Transactional leadership is considered a passive leadership style where the leader is concerned with the compliance of the team members. The leader will use tactics like rewards and punishments to get team members to follow or achieve the leader’s goals. The leader also doesn’t have goals that align with organizational change. They prefer things to be status quo. And, they don’t like to get involved unless something is going wrong.

What is an Example of Transactional Leadership?

Sometimes transactional leaders are given a negative connotation, but a transactional leadership style isn’t always a bad thing.

Think of a transactional leader as someone who is hands-off and lets their team members be autonomous. They will step in and correct behavior or performance if there is a problem. But they realize that their team members are each pursuing their own career goals. If the leader wants something from them, they need to offer a promotion or reward. And, if the leader wants them to change behavior, they are not afraid of applying negative consequences. The understanding of this is what keeps team members moving toward the common goal.

What Does it Look Like in Practice?

On a large scale, it could be a CEO or President of a well-established organization who is confident in the long-term success of that company, both as it has performed in the past and how it will perform in the future. The CEO is surrounded by a team that works autonomously and keeps things moving forward, with little major change. Consequently, things operate as expected, and the CEO only steps in when goals are not being met or performance is below what is expected.

The employees of the company know that they will be rewarded for meeting goals and punished for allowing their performance to fall below a standard, so they work toward promotions and rewards to avoid negative consequences.

On a small scale, it could look like a leader of a sales department. The leader has a small team that works very independently; maybe they are evenly dispersed in a remote work environment. The leader does not get involved in their day-to-day work, but they have weekly calls to discuss sales numbers and leads for the week.

The leader has set the expectations of what the sales numbers should be each week, and the team members know that if they don’t hit those numbers, there will be performance conversations. So, if a sales team members’ performance is consistently below the mark, they could lose their job. The leader has also promoted the top-performing sales team members to senior-level roles.

What do Transformational and Transactional Leaders Have in Common?

According to Burns, leaders could either be transformational or transactional. He believed that it truly broke down to transformational leadership versus transactional leadership. Because they were so juxtaposed in Burns’ explanation, they didn’t share a lot in common.

Bass later argued that one person can be both types of leaders at different points in their career, at different organizations, or even at different times in the year while working toward different organizational goals. Because it’s just that leaders display more of one set of characteristics than the other.

Either leader can offer encouragement. Both types of leaders can emulate their organization’s culture. And, they both can have a talented, award-winning team.

Both types of leaders share movement toward organizational objectives. Because of the negative connotation often attributed to transactional leadership, it might seem that leaders being more passive would mean that less gets done. However, transactional leaders still manage their team toward a goal, just like transformational leaders. It’s just that the journey to get there is what makes these leadership styles very different.

What is the Difference Between Transactional and Transformational Leadership?

Top view of red pencil among black on blue background

Because they are such opposite leadership styles, let’s break down the difference between transactional leadership and transformational leadership.

Transformational Leadership Transactional Leadership
The leader is active The leader is passive
Leader is proactive in team interactions Leader responds to team members’ behavior
They challenge organizational culture with new ideas and change They abide by the current organizational culture and norms
The leader encourages team members to be selfless and put the team’s needs first Leader encourages team members to look out for their self-interest and use rewards and punishments to reinforce
They manage through support, empathy, and building respect They manage by exception – they don’t get involved unless they need to

Which Leadership Style is Best: Transactional or Transformational?

After taking the time to compare and contrast transactional and transformational leadership – which one should be used? As with any good answer – it depends on the situation.

Having both kinds of leaders can help to give an organizational culture balance. In well-established organizations, it might be a bad idea if every department has a transformational leader who is trying to make big, organizational changes at the same time. Because, it could set the organization up for failure if each department is making changes without consulting the others. Also, the workplace could become siloed, and the goals could begin to conflict.

Bass’s idea of having leaders that can be both is important because a good leader can become transformational in times of change and become more transactional when change has successfully been implemented and it’s time to evaluate the effects of that change. Equally, having flexible leaders can ensure that a large organization is changing when it needs to and moving forward with enacted change when appropriate.

Gold medal 1 place with a ribbon

So, whether you see yourself as a transactional or a transformational leader, you can leverage your strengths and what you know about the leadership styles to manage your team effectively.


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