Difference Between Transformational & Transactional Leadership

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Managers employ different strategies and techniques for managing business tasks and and motivating employees. Styles can range from the strict micromanager to the hands-off facilitator. Two major theories of management, transformational and transactional, take polar-opposite approaches to these tasks. Transactional leaders typically concern themselves with ensuring that all business tasks flow smoothly each day, while transformational leaders look to move their companies to higher levels of performance.

Transformational Leadership Advantages

  • Transformational leadership emphasizes employee initiative and challenges the conventional hierarchical leadership theories. The transformational model has been adopted by many of today's more progressive companies, including Apple and Southwest Airlines. Companies that employ a transformational scheme motivate and inspire employees, particularly when the company faces a challenge or shift in focus. Transformational leaders use team-building, motivation and collaboration with their employees to achieve improvements and to gain the flexibility they need to adapt to ever-changing conditions.

Transformational Leadership Drawbacks

  • The most noticeable disadvantage of transformational leadership is its dependence on the intellect, initiative and skills of employees. When the employees fail to deliver, the transformational leadership style falls apart. This style also depends on the clarity of the leader's vision and communication. If the leader lacks the ability to communicate his vision of the company's goals to his employees, those employees will not participate at the level required to meet the leader's goals.

Transactional Leadership Advantages

  • While transformational leaders rely on the skills and motivation of employees to keep business operations running, transactional leaders rely on established rules and processes. The transactional style typically uses a rigid structure in which all managers and employees know their roles and understand their tasks. The rules and regulations within a transactional structure show the criteria needed to accomplish the task, the rewards for achieving company goals and the punishments for failing to meet those criteria.

Transactional Leadership Drawbacks

  • Transactional leaders tend to be more reactive to changes in market conditions, while transformational leaders are typically more proactive. Transactional leadership also promotes a rigid hierarchy, in which only the top levels of management are allowed to contribute ideas to the company's improvement. Employees with innovative ideas may not get the chance to communicate those ideas with management, as they would with a transformational leader. When confronted with new laws, new markets or new technologies, transactional leaders are often slow to respond to and take advantage of these conditions.

References

  • Photo Credit monkeybusinessimages/iStock/Getty Images
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