How can you tell transactional from transformational leadership?

"Transactional leadership" is not a dirty word. Good leaders lead based on the situation and the organizational environment. In some cases, a transactional leadership style works best. A classic situation would be possibly a sales environment where salespeople are incentivized with financial rewards based on sales. With that said, leaders must adapt their leadership styles based on the situation and the people they lead. As a wise person once said, if the only tool in your toolbox is a hammer, the whole world looks like a nail. This is not an effective approach.

To my mind Transactional Leadership is a misnomer as it actually describes the use of authority and process (aka management) to influence people to do things, mainly because they have to.

During my early days of HR, I was introduced to the theory X and Y that McGregor had suggested around the 60s. The theory created a distinction in terms of the perception of leaders on the nature of individuals based on various assumptions. Assumptions of theory X were that an average employee does not like work yet engages in that to pay bills. The main objective they have is to achieve financial security and don't care much about career aspirations. Hence, employees must be compelled to perform work else they will escape it at the slightest of the opportunities. The way to get that done is through rewards and punishments, structure ad order. Leaders operating with that belief typically adopt a 'transactional leadership' style.

Transformational leaders communicate an overarching purpose and inspire those they lead to work for something larger than themselves. This is an effective leadership style for dynamic environments where follower initiative is a key success factor. It is incumbent on a leader to provide a clear purpose and end state. Transformational leaders are good at providing the task and purpose and allowing their followers to determine "how" to accomplish the mission. Good transformational leaders are consistent in the purpose and vision they communicate and they do not fall into a trap whereby they present a new flavor of the week.

It is important to note that while transactional leadership provides structure and clarity, it may not foster creativity or long-term employee satisfaction.

Continuing, theory Y, however, assumes that an average employees want to add value through their jobs and expend efforts in that direction. They are responsible beings who offer skills and capabilities, which should be fully utilized. If they find the job rewarding and satisfying, they will show more commitment and even loyalty. Leaders who believe in theory Y typically demonstrate 'transformational leadership' style creating an environment where employees can assume self-direction and take initiative to contribute towards organizational goals.

Transformational leadership is just leadership! I define leadership as the ability to influence without authority through building relationships, trust and psychological safety.

It is interesting to note that both these styles stem from assumptions and beliefs of the leader and not adopted as a result of understanding their employees' outlook towards work. They are both focused on the behavioral side leaders display towards their employees, which is a move from the 'trait theory' of leadership which was focused on attributes.

I do not find this "you are either this or the other" perspective useful. It misses the point that a great leader must be able to leverage both to coax out the full potential of employees as well as the organization as a whole. Intrinsic motivation will not happen unless there is a structure in place that also helps guide the extrinsic motivation factors. You cannot have one without the other.

Transactional leadership is the appropriate style to adopt when face with a critical or tame problem. A critical problem poses an immediate danger to the organisation and requires a highly directive style (authority) to resolve. A Tame problem I.e. a routine non-urgent problem that requires the use of process to resolve (management). A wicked problem is one which is very complex and there is no apparent answer as there are often multiple components impacting at once and this requires the leader to become more of a problem finder than problem solver. To do this they need to adopt a transformational style to build the networks required cross the organisation to help them better understand the true nature of the problem they are facing.

Effective leadership requires flexibility and adaptability based on what the situation demands. At the end of the day we must consistently influence individuals to want to complete a task/project with excellence. This means, our leadership style should embrace high performance and productivity while remembering to treat the people we work with, human capital, as the most valuable asset. As leaders are continually growing and learning as we bolster our leadership arsenal.

Leaders who exude behaviors that seem less motivated by self-interest and more motivated by their concern for others are likely to earn the esteem of their followers. Transformational leaders are charged with a responsibility to future generations, placing the long-term best interests of the organization ahead of their own. Stewardship is not created through formal rules, but rather is facilitated through leaders who generate interpersonal and institutional trust, clarity regarding organizational strategy, and intrinsic motivation in followers, which, in turn, encourages followers to act with moral courage in service to the organization or cause.

I once had a leader who during our weekly check-ins would be very meticulously seek updates on the progress of assignments and status of projects. At another point, I also had a leader who would be almost equally meticulous about finding out what I was doing and learning, what I needed support with, and what my aspirations for the near future looked like. And, that's the difference between transactional and transformational leadership styles - the focus of the former is on work; the latter's, on you.

Transactional leaders can: 1. Primarily focus on achieving specific goals and targets. 2. They offer rewards and incentives based on their performance. These rewards may include bonuses, promotions, or recognition. 3. They provide clear instructions and expectations to their team members, specifying what needs to be accomplished and how it should be done. 4. They actively monitor the performance of their subordinates and provide feedback on a regular basis. This feedback can be both positive, acknowledging successful completion of tasks, and negative, addressing areas for improvement. 5. They primarily respond to problems and challenges as they arise rather than taking a proactive or visionary approach to leadership.