Becoming A Transformational Leader

Throughout history, leadership has come in many different forms. From ancient conquerors to 20th-century peacemakers and innovators, many events have been defined by the nature of leadership. Sometimes passionate, sometimes bellicose, sometimes considered, leadership paves the way for progress by bringing people towards a common goal.

In this article, we’ll briefly explore the difference between transactional and transformational leadership, and how the latter has come to define the success paths of many startups.

Transactional leadership is built on a relationship of economic influence. A transactional leader relies on rewards and punishments to motivate team members. A transactional leader’s ability to influence people depends on their ability to give or withhold incentives. To do that, clear rules are established and carefully designed objectives are set. This is a “command-and-control” type of leadership, with the accent on control and robust use of formal power.

So what exactly is transformational leadership and why does this make a lot more sense for a scaling startup?

Transformational leadership is mission-driven, where a leader inspires the team to follow their goals and the overall purpose of the company. These leaders encourage the team to be a part of something bigger than themselves. Transformational leaders tend to be very confident in their judgment abilities and realistic about their constraints.

Although there are similarities between the two, transformational leaders tend to appeal to the team’s values and stimulate strong emotions about the mission itself. And while both styles stir strong feelings, charismatic leaders focus on the emotional connection and the team tends to follow the leader versus the mission.

Why mission is crucial to your leadership style

Mission drives loyalty. Understanding a company’s purpose helps team members feel belonging to the team and the ‘why’ behind their work. Gallup’s research shows that ensuring employees have opportunities to do what they do best every day and emphasizing mission and purpose are the two strongest factors for retaining Millennials, Generation Xers, and Baby Boomers . More than one in four Millennials strongly agree with the statement “If the job market improves in the next 12 months, I will look for a job with a different organization.” This makes it more important than ever to focus on strengths and mission to drive down the cost of turnover and prevent the loss of key employees, especially among Millennials.

Mission fosters customer engagement. A strong mission helps create brand differentiation, consumer passion, and brand engagement. Unfortunately, only about four in 10 employees (41%) know what their company stands for and what makes its brand different from its competitors. This lack of brand awareness is not a marketing problem; it is a mission-driven leadership and management problem.

The mission helps strategic alignment. Start with a clear purpose — the what and why of the organization. How, who, when, and where is secondary to the enterprise’s reason for existing. The mission can help leaders establish and balance priorities, set performance goals, and align rewards and compensation at all levels.

The mission brings clarity. Awareness of mission guides decision-making and judgment. A clear sense of what matters most helps leaders determine the best path for the company and helps them set priorities. This clarity inspires conviction and dedication.

The mission should be measurable. To maximize the value of mission and purpose, leaders need a reliable assessment of employees’ attitudes about their work and how it connects with the company’s purpose, such as their responses to the “mission and purpose” item in Gallup’s Q12 employee engagement survey. Leaders and managers should use this information to guide them as they tackle the challenge of helping employees connect their work behaviors to the company’s ultimate purpose.