LEADERSHIP STYLES: The Impacts of Transformational Leadership and Transactional Leadership on Organisational Performance and Change

Introduction

           Every company, business, or organisation has some senior employees named the company's executives. Where they take the major decisions regarding the operations of the company. Similarly, the junior and the lower-level staff tend to follow their footsteps to comply with the company and sustain its brand image. The current study will focus on the leadership styles that are followed by different managers and executives of the company (Yauney, 2018). Leadership is the most discussed topic in the current competitive environment where the organisations are in various competition due to the increase in the number of new entrants (Khan et al., 2018). Therefore, the organisations have incorporated the leadership styles within their companies that the employees follow to have better productivity within the organisation. All the employees work for a common goal for tom to achieve the mission of the respective organisation. Leadership can be defined as one of the intrinsic qualities of a person that makes other people follow him/her.

A leader tends to associate the other employees/workers with his personality and tries to motivate them to achieve a common goal. Leadership is all about motivating a group of people to accomplish a goal or the defined objectives. However, there are many types of leadership styles that the leaders incorporate to motivate the employees. In contrast, in the respective study, the leadership styles that will be discussed are the transformational and transactional leadership styles. The literature will be provided further to support the effectiveness of the transformational and transactional leadership styles.

2.0 Literature Review

2.1 Impact of Transformational Leadership on Organisational Performance and Change

           There are different complexities related to the job description and the job specification in the workplace that can affect the employees' productivity and hinder the execution of the objectives. Therefore, the managers and the leaders implement the transformational leadership style to increase the employees' motivation level. The transformational leadership is the one where the leader incorporates different qualities like idealised influencing, inspirational motivation and intellectual stimulation. According to Nguyen et al. (2017), in the transformational leadership, the employees are encouraged and motivated to perform better and work according to the company's vision and have better productivity than the competitors. In this case, the leaders need to incorporate a strong sense of the culture that is followed within the organisation.

As discussed by the author Alqatawenh (2018), the transformational leaders are the one that does not micromanage their employees or create pressure on them to instruct every single detail as it can make them feel inferior or in-confident. Therefore, the leaders that follow the transformational leadership style encourage the employees to stay confident and make decisions that are meant to be taken within their job. This development of trust on the employees built up by the leader helps them feel more confident, which allows them to perform better and move towards the organisation's goals, directly affecting its productivity. Therefore, it can be analysed that the role of the leader has a significant effect on the performance and the productivity of the employees. Hence, transformational leadership has some characteristics that emphases the employees' performance and motivate them to be more productive (Busari et al., 2019). These elements encourage the employees to perform better and stay committed to their job. These characteristics related to the transformational leadership are the motivation and the positive development of the employees, which helps them to be more productive.

Similarly, transformational leadership increases the implementation of the moral standards that are being followed within the organisation and the respective employees. Moreover, it also has an emphasis on the values of the organisation and the priorities. Furthermore, every company follows a culture that helps the employees maintain standards and form an emotional bond. Hence, transformational leadership helps create a culture within the company, which promotes the employees to work for a common goal.

           It can be evaluated by observing the attributes and the effects of transformational leadership that it increases the strength of the employees that allows them to follow the culture of the organisation and being more loyal by incorporating their own skills that affect their performance and the profitability of the organisation (Nguyen et al., 2017). In transformational leadership, the individual leadership style encourages the employees to become leaders, contributing to their betterment. As discussed by the author Duggan (2018), the effectiveness of the transformational leadership can be analysed by observing the revenues and the corporate culture of the companies that follow the individual leadership style within their operations and their employees as well. These companies are IBM, Intel, Microsoft and Apple. Therefore, it can be evaluated that the most profitable companies in the world like Apple that have their revenues in trillions use the transformational leadership to have a defined corporate culture and an adverse impact on the performance of the employees (Nguyen et al., 2017). Apple, IBM, Intel and Microsoft are known for the technological advancements that they have imbibed within their operations in order to have better strategies formed, and a more significant number of leaders created that can help the organisation to sustain their brand's image and gradually sustain their performance in the competitive environment and their relative industry as well. Therefore, it can be evaluated that in response to being more successful and have a more significant market share the employees should be provided with immense value with the use of transformational leadership style (Ba?karada et al., 2017).

2.2 Impact of Transactional Leadership on Organisational Performance and Change

           It is necessary to maintain its image in the current business environment and sustain its productivity to compete within the respective saturated business environment. As identified by the individual author Chaudhry, and Javed (2012), the leaders use leadership styles to improve their organisation's effectiveness to increase their revenues. The leadership styles are developed and implemented for two significant reasons: enhancing the employees' performance or bringing change within the organisation. The leadership styles can be identified as helping the manager form a bond with the employees. Therefore, in the current study, the leadership style used is the transactional leadership style that supports the organisation to change the company with time by incorporating values, strategies, and motivating employees to be more productive.

           The transactional style can be explained as, the transactional leadership is about passing on an order or an objective to the employees that is to be executed at any cost and on that bases the employees are rewarded with incentives, bonuses, encashment and different types of prizes that helps in building motivation among the employees or they have to face punishment if they fail to come up to the expectations of the employer. The transactional leadership style is followed mostly in the organisations with no tolerance for mistakes or errors in their operations, either the military operations, the company's supply chain or the organisations with live time operations. However, as per the author Adriansyah et al. (2020), the transactional leadership is not applicable in the organisations that require innovation or creativity but is useful for the ones that are only executed to incur profits for the company and are based on increasing the number of the sales only. In the transactional leadership style, employees' growth is minimal. They only work on the bases of specific incentives, fear of losing the job, fear of being demoted, or having their salary reduced. Although, if they come up to the employer's expectations, they are provided with monetary benefits, incentives, and bonuses. Hence, it can be evaluated that the transactional leadership style can contribute to the effectiveness of the employees' performance but is less effective in bringing change into the organisation's operations.

           Moreover, it has been identified by the author Saeed, and Mughal (2019), that the transactional leadership style can be implemented when the firm or the organisation is going through a critical stage and demands immediate productivity from the employees where they need to portray their skills and work as per the objective is defined to them. Therefore, this type of short-term changes can be expected from the implementation of the transactional leadership style. Moreover, many organisations in the world opt the transactional leadership style where they need aggressive profits or performance in the industry. The example of transactional leadership can be related to the organisations like the Military groups, the coaches of NFL (national football League) and different other firms which sometimes require the short-term goals to be met with the deadline also follow the transactional leadership style (Chaudhry, and Javed, 2012). This leadership style differs from the other leadership styles that have aimed to work on the growth of the employees and their attributes and skills as they can work for the organisation's productivity to incur more remarkable revenue streams.

3.0 Conclusion

           The respective study has focused on the two most common leadership styles: the transformational and the transactional leadership styles with immense emphases on the employees' productivity or earning revenue through it. There are differences identified in the respective research regarding the two most common leadership styles: the transformational and the transactional leadership styles. The transactional leadership is more focused on attaining the objective of the organisation and possess about positive and negative features only for the respective employees as the transactional leader provides the employees with two options that are about executing the operations of the company within time to get benefits and rewards or if they fail to achieve it they would be given several punishments which are either related to their salary, bonuses or their promotion (Ba?karada et al., 2017).

           On the other hand, transformational leadership has been explained, which focuses on the betterment of the employees and their excessive growth by increasing their skills and attributes. The transformational leader has a long-term approach that focuses on the employee's skills and attributes, which can benefit the organisation in the near future (Khan et al., 2018). Therefore, the transformational leaders have an immense focus on developing the employees and creating value for them, increasing their loyalty towards the brand.

           In comparison to the organisation's performance and the change related to the leadership style, it can be analysed that the transformational leadership style has greater effectiveness for bringing change within the organisation and developing the skills of the respective employees to increase the firm's performance. Furthermore, it can be evaluated that the transformational leaders tend to demand nothing in return like the attributes that the transactional leaders require (Chaudhry, and Javed, 2012). Similarly, it has been identified that the transactional leaders demand performance from the employees regarding monetary benefits and incentives offered by the respective leaders to enhance the firm's profitability. It can also be evaluated through the findings of the respective research that the transactional leadership style can cater to increase the performance of the employees but is not viable to bring changes as it works for the short-term period only. However, the transformational leadership style can cater to both the employees' characteristics and the organisation, bringing change within the organisation and improving employee performance.

References

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