Transactional and Transformational leadership in Today's Business World

Herb Kelleher, the founder and former CEO of Southwest Airlines, used a combination of transactional and transformational leadership styles to create a unique and successful corporate culture.

Kelleher used transactional leadership to set clear goals and expectations for his employees. For example, he established the "10-minute turn," which required Southwest Airlines to turn around planes in just 10 minutes, compared to the industry average of 30 minutes. Kelleher incentivized employees with bonuses for meeting or exceeding this goal.

At the same time, Kelleher used transformational leadership to inspire and motivate his employees to go above and beyond these goals. He created a positive and supportive work environment, encouraged collaboration and teamwork, and emphasised the importance of treating customers with respect and kindness.

The combination of these two leadership styles helped Southwest Airlines achieve great success. The company consistently ranked high in customer satisfaction and employee engagement, and was named one of Fortune's "Most Admired Companies" multiple times.

In a study conducted by The Ken Blanchard Companies, it was found that organisations with leaders who used a combination of transactional and transformational leadership styles had higher levels of employee satisfaction, motivation, and productivity. These organisations also had lower levels of turnover and absenteeism.

So, it's clear that both transactional and transformational leadership styles have their own unique benefits, but when used together, they can create a powerful combination that leads to great success for both the organisation and its employees.

But what are transactional and transformational Leadership ?

Transactional leadership is like a rewards and punishment system. Leaders using this style set clear expectations and provide feedback to their team. Employees who meet or exceed expectations are rewarded, while those who fall short may face consequences. This leadership style is all about achieving specific goals and meeting performance targets.

On the other hand, transformational leadership is about inspiring and motivating employees to achieve shared goals. Leaders using this style create a vision and set goals that are not just about meeting performance targets, but also about empowering employees to reach their full potential. They create a positive and supportive work environment, encourage collaboration, and provide coaching and mentoring to help employees develop their skills and achieve their goals.

The Importance of Transactional and Transformational Leadership

Both transactional and transformational leadership styles have their own unique benefits and are important for organisational success.

Transactional leadership is important because it helps organisations achieve specific goals and meet performance targets. This style can motivate employees to work hard and achieve their targets, leading to improved productivity and performance.

Transformational leadership is important because it helps create a positive and supportive work environment. When employees feel valued and empowered to contribute to the success of the organisation, they are more likely to be engaged, motivated, and committed to achieving shared goals. This can lead to improved morale, teamwork, and collaboration.

Combining Transactional and Transformational Leadership

Leaders who use both transactional and transformational leadership styles can create a more effective leadership style. By setting clear expectations and goals, providing rewards and feedback, and inspiring and motivating employees, leaders can create a balance between achieving performance targets and creating a positive work environment.

For example, a leader might use transactional leadership to set clear goals for their team and provide rewards for meeting those goals. At the same time, they can use transformational leadership to inspire and motivate their team to go above and beyond those goals, and to create a positive and supportive work environment where everyone feels valued and empowered.

In conclusion, transactional and transformational leadership styles are both important for organisational success. By combining these approaches, leaders can create a more effective leadership style that balances the need for achieving performance targets with the need for creating a positive and supportive work environment. So, what kind of leader are you? Do you lean more towards transactional or transformational leadership? Or do you use both styles??