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Transactional leadership and transformational leadership

  • Transactional leadership views leadership in terms of an exchange between leader and follower. At its most basic this transaction involves the exchange of reward for work.
  • Transformational leaders seek to raise followers' consciousness about issues of consequence and subsequently transform followers into leaders themselves.

Based on his observations of political leaders; JM Burns' 1978 book, Leadership, contrasts transactional leadership with transformational leadership. Transactional leadership describes a relationship in which the leader initiates an exchange of ‘valued things’ which motivate and bind followers to the leader (Goethals, 2005). At its most basic, transactional leadership is the exchange of reward for work – rewards could be psychological or material in nature (Bass & Bass, 2008). Transactional leadership also promotes compliance through threat of punishment. Sims and Lorenzi comment that ‘effective leadership reinforces desired followers’ behaviour and eliminates undesired follower behaviour through providing or denying social, symbolic or material rewards and punishments' (Bass & Bass, 2008, p. 366).

Transformational leadership, on the other hand, ‘originates in the personal values and beliefs of leaders, not in an exchange of commodities between leaders and followers’ (Kuhnert & Lewis, 1987, pp. 649-650). A transforming leader:

  1. raises the followers' level of consciousness about the importance and value of designated outcomes and ways of reaching them;
  2. gets the followers to transcend their own self-interests for the sake of the team, organisation or the larger polity; and
  3. raises the followers' level of need from lower-level concerns for safety and security to higher-level needs for achievement and self-actualisation (Bass & Bass, 2008, p. 619).

Rather than operate in one style or the other, Bass proposes that transformational leadership can augment the effects of transactional leadership, citing Presidents Lincoln, Franklin D. Roosevelt and John F. Kennedy as examples of leaders comfortable swapping between styles (Bass & Bass, 2008).

Criticisms and challenges

Critics of transactional leadership point out that rewards motivate only at a base level and produce poorer results where higher level thinking is needed (Bass & Bass, 2008). While exchanges of higher quality goods (i.e. emotional resources) may improve outcomes, approaching leader-follower relationships from a purely transactional perspective is likely to be limiting in the long term.

The main challenge for transformational leadership is that despite being conceived as morally positive, the intentions of transformational leaders cannot be guaranteed which could lead to abuse of power in the hands of a skilled operator. The suggestion that ‘there are pseudo versus authentic transformational leaders’ led to research into authentic leadership (Avolio, et al., 2009, p. 423).

Further reading

James MacGregor Burns (1978). Leadership.