Difference Between Transactional and Transformational Leadership

Leadership is a trait of influencing the behavior of individuals, in order to fulfill organizational objectives. A number of leadership theories have been propounded by various management experts considering behaviour, traits, nature, etc. namely, Authoritarian, Laissez-faire, Transactional, Transformational, Paternalistic and Democratic. Transactional Leadership or otherwise known as management leadership, refers, to a leadership style which lays emphasis on the transaction between leader and its subordinates.

On the other hand, Transformational Leadership is a type of leadership which becomes a reason for the transformation (change) in the subordinates. In this style, the leader works with the subordinates to ascertain the desired change in the organization.

Many people have trouble understanding the difference between transactional and transaformational leadership.

Content: Transactional Leadership Vs Transformational Leadership

1. Comparison Chart
2. Definition
3. Key Differences
4. Conclusion

Comparison Chart

Basis for Comparison	Transactional Leadership	Transformational Leadership
Meaning	A leadership style that employs rewards and punishments for motivating followers is Transactional Leadership.	A leadership style in which the leader employs charisma and enthusiasm to inspire his followers is Transformational Leadership.
Concept	Leader lays emphasis on his relation with followers.	Leader lays emphasis on the values, ideals, morals and needs of the followers.
Nature	Reactive	Proactive
Best suited for	Settled Environment	Turbulent Environment
Works for	Developing the existing organizational culture.	Changing the existing organizational culture.
Style	Bureaucratic	Charismatic
How many leaders are there in a group?	Only one	More than One
Focused on	Planning and Execution	Innovation
Motivational tool	Attracting followers by putting their own self interest in the first place.	Stimulating followers by setting group interest as a priority.

Definition of Transactional Leadership

A leadership style whereby the objectives and goals are predefined and the leader uses reward and punishment to motivate his followers is known as Transactional Leadership. It focuses on improving the current situation of the organisation by framing the steps and controlling the organisational activities. The basic purpose of this type of leadership is to revamp the existing corporate culture and to enhance current policies & procedures.

In 1947, the style was first proposed by Max Weber followed by Bernard Bass in the year 1981.

In this leadership style, the leader uses his authority and responsibility as his power as well as the style has a formal approach. Prize and penalties are the two primary tools employed by the leader to inspire his subordinates i.e. if an employee achieves the target within the stipulated time he is given initiative for his work, whereas if the task is not completed within the required time, then he will be penalised for the same.

Definition of Transformational Leadership

The style of leadership in which the leader uses his influencing power and enthusiasm to motivate his followers to work for the benefit of the organisation. Here, the leader seeks the requirement for a change in the existing organisation culture, gives a vision to his subordinates, incorporates mission and implement the change with the dedication of his followers.

In transformational leadership, the leader acts as a role model and as a motivator too who offers vision, excitement, encouragement, morale and satisfaction to the followers. The leader inspires his people to increase their abilities and capabilities, build up self-confidence and promotes innovation in the whole organisation.

James MacGregor Burns first proposed the concept of this leadership style in the year 1978. The main idea of this leadership style is that both the superior and subordinate work for lifting each other for improving their morale and motivation.

Conclusion

According to some researchers, transactional leadership is best while some think that transformational leadership is better. So the debate is never ending, for the two leadership styles. In my opinion, there is no standard leadership style which is best suited to all the circumstances. So, an organisation should not rely on a single leadership style. It must employ the requisite leadership style as per its needs and prevalent conditions.

If you are searching for the best leadership style between transactional and transformational leadership, then you will end up saying that both are having its merits and demerits. It depends on the situation which leadership style will be most appropriate to it.