Transformational Leadership

Transformational vs. Transactional Leadership

Transactional leadership is all about motivation through rewards and punishment. It’s a give-and-take relationship. Transactional leadership focuses on results and conforms to the uncompromising structure of an organization.

Think of military operations, mega-corporations, and international projects that must adhere to strict requirements and laws. A transactional leader shines in these areas. They make sure everyone follows the rules and regulations, stays organized, and sticks to the requirements of the job. This is quite the opposite of a transformational leader.

Transformational leaders encourage innovation and creativity, whereas, transactional leaders want to keep the status quo, relying on self-motivated people who work in a very structured, directed environment.

Where transformational leaders have more of a “selling” style, transactional leaders are of the “telling” style. Transformational leaders are proactive and prioritize group progress, while transactional leaders are reactive and appeal to the follower’s individual interests.

Where does a transactional leader thrive? In crises or projects that are linear and require very specific processes. Also, in corporations, the military, and even in sports (i.e. NFL coaches). 

Some of the characteristics of transactional leaders include: 

• Focused on short-term goals
• Strive for efficiency 
• Opposed to change and innovation
• A tendency to be inflexible 
• Follow rules and regulations closely
• Favor structure, policies, and procedures 

Background & Origins of Transformational Leadership

In 1973, a man named James V. Downton coined the term “transformational leadership.” James McGregor Burns, leadership expert and presidential biographer, further developed the concept in the ’80s. 

Burns says transformational leadership is when, “leaders and followers make each other advance to a higher level of morality and motivation.” He talked about how transformational leaders can inspire followers to change expectations and motivations to work toward a common goal. A transformational leader affects change with their personality and through example. 

Bernard M. Bass furthered Burns’ work in the 1980s. He focused on the psychological mechanisms behind transformational and transactional leadership. Bass also explained how to measure transformational leadership. His work opposed that of Burns’ in that he argued that leadership can be both transformational and transactional. 

By 1985, transformational leadership had become well-defined and developed, and according to Bass, encompassed the following aspects:  

• Highlighting important priorities 
• Fostering higher morality 
• Establishing an ethical environment 
• Coaching and mentoring individuals 
• Allowing freedom of choice
• Promoting the common interest over self-interest
• Using persuasive appeals based on logic 
• Valuing intrinsic motivation 
• Being authentic and consistent 

The five major personality traits that have been found in most individuals who display qualities of a transformational leader are: 

1. Extraversion

2. Neuroticism 

3. Openness to experience 

4. Agreeableness 

5. Conscientiousness 

Elements of Transformational Leadership

Bass outlined what’s often referred to as the “4 I’s” – the four components of transformational leadership. They are as follows: 

• Inspirational Motivation 

Transformational leaders have a vision and present that vision in a way that inspires and motivates followers. These leaders can communicate their vision in simple terms that help followers be motivated and passionate about fulfilling goals. 

• Idealized Influence 

A transformational leader doesn’t just talk the talk, they walk the walk—they’re strong role models, and they’re admired for this. They embody the qualities they want to see in their team, making them trustworthy. 

These first 2 I’s combine to form the transformational leader’s charisma. These leaders live their vision and lead their followers by example. 

• Intellectual Stimulation

Transformational leaders welcome team members who challenge the status quo; who are innovative and creative. They constantly push followers to perform at higher levels. 

• Individualized Consideration

A transformational leader genuinely cares about the individual needs and feelings of their followers. They offer support and encouragement, and maintain open lines of communication. In this way, the leader builds trust within their team and the organization.

Transformational Leadership in the IT World

As more companies embrace digital transformation, transformational leadership is becoming increasingly important—though it can be used in any industry. Constantly changing tech necessitates innovation as well as a strong leadership style. Transactional leadership doesn’t really fit in here. A leader in IT must innovate, pivot, and adapt quickly. There’s no room for sticking to outdated formulas for success.

CIO’s, as leaders in IT, need to be transformative, particularly because they’re often largely in charge of a business’s digital transformation. According to Gartner, 40% of CIOs are responsible for digital transformation in their company, while 34% are responsible for innovation. 

Inspiring and motivating teams is crucial when planning digital transformation. The very success of a project depends on the group’s buy-in and ability to innovate and accept change. This is exactly where the transformational leadership style comes into play. 

However, there are still strict processes, procedures, and regulations to follow in the tech world, so having some transactional leadership qualities is still beneficial.

Benefits & Effects of Transformational Leadership

As authors Bernard Bass and Ronald E. Riggio explained in their classic text, Transformational Leadership, there are a number of advantages and effects that result from the transformational leadership model. Leaders who use the transformational methodology help their followers become leaders by tending to their individual needs and empowering them. 

According to a study published in the Journal of Occupational and Environmental Medicine, this style of leadership also has a positive influence on employee wellbeing. The researchers found that employees who had employers with a higher degree of transformational leadership reported heightened wellbeing. 

Some additional benefits are: 

• Followers are inspired to achieve extraordinary results 
• Followers develop their own leadership abilities 
• Helps align the goals and objectives of individuals, the leader, the group, and the organization
• This leads to higher levels of employee performance
• Groups have a greater sense of satisfaction

Training & Certification

While transformational leadership skills are considered soft skills, there are training and certification programs available to help develop transformational leaders. Here are some online resources:

• Georgetown University School of Continuing Studies – Institute for Transformational Leadership
• University of Notre Dame Mendoza College of Business – Executive certificate in transformational nonprofit leadership
• Coursera- Transformational leadership: Developing others
• University of Washington – Bothell School of Business Transformational Leadership Development Programs
• The Great Courses – Transformational Leadership: How leaders change teams, companies and organizations

Real-world Transformational Leaders

According to Bass, a transformational leader is someone who:

• Exemplifies moral standards and encourages the same of others 
• Motivates and helps followers develop
• Encourages employees to change attitude from self-interest to a mindset of working for the common interest
• Promotes an ethical work environment with clear values, priorities, and standards
• Emphasizes authenticity, cooperation, and communication
• Provides individual mentoring and coaching for followers 
• Appeals to the ideals of followers 

Some known transformational leaders include: 

Reed Hastings, Netflix

A visionary founder with no experience in the industry, Hastings revolutionized television. Not adhering to an old formula for success, Hastings explored new avenues for growth and totally transformed T.V as we know it today.

Jeff Bezos, Amazon

With a background in finance, Bezos dove in and reinvented retail. Having no predetermined way of doing things, his outsider perspective proved to be powerful.

Steve Jobs and Tim Cook, Apple 

A classic example of “dual transformation”. Steve Jobs redesigned the computer, launched the device and also built an entire software ecosystem. Cook has successfully furthered Jobs’ vision, maintaining a focus on innovation.