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According to Theodore Roosevelt “The best executive is the one who has sense enough to pick good men to do what he wants done, and self-restraint to keep from meddling with them while they do it.”
“Good leaders make people feel that they're at the very heart of things, not at the periphery. Everyone feels that he or she makes a difference to the success of the organization. When that happen the people feel centered and that gives their work meaning”, says Warren Bennis.
In the ever changing social and political environments, the leaders find themselves playing important roles. They have to be strategic in every bit. On the other hand the “organizations are looking for such leaders who are not only strategic but also are transformational to take them to the next level”, says Dr. Byron L. Cherry.
Good leadership essentially means having leadership qualities. This brings us upon the issues of transactional and transformational leadership.
Concept of transactional leadership revolves round power and control of leader over his or her employees or followers. The leader provides incentives to the flowers and they do what exactly their leader wants. Logical sequel of this theorem therefore is that when the employee performs the task entrusted by the leader he becomes fit for a reward. When he does not perform the follower is in for a punishment or at least the withdrawal of the reward.
Theme of transactional leadership therefore can be explained in the following words – “I will give you me that, where the leader controls the rewards, or contingencies”. In fact the transactional leaders “manage by exception”. Naturally they are less inclined towards any change or major transformations in the working environment. Nor they cherish any idea of changing the employees. Keeping everything constant excepting when faced with some problems is the essence of transactional leadership.
For instance when the organization is not able to attain the desired goal it faces a problem that will require some structural or organizational changes. Transactional leadership will only accept the idea of changes in such situations.
One might consider it extremely unlikely that such approach would ever be useful in leadership. Yet the approach is very much prevalent at real workplaces around the world. It seems to be a paradox but it is true. Transactional leadership is quite common in use and it relies on a fixed set of assumptions relating to human beings and their motivations, working pattern of the organizations and related issues. However these assumptions are becoming demonstrably incorrect, inaccurate and unreliable in the modern day contexts.
For instance, it is well known that effects of the rewards and punishments could be expensive. Rewards have to grow bigger with the passage of time. Else it might loose its effects. Moreover the end objective of building of loyalty cannot be achieved by dispensing rewards alone.
We know that the effects of rewards and punishments result in high "costs" because the use of rewards tends to require bigger and bigger value rewards over time, to remain effective. We also know that the building of loyalty (to a leader) requires more than dispensing rewards. In fact the transactional leadership can be linked to the behavioral approaches on human functioning. The approach is not valueless but fails to come up to the requirements of analysis. Transactional leadership focuses more on management than leadership. It has particular focus on the management of rewards and punishments.
The antithesis to transactional leadership is transformational leadership. This approach is based on partnership rather than domination. The essence is decentralization rather than centralization. It does not revolve round the concepts of rewards and punishment like the transactional leadership. In contrast the transformational leadership is the process of leader follower partnership. They work together to bring up significant changes or transformation in the organization.
Thus recognition that leadership involves transformation and change and learning on part of both the follower and leader, are the essence of transformational leadership. Some power imbalances are inevitable. Yet the difference with the transactional leadership is quite obvious. Transactional leadership involves telling, commanding or even ordering. It is essentially based or the reward and punishment tandem. Transformational leadership on the other hand involves inspiring the followers so that their involvement is voluntary based on common vision. This is what is evident in the lives of the greatest leaders that have appeared in the world from time to time.
The author who brought up in true lights the distinction between the transactional and transformational leadership was James McGregor Burns. He was the pioneer of the analytical issues involved in the two types of leadership approaches. The other notable author was Bernard Bass who was a disciple of Burns. He extended the work of Burns.
Bernard Bass defines the transformational leadership as the particular form of leadership that takes place when the leaders “broaden and elevate the interests of their employees, when they generate awareness and acceptance of the purposes and the mission of the group, and when they stir their employees to look beyond their own self-interest for the good of the group.” On the other hand the transactional leadership is based on “reciprocity” between the leader and the followers.
Bensimon points out that “the transactional leadership considers the relationship between leaders and followers as a two-way process of exchange and mutual influence. Leaders accumulate power through their positions and their personalities, but their authority is constrained by follower expectations in regards to transformational leadership”. In this way he presents a one-way view of the relationship between leaders and followers. He points out that leaders initiate relationships, which raise followers to new levels of morality and motivation.
In essence transactional leadership would conjure a managerial image. Transformational leadership on the other hand would evoke the images of individuals who were extraordinary in their own rights. Such people could be Martin Luther King Jr. or General Colin Powel, or Mohandas Karamchand Gandhi.
To sum up one can safely conclude that the difference between the fulfilling and the changing expectations is in the heart of the distinction. In the words of Dr. Byron L. Cherry, “Transactional leaders are depicted as accepting and maintaining the culture of an organization as it exists with a belief system, language, and group norms. In contrast, transformational leaders change organizational culture by introducing new beliefs and goals, and by changing how group members define their roles”.
“Bass states that this form of leadership goes beyond traditional forms of transactional leadership. Transactional leadership emphasizes corrective action, mutual exchanges, and rewards only when performance expectations are met. On the other had, transformational leaders trust their transformational versus Transactional leadership subordinates and leave them space to breathe and grow. The bottom line is that transformational leadership is a more developmental and constructive form of leadership for the employees and the organization as a whole.”
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While transactional leadership approach is still very much operative, it is being gradually replaced by transformational leadership approach that fits in with the democratic set up of contemporary world.
Numerous studies have been conducted over the years either for finding out or for defining the leadership improvement resources. For instance there have been numerous documents on the non-representation or under-representation of women in the field of educational leadership. In many institutions and organizations these issues are prominent. James McGregor Burns in 1978 and Bernard Bass in 1985 worked on the process of resolving these issues. Both professed that transactional as well as the transformational leadership behaviors offer promises for resolving these issues. As the leader moves towards increasing and elevating the levels of the social consciousness of his or her followers, they use the process of either transformational or the transactional leadership.
(Source: Leithwood – 1990)
In the process the leaders place more emphasis on actualization of his or her followers. The task is accomplished using the process of role modeling. Leaders transmit values and at the same time server as the catalyst for influencing their followers. In fact they set them collaboratively to transform their characteristics as well as the social environments.
(Source: Bass – 1985 and Beaven – 1989 – Multifactor leadership questionnaire)
In this manner the constituents become empowered. Ability of predicting the consequence of their behavior is the changed environment and behavioral changes in the followers. Studying the two methods aims at resolving a few issues involved. The first one of them is to determine the gender differences in the transformational and the transactional leadership. The second one is to decide on the differences in the perceptions of the accomplishments of the outcomes desirable for the organization through active collaboration of the leader and his or her followers.
Whatever model you use for your leadership task accomplishment, each will have its own drawbacks and limitations. New models are also devised that are the variations of the old models for both transactional and transformational leaderships. Initially when you try using either of the methods, you will understand that the relationship between two models is always dependent on the exchange that could take place. Such exchanges could be anything and they are not confined to finance alone.
According to Burns the transformational leader “recognizes and exploits an existing need or demand of a potential follower… (and) looks for potential motives in followers, seeks to satisfy higher needs, and engages the full person of the follower” Transactional leader on the other hand “pursues a cost benefit, economic exchange to met subordinates current material and psychic needs in return for “contracted” services rendered by the subordinate” according to Bass.
Perhaps the most appropriate comparison was advanced by Bass who said “the transactional leaders work within the organizational culture as it exists; the transformational leader changes the organizational culture”.
A review of the everyday life normal human beings have in the society can be taken for the study. Normally the relationship between two persons is mostly based on the levels of interaction they carry out with each other. Such exchanges need not necessarily be financial or material based. In fact it could be at various other levels and could also be spiritual or psychological. The more the exchange between the two parties the stronger would be their relationship.
As you have expectations from your manager he also has expectations from you. The expectations are rather mutual and require reciprocation. Thus when something is done for someone by someone else basing on the return such relation becomes the transaction relationship. The best example is the election manifesto published by various political parties and the promises made by the leaders to the mass in return for which they get their votes.
Similarly in business, leaders announce benefits in their agenda and in exchange his employees will give productivity. Again the leaders announce rewards for such productivity or punishment in failing to achieve it. The system becomes one of transactional leadership where everything assessed on the basis of returns received and either reward or punishment attains at the end of it for the performer.
These leaders are therefore the transactional leaders who give something away to thief followers in exchange of getting something from them. Burns rightly remarks that the transactional leader “approaches followers with an eye to exchange one thing for another.”
However there is the other side as well. Everything in life may not happen merely on the basis of expectations. Sometimes things also happen without any expectation. Such services are selfless and dedicated. Mother does not expect anything from the child and provides unconditional services. Similarly the leader may at times provide services to his followers without expecting anything in return. Both the mother and the leader play vital roles in their respective fields in shaping the life of the child and the followers respectively. This is what is called the transformational leadership.
Strangely enough, such leaders are not rare species. You will find many leaders in the pages of history and even in the contemporary world serving the fellow people without any expectation or without asking for any favor in return. Such leaders develop goals that are common with their followers and they put the followers in the front developing them. Instead of followers following the leader it becomes sort of partnership and collaborative efforts. The process takes the followers truly to the next levels where they shelve their self interest in lieu of the greater interest of the society at large.
The leader who recognizes the transactional needs in potential followers “but tends to go further, seeking to arouse and satisfy higher needs, to engage the full person of the follower … to a higher level of need according to Maslow’s hierarchy of needs” is the real transformational leader; says Bass.
(Source: The ethics of transformational leadership by Bernard Bass)
One can thus distinguish the two types of leadership as the leadership of stability and leadership of volatility. Jain Hay, one of the leading authors on the subject has aptly compared the two types of leaderships in his work. To him the transactional leadership is one of stability and exchange whereas the transformational leadership is that of values and volatility. The growing orthodoxy today is positioning the transactional as well as the transformational leaderships as linked to each other. Leaders all over the globe have created complementary styles connecting the two systems. The debate is not new. It is going on since the late 1970s in the background of the increasingly turbulent and unstable economic scenario in the post World War II environments.
“The declining significance of the pre-existing ‘social contract’ which had implied long-term employment in return for loyalty With the apparent demise of a transaction fundamental to organizational leadership and an emerging context of organizational volatility came the search to better understand the leaderships of stability and of change; and the leaderships of contract and of values.” (Griffin, 2003)
The distinction between the two categories of leadership was for the first time brought out by Downtown in the year 1973. Thereafter the theory was propounded by many notable authors like Barnett, Conner, McCormic and Cox during the period from 1973 to 2001. In fact all of them upheld the views of Burns who distinguished between the ordinary transactional leaders and the volatile transformational leaders. To them the later categories of leaders were characterized by extraordinary adjusting and adaptive capabilities.
Both Bass and Yukl during 1989-90 in their works pointed out that the two types of leadership forms opposite poles. Early empirical studies also supported this view and suggested that the two approaches could be independent of each other while Burns claimed that the latter form of leadership is more effective in comparison to the former.
(Source: Brown and Moshuvi – 2002)
While the work of Burns received good attention there was opposite views as well. Bass for instance argued that transactional and transformational leadership may not be segregated from each other as they form part of the same process. In fact the transformational leadership is the enhancement of the transactional leadership. Other notable authors supporting such views included Professor Emeritus of Organizational Behavior at the State University of New York. The argument advanced following footsteps of Bass was that “transformational leadership enhances or augments the effects of transactional leadership and that all leaders display both leadership styles though to different degrees”. (Bryant – 2003).
Put succinctly, “Transactional leadership seeks to maintain stability rather than promoting change within an organization through regular economic and social exchanges that achieve specific goals for both the leaders and their followers.” (Lussier & Achua, 2004, p. 358).
“By nurturing followers’ personal capacities and abilities, transformational leaders are held to have strong positive influences on followers’ motivation and their ability to achieve or even surpass goals.” (Barbuto, 2005; Feinberg, Ostroff & Burke, 2005).
Considering the inspirational motivation and intellectual simulation that transformational leadership brings up in the leader-follower relationship, such leadership and not the traditional exchange based transactional leadership, could really be conceived as the strategies for future leadership on planet earth.