Transactional vs. Transformational Leadership: The Big Debate

Posted by: Jannike Post Date: 12th March 2015

Many of the arguments about leadership styles boil down to the discord between transactional and transformational approaches.

Leadership experts Nigel Girling and Tina Parker have put forward arguments for each side of the debate, and we’d love to hear your case for either side.

The case for Transactional Leadership – Nigel Girling, Director of the National Centre for Strategic Leadership

Transactional leadership, like Douglas McGregor’s Theory X and the early ‘tell and sell’ stages of the Tannenbaum & Schmidt Continuum, tends to get a bad press. Millions of words have been written in recent years about the impending death of ‘command and control’, and the need for a more engaging leadership style and culture. Indeed, I’ve contributed thousands of those words myself. Perhaps it’s time to set the record straight.

Sometimes it’s right to be an autocrat, a dictator, the sole authority and decision maker.

There, I’ve said it.

Here are some of the reasons why.

  • People like and need direction. It creates clarity, it defines rules and boundaries, it provides certainty and security, and it helps people to know exactly where they are and what they need to do.
  • It increases speed. When time is of the essence, and it usually is, the retention of absolute authority by the leader is typically the fastest route to a decision, action or result.
  • The leader is often the best person to decide. The leader is likely to have been appointed because of their superior knowledge, experience or ability. Why wouldn’t you want them to be the one who decides?
  • Job Mobility. As people now move jobs so frequently, they often won’t have time to develop the knowledge or skills to be empowered or given much freedom to act.
  • Extrinsic motivation still works. For many people, the simplicity of ‘do this, get that’ motivators or incentives is still the simplest way to drive performance.

So, don’t be misled into thinking that Theory Y = Good and Theory X = Bad, or that transformational leadership styles are the one right way to lead. It simply isn’t true.

The case for Transformational Leadership – Tina Parker, Head of Strategic Leadership at the Babington Group

The only people who need direction in the sense that transactional leaders mean it is animals and fools. X-theory leadership assumes that employees are lazy and inherently dislike work. This is only true in people who do a job for the sake of doing it. Most people, in today’s world, have “careers”, not “jobs”, and what would be the point in pursuing a career you did not like or enjoy, especially when there are so many choices open to us?

While increased speed and lowering costs are the essence of transactional leadership, at what cost to quality?

Transformational leaders are visionaries, charged with recognising the need for change and driving that change forward. These leaders of the future are role models for followers, empowering them to take ownership and responsibility for their own work; enhancing job enrichment, motivation, and morale. Transformational leaders are able to inspire their followers to work towards common goals, while challenging their perceptions, expectations, and motivations.

According to James Macgregor Burns, who introduced the concept of transformational leadership, “Leaders and followers make each other advance to a higher level of morality and motivation.”

The transformational leader will prevail and flourish in today’s ever changing world.

Here’s why:

  • People need vision and inspiration to determine their direction. Transformational leaders communicate their vision well to other leaders and followers, and their common traits of enthusiasm and passion provide an energy that carries through the organisation, enabling employees to optimise performance.
  • Lower employee and customer turnover costs. They fully engage with people to fully understand and satisfy their needs, while aligning those with the needs of the organisation. They use their positive expectations of their employees to inspire, motivate and encourage them to do their best. Employees feel more like they “belong” or “fit in”, making them more likely to stay with the company. Lower turnover equals lower hiring and training costs. Working with customers, in the same way, retains their belief and loyalty in the organisation, reducing marketing costs for selling to prospective clients.
  • Several minds are better than one. No one person has all the answers. Employee empowerment, promoted by the transformational leader, encourages creativity and innovation required for ongoing improvement.
  • Improving organisational culture. They raise awareness of moral standards to create an ethical climate through shared values. They “walk the walk and talk the talk”.
  • Continuous improvement. Through instilling self-belief, empowerment, exploration, and challenging “what is”, in an organisation that anticipates and embraces change, continuous improvement becomes the norm.
  • Quality. Through a collective effort, shared vision and being allowed to learn from mistakes, quality will be built in, naturally.

While transactional leaders demonstrate fast gains through short-term goals and control of rewards, transformational leaders are preparing staff and organizations for the future and keeping them moving forward

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Your Views

I have to stand on middle ground here. For transactional leadership, I agree with the need for sound direction when it comes from a place of experience, maturity, and stability. Transactional leadership will continue to exist as long as we have hierarchical organizations.

That said, with the increased focus on growth across diverse industries, we will see elements of culture, shared decision making, and collective empowerment finding their way into the transactional leadership model. A healthy infusion of transformational leadership attributes into the transactional leadership model will allow for the emergence and sustenance of a hybrid approach to organizational leadership while delivering quality, creating a culture shift with an engaged workforce, driving integrity and motivation, and fostering innovation. This holistic approach will ensure sustained success.

The predictable answer by most to this debate is that a blend of the two methods is the best recipe – hence the debate.

Note I am a sales biased leader, and this profession would lend itself to a more transactional leadership method. Sales people need rules…if you give them an inch they will take a mile, right?

This very theme is quite close to home, actually. I have learned the hard way by adopting a transformational style.

To address Tina’s opening statement about people being in careers rather than jobs, this in the main is untrue in my experience.

Very few aspire to become a sales professional in earlier life, and therefore fall into a ‘job’ in the profession because they are suited to it. The idea that employees are more engaged by transformational leadership because they feel more involved in decisions, leading to retention improvement, is, unfortunately, a black/white notion and could only ever be verified subjectively.

In my experience, teams want to be led in the right direction and not have to find it for themselves, otherwise what is the need for a leader anyway?

When discussing the theme of Transactional Leadership, the most frequent word used is ‘vision’. To me, a ‘vision’ is a result of something, an end point…an output. And so to achieve your output, there must be a series of inputs executed to reach it – these are your transactions.

Other terms synonymous with the Transformational style are ‘morality’ and ‘loyalty’ which, in isolation, are great traits for all work forces – but at what point do loyalty and morals become greater priorities than actual business performance? For those who are ’empowered’ and ‘being creative’, it is a lovely notion, but I know few business owners that put this above their bottom-line results.

So – create rules, a framework by which you operate, and by all means your team is to be consulted on these rules and actions. Execute these TRANSACTIONS, and these will lead to your desired TRANSFORMATION.

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