Transactional vs. Transformational Leadership: What’s the Difference?

Transactional vs. transformational leadership is not a question of a good vs. bad,

right vs. wrong approach to leadership. While they are in fact opposite approaches
to leadership, both offer advantages and are important styles of leadership to
understand and apply in certain types of situations.  

A leader may naturally gravitate towards either the transactional or

transformational side in their style and methods. However, the best leaders
understand that both can be utilized and integrated into their overall leadership
toolkit. Those who aspire to leadership in the business world should develop an
understanding of the differences between the two and recognize how they can
apply the appropriate style based on the situation.

What Is a Transactional Leadership Style?

A transactional leadership style follows a managerial philosophy of reinforcement

and exchanges, managing employees by establishing specific goals and then
offering a reward for achieving them. That’s the “transaction” in transactional
leadership. Effective transactional leaders recognize and reward a follower’s
accomplishments in a timely way.

A study in Psychiatric Services found transactional leadership “more practical in

nature because of its emphasis on meeting specific targets or objectives.”

Transactional leaders are often found in manufacturing, where line workers are
expected to hit a set production quota per shift. Another area where a transactional
mindset is beneficial is sales, as the team and individual members are driving to hit
specific sales goals. Transactional leadership can also be most effective in
situations where teams are working under strict time constraints to deliver on a
project and/or where financial resources are limited.

Transactional leadership often goes hand-in-hand with maintaining a status quo of

actions and processes that have proven successful. It tends to work best with self-
motivated employees who do not seek or need inspiration from their managers or
company executives, making it a leadership approach more often used at
established companies.
What is a Transformational Leadership Style?

The transformational leadership style is grounded in four components, commonly

referred to as the four “I’s” of transformational leadership:

 Intellectual Stimulation: encouraging new experiences and ways of

thinking for themselves and employees
 Individual Consideration: mentoring employees and supporting their
professional development
 Inspirational Motivation: imparting a vision for an organization that
employees internalize and make their own
 Idealized Influence: serving as role models for how they expect employees
to conduct themselves

As the four I’s detail, transformational leaders focus on nurturing and positively
motivating their employees. Rather than micromanage, transformational leaders
foster an independent workplace that promotes creativity, desires innovative
thinking and empowers employees to make their own decisions in their work.

Transformational leaders emphasize personal and professional growth and

encourage all employees to think creatively in developing solutions to
longstanding challenges, but they can be most impactful in leading younger
employers, helping to integrate them into the company culture and giving them a
sense that their work is a part of something special.

The leadership style works well in organizations or teams where the goals include
developing the talent of the employees, and not just meeting an immediate
production quota or sales goal.

Transformational leadership can also be the preferred approach in an environment

where a product or service is new, or in an industry where innovation is key to
survival. Many of the constraints and quotas may still be in play—limited financial
resources, strict deadlines, specified quotas—but with a new product or start-up
company, “the rules” and processes are not yet established, and open and
innovative thinking on how to produce, grow, survive and thrive may be needed
and even expected.

Transactional vs. Transformational Leadership: Which is Better?

It all depends. Neither approach is “better” than the other, and, despite the clear
differences, the two are not mutually exclusive. A blended approach often works
best because both leadership styles work, but they work best in in different
situations, depending on the desired outcomes and on the leader.

Leadership Effectiveness

Both transactional and transformational leadership are effective in achieving

intended results.

Transactional leaders focus on organizational performance and employee

supervision. These leaders are not looking much toward innovating for the future,
but rather maximizing productivity in the present. They focus on making the day-
to-day business of an organization flow smoothly.

Transformational leaders focus on organizational change and employee

development. These leaders devote more time to developing a strategy for the
future of their team or organization, then motivating and inspiring employees to
buy into that vision. This leadership is most effective in organizations or teams that
need a leader to guide them towards positive change.

The most effective leaders recognize when and how to apply the elements of both.
For example, sales may be transactional at its core, with the sales team driving
towards specific and continuous sales targets, whether that be monthly, quarterly or
annual sales goals. But sales is also about people, with developing and managing
customer relationships at its heart.

Sales team leaders need to understand what motivates and inspires people (both
their employees and customers) and look beyond the sales transaction to be
innovative in seeking out new customer relationships, emphasize the strategic
thinking behind key account management and may even need to lead the team in
transforming their sales approach in response to market factors.

Promoting Growth, Innovation and Creativity

The transformational leadership style has clear advantages when it comes to

promoting growth, innovation and creativity within individuals, teams and an
organization as a whole.

A study in Frontiers in Psychology found that transactional leadership led

employees “to perceive the culture as more goal, than innovation, oriented,”
whereas transformational leadership led employees to see the
organizational culture as more innovative. Employees feel they are encouraged to
develop as professionals, growing their base of skills and knowledge.

A key part of the overall strategy of a transformational leader is to encourage

innovation and creativity in the workplace. The focus on employee development is
important to cultivating the future leaders an organization needs, as employees
grow into the shoes of their leaders and emulate their style.

Transactional vs. Transformational Leadership: How They Complement

Each Other

In developing, adapting and applying these two styles of leadership, it’s important
to consider both the advantages and disadvantages of each, along with the current
work situation your team and organization may be functioning in.

Transactional Leadership: While it’s the best approach for maximizing

operational efficiency, transactional leadership can fall short in the areas of
innovation, long-term strategy creation and employee development.

Transformational Leadership: While best for creating strategy and fostering

organizational change, transformational leadership sometimes lacks the attention to
detail, as these leaders are less concerned about daily workflow and processes. It
also relies on having the type of leader who can sustain both a great deal of
motivation and passion for a long period of time.

What is Transactional Leadership?

Transactional leadership is based on a system of rewards and punishment with a
strong focus on results. This leadership style assumes low or no self-motivation at
all among the employees, so a strict transaction-based system with built-in
incentives is used instead. The core consists of a clearly set exchange between the
leader and the employee. A framework of rules and guidelines stipulates what
reward or punishment an employee will receive if he or she performs various
actions resulting in different outputs. At the end of the day, both parties would gain
from the same outcome – the employee gets rewarded for good performance and
the leader reaps the benefit of good output. Transactional leadership belongs to the
Full Range Leadership Model together with transformational, and laissez-faire
leadership, so it is merely a subset of an overall leadership toolbox.
The transactional leadership style depends on the leader’s ability to find
appropriate rewards and punishments to influence employees to produce the
desired results. The leader gives instructions and expects them to be carried out.
Employees who don’t follow the instructions are punished while those who do are
rewarded.  Keep on reading for examples, and no, we are not referring to physical
punishment of any sort. The transactional leader needs to be very sensitive to
reactions among the employees and calibrate the system accordingly so that the
reward vs performance balance is satisfying all the involved parties.

The three components of transactional leadership

Bass, Howell, and Avolio widened the concept of transactional leadership with
their three components or flavors of the leadership style. 

Contingent reward is a straightforward approach to rewarding the followers

depending on task fulfillment and outcome. Contingent rewards include bonuses,
promotions, recognition, and appreciation for instance.
Active management by exception involves controlling and monitoring activities
and tasks as well as the performance and outcome in the end. The leader steps in
and intervenes at an early stage prompted by signs of problems or failure. This
intervention will result in negative feedback, a reprimand, or another type of
punishment.
Passive management by exception gives team members more freedom and
prompts leadership intervention only when necessary, even if it means that
intervention comes later than in the active management by exception case. Similar
to in the active case, failure results in a negative reaction towards the failing
employee.
A transactional leader can deploy any of the above components and each of them
will bring different opportunities as well as requirements.

For instance, the active management by exception gives the opportunity to identify
and correct errors at an earlier stage, but the requirement is of course much more
time spent by the leader on monitoring and following along, whereas passive
management by exception is less time consuming as long as there are no
exceptions.
As explained additionally further below in the chapter on what science says about
transactional leadership: Carrot is good, the stick is bad. If you use transactional
leadership, you have plenty of reasons to focus on the contingent reward
component of this leadership style.
What Are the Characteristics of Transactional Leadership?
Transactional leadership characteristics can be grouped into four different areas.

1.   Instructions, Rules, Guidelines to create clarity

For transactional leadership to at all work, there need to be clear expectations on

what the employees should do and how they should do it. If this is not clear, then
how would people know which behaviors are rewarded or punished? Also, the
efficiency in transactional leadership comes from the high-level clarity in what to
do and how to do it – avoiding waiting times, discussions, solution finding, etc. in
favor of hardcore performance.

2.   Reward and punishment framework for incentivizing

Incentives are a major part of any transactional leadership approach. Clear rules on
how different behaviors and levels of performance result in what type of reward
helps in deploying transactional leadership properly. Punishment could be made
clear by stating what constitutes breaking the rules and what behavior is
unacceptable.
The framework should inform all employees what they need to do to obtain a
bonus and how large it will be. The framework can also specify how bad behaviors
affect the possibility of a bonus or how many mistakes you are allowed before
there are consequences etc.
3.   Results is the focus, not relationships

Transactional leadership is focused on results, not on relationships. If you do not

perform, it will not matter how nice you are, there simply will be no bonus and you
might experience deductions or other negative impacts. The strong focus on results
indicates some familiarities with pacesetting leadership. After all, results can be
measured, and this is a requirement for the transactional approach.

4.   Directive approach and ready to take action

Since detailed instructions, rules, and guidelines are a core component, the
employees are more often told what to do and how to do it. Hence, there are
elements comparable to commanding leadership. All the instructions and rules are
focused on resulting in actions and outcomes – no excess “fluff” is needed since
the result is in focus and not relationships. Results are achieved by action, not by
sitting around.

What are the Pros and Cons of Transactional Leadership?

As with all leadership styles, there are advantages and disadvantages associated
with transactional leadership as well. There is an infographic summary at the end
of this chapter for reference.

Advantages of Transactional Leadership

Clarity and efficiency are two obvious potential advantages of transactional

leadership. Let’s explore those and additional advantages to a bit higher detail.

1.    Employees who deliver results are rewarded

Transactional leaders are clear about how they operate. Employees will get
rewards if they deliver and they will suffer consequences if they don’t. Employees
who are willing to work hard and skilled at what they do like this. It also creates a
sense of fairness since the better you perform, the better you are rewarded. (Some
similarities with Pacesetting Leadership.)

2.    Rewards and punishments are clearly defined

Employees know beforehand what is expected and the associated rewards and
punishments. Rewards could be salary, bonus, time off, promotion, recognition,
and awards. Punishments can for instance be no bonus, being highlighted as a
problem somehow, and even termination.

3.    Short-term goals can be achieved quickly

Unlike the democratic leadership style where decisions are made through
collaborative effort, transactional leaders make decisions quickly and usually with
minimal consultation. Additionally, close staff monitoring means that mistakes are
spotted early and addressed so that they don’t have a ripple effect on the
organization. Short-term goals are, therefore, more likely to be achieved quickly.  

4.    There is order and structure

There are certain times in an organization’s business cycle where a strong
emphasis on order and structure is necessary and beneficial. Transactional leaders
work feverishly to maintain the order and structure an organization needs.
Anything that threatens predictability is immediately dismissed. (Refer to
Bureaucratic Leadership for order and structure as well.)
5.    It can be very productive
The transactional approach can lead to very high productivity if done right. Broken
down tasks, repeatability, the right incentives, high clarity – this can be very
effective when deployed in the right way in an appropriate area.

Disadvantages of Transactional Leadership

There are some substantial cons to transactional leadership. Make sure you are
aware of them before you use this leadership style, that way you can mitigate the
effects

1.    External motivation works up to a point

Some people are motivated by rewards, others aren’t. The strict focus on an
approach of concrete incentives to get things done doesn’t encourage employee
loyalty. If the only reason to stay with an organization is the possibility of getting a
reward, an employee is more inclined to pursue better opportunities outside the
organization if such alternatives exist.

2.    Creativity is discouraged

Transactional leaders are more akin to bureaucratic leadership since they follow
strictly outlined goals and procedures. Outside-the-box thinking is discouraged.
This stifles the creativity of employees and forces them to work within a rigid
framework. Organizations with strong transactional leadership do not handle
change well.

3.    Employees are blamed for the failure to meet targets

It is expected that employees will successfully complete tasks once instructions are
given. Therefore, the leader instinctively casts the blame on employees if the
overall goal has not been met. A possible statement this leader would make is, “I
gave them clear instructions and they didn’t comply. They should learn from their
mistakes. There will be consequences.” This could result in a punishment culture
that is detrimental in so many ways.
4.    Leaders and employees are underdeveloped
Motivation and growth aren’t priorities for transactional leaders. They have a laser-
like focus on numbers and results. Therefore, there is little room for either the
leader or the employees to grow because there are no opportunities for
continuous learning and development.
5.    The leader becomes a bottleneck.
Consistent monitoring of employee output is fundamental to this leadership style.
Therefore, the leader becomes a bottleneck as employees await feedback before
they can move on to their next task. The employees will also feel micromanaged at
the same time, normally not a good thing.

How to be effective at transactional leadership?

Transactional leadership has its place despite how cutthroat it might seem. The
punishment portion is often simply the avoidance of rewards, i.e. no bonus if you
fail. We are not talking about public flogging here.

To best fulfill the characteristics of transactional leadership and get going, the
following enablers can be useful to have in place.

1.   Create clarity

A transactional leader should have a clear plan for how tasks should be executed.
Instructions and tools should be available to enable transactional efficiency. The
leaders should be clear on the resources needed and how rewards and punishments
will be distributed. Rules on how to behave, how not to behave, connected to
consequences, good and bad must be made available together with additional
guidelines and policies.
2.   Implement a system for measurement

A system should be in place to ensure that employees know what do to and that
they are doing what they’re supposed to do when they’re supposed to do it.
Employees should, therefore, be closely monitored so that the leader can have as
much information on progress and output as possible. Knowing this is essential to
ensure the proper and just distribution of any rewards.

Some leaders may even choose a tracking system or a ticketing system, to be able
to follow all activities, determine output and when rewards should be issued and
when appropriate intervention needs to be arranged to support an employee.

3.   Ensure Communication

Transactional leaders should effectively communicate their expectations to their

employees. This may mean hosting weekly progress meetings, sharing output and
productivity measures on an online platform, or whatever works best for the unique
needs and preferences of the business. The whole idea is to create as much clarity
as possible and communicate well with the team members, so they know what to
do, when to do it, and what to expect as a result of their actions.
Additionally, feedback is important to help employees keep on track. This is
especially true for new hires who need time to adjust and learn the unique
requirements of the organization. Remember: carrot, not stick. 
The overarching and most important thing is to use transactional leadership when it
is suitable and to use it for that portion of your operations. If you have a
warehouse, a call center, and a product development department, then perhaps you
should not use transactional leadership in the last one for instance? When you use
transactional leadership, use the good kind, i.e. the contingent reward component.
What is Transformational Leadership?
Transformational leadership can be thought of like a caterpillar evolving into a
butterfly. It takes time. It takes motivation. It takes hard work. In the end, it is all
worth it since the result is fantastic.

This change improvement journey, or transformation, is facilitated by an ideal

embodied by the transformational leader who is a strong moral example in working
towards the benefit of the team and a positive change in organizational culture. The
transformational leader actively promotes challenging the status quo and
opportunities for change and improvement in team members and in general.
Team members are very loyal to their transformational leader who they trust,
admire and respect. This belief in the leader coupled with the leader’s aims
towards improvement for the team results in very motivated team members that are
willing to perform out of the ordinary.

According to the initial theory of transformational leadership, it is one side of a

coin. The other side, i.e. the opposite, being transactional leadership, which
together with transformational and laissez-faire leadership form the Full Range
Leadership Model. Transformational leadership has a lot of similarities with
Democratic leadership.
What Are the Elements of Transformational Leadership?
The Full Range Leadership Model identifies four components of transformational
leadership.
1. Individual Consideration (IC)
2. Intellectual Stimulation (IS)
3. Inspirational Motivation (IM)
4. Idealized Influence (II)

1.      Individualized Consideration (IC) – Caring

Each team member has unique needs and experiences a wide range of emotions. A
transformational leader understands this and demonstrates genuine concern. When
team members feel like their leader genuinely cares about them, they are more
likely to perform at their best. This requires the transformational leader to have
highly developed emotional skills and lots of empathy.

Individual Consideration also includes personalized feedback and praise, as well as

recurring two-way communication between the leader and each member. The
leader also acts as a mentor as well as a coach to the team members to challenge
them and help them to develop themselves further.
2.     Intellectual Stimulation (IS) – Thinking

Respondents to a survey[1] conducted by Cangrade revealed that intellectual

stimulation matters more than money to employees. According to the survey,
intellectual stimulation accounts for 18.5 percent of job satisfaction while money
contributes to 5.4 percent to job satisfaction.
Intellectual stimulation involves challenging the team to question the status quo,
stimulating creative thinking, and encouraging risk-taking. This is a big step
towards finding new and improved ways of doing things – a core part of
transformational leadership. A transformational leader taps into the ideas among
team members and learns from them. Reflection is also important, consider
using interpersonal communication for a systematic approach to reflection.
3.     Inspirational Motivation (IM)

To reach higher performance, the transformational leader needs to provide the

followers with an inspiring vision. The transformational leader communicates
convincingly and with optimism about the vision and puts the short-term activities
into a larger context. A strong sense of purpose and great inspiration is a big part of
obtaining the increased performance of transformational leadership. Everyone feels
like they are a part of the vision and that their contributions are essential to fulfill
it. Some similarities with Visionary Leadership, refer to our in-depth article on that
topic for inspiration, which is available in our leadership styles repository.
4.     Idealized Influence (IF) – Influencing

The team admires who the leader is and what he or she stands for. There are no
double standards and the leader acts as an ethical role model; team members won’t
be asked to do something that is wrong or that the leader wouldn’t do him or
herself. Trust is the thread that binds the organization.
These four components of transformational leadership all need attention and focus
if you want to become a good transformational leader. It will not work if you push
three out of four components and leave the last one unattended. I suggest you
reflect every now and then over which components you use the most and how you
can improve further. It might even be a good idea to discuss the four components
with your team and seek their feedback on the current state as well as their wished
state for each of them. Transformational leadership involves everybody learning
and improving, including the leader him or herself.

There is one thing that runs like a red thread through the above: Charisma. The
ability to influence, inspire, stimulate, and being perceived as caring are all
charismatic traits to some degree. The charismatic streams in transformational
leadership are so strong in fact that it is often compared with charismatic
leadership. There are indeed many similarities but there are also some very key
differentiators between these styles.
What are the Characteristics of Transformational Leaders?
There are quite a few characteristics that enable the successful implementation of
transformational leadership. A successful transformational leader needs to have as
many of the characteristics and skills of the below as possible. It is quite a list.
Being a transformational leader is not easy and it is not for people without
ambition.

1.   Communication Skills

You need to be a good communicator, perhaps by using metaphors and stories as

part of communicating. This also includes two-way communication where skills as
active listening, body language, and others are useful. You need to make people
understand you and you need to be good at understanding them as well. What
drives people? Knowing this helps you to inspire and motivate them for instance.
Listening to people makes them feel part of the team and contributors to the overall
transformation.
Versatility in communication means you can handle difficult one-on-one
conversations as well as inspiring a larger audience from a stage.

2.   Role model

You need to be a role model when it comes to setting high targets and expectations
and delivering on them. People will look to you for strong values, courage, and a
sense of ethics. You need to be stable and emotionally mature – not blowing off
steam or having different attitudes on a weekly basis.
3.   Persistence and Passion

You need to be persistent and passionate about what you do. Show enthusiasm,
optimism and consider failure an impossibility. Why would people believe in you
if you don’t believe in yourself?
4.   Visionary and strategic

A big portion of success with transformational leadership rests on the vision of the
future and understanding how to get there. The vision needs to be strong enough to
inspire, and it needs to be realistic enough so people believe it can be achieved.
This is a balancing act for any leader. The only way a good vision will become
reality is if it is communicated properly of course, so remember that this skill set
needs to be combined with communication skills – not just to sell people on it, but
also to have them contribute in shaping the vision.
5.   Self-awareness

As a transformational leader, you need to know yourself and understand how you
affect others. This is probably true for most, if not all, leadership styles of course.
Know your weaknesses, know your strengths. Never stop developing yourself.
6.   Coaching and ever learning

Transforming people is done through coaching amongst other processes, so you

need to be effective in coaching and mentoring others. (Have a look at our article
on coaching leadership for inspiration.) This applies to yourself as well by the way
since transformational leaders should never stop learning. Learn from your own
mistakes and others so you know what not to do. Learn from successes and repeat
what you did in the future.
7.   Emotionally Intelligent

It is difficult to be good at communication, at inspiring others, coaching, being a

role model, and knowing yourself if you aren’t emotionally intelligent. This part is
essential for so many other things in this list. We can all learn how to be better at
empathy and how to treat others. Transformational leaders need to be very
emotionally intelligent to complete their visions, that’s for sure. (For insights on
empathy, read our article on the importance of empathy in leadership.)
If you lack some of the things outlined above, then why not start with transforming
yourself into the person you need to be by addressing any gaps you might have.
We all need to start somewhere and continue to develop ourselves towards
realizing our vision. After all, this is what transformational leadership is all about.

What are the Pros and Cons of Transformational Leadership?

Transformational leadership, like all leadership styles, has a set of advantages and
disadvantages.

Advantages of Transformational Leadership

Here are four examples of the strong advantages of the transformational leadership
style. They are centered around vision, loyalty, change, and communication.

1.  Shared vision

Everyone in the organization believes and supports the leader’s vision. A
transformational leader has an uncanny ability to see the problems within an
organization and create a vision for growth. The team understands the purpose of
the vision and are willing to do what it takes to make it a reality.

2.  Employee loyalty

Transformational leaders help each team member feel like a valuable part of the
organization. They are more engaged, empowered and committed to helping the
organization excel. All these aspects contribute to a strong sense of loyalty
between the team members and their leader. All these combined results in low
employee turnover in teams with good transformational leadership.

3.  Change management is a strength

Change management is the process of preparing, equipping, and supporting a team
to successfully respond to internal and external change. Furthermore, change is a
requirement for an organization to grow. People normally fear change and will,
therefore, resist it. All the four elements mentioned above, i.e. Individualized
Consideration, Intellectual Stimulation, Inspirational Motivation, and Idealized
Influence work together to enable change in a good, motivational and well-
communicated way.

4.  There is strong communication

Strong communication is necessary for change to occur. Transformational leaders
provide clear, consistent messages to their teams and major portions of the
leadership style are resting on a foundation of communication. These leaders also
listen to and value the input of each team member.
The above advantages with transformational leadership have some commonalities
with servant leadership, another visionary leadership style.
Disadvantages of Transformational Leadership
The disadvantages of this style are centered around the importance of influence,
overlooking details, high pressure on team members, risk and time requirements
for the leadership style.

1.    Influence is lost if the team disagrees with the vision

Transformational leadership depends heavily on the team being intrinsically
motivated to achieve the vision. However, it is possible for the team to lose faith in
the vision along the way. There are no extrinsic rewards to keep them going so
they can simply stop performing. Transformational leadership relies too heavily on
the acceptance of a common vision with little else to motivate people to work.

2.    Minute details can be overlooked

Moving towards a common vision is like seeing a light at the end of a long tunnel. 
This can result in tunnel vision, where everyone is so fixated on getting to that
light that they neglect the small steps and details necessary to get there. It won’t be
an obstacle-free journey. A transformational leader may overlook the minute
details necessary for operational efficiency because of the strong focus on the long-
term vision.

3.    Puts added pressure on employees

There is a lot of pressure to do more than what is considered normal under the
guidance of a transformational leader. A team member may believe that he or she
is exerting maximum effort, but the leader may think otherwise. The added
pressure of performance expectation may ultimately result in a demotivated
employee.

4.    May result in unnecessary risk

Some transformational leaders do not adequately assess whether the recommended
change is right for the organization in its current stage of development. Therefore,
they take on risks that may lead the organization to its demise.

5.    Frequent communication is time-consuming

Everyone should be kept in the loop for transformational leadership to be effective.
This requires several weekly meetings, progress reports, and other time-consuming
communication. A breakdown in communication causes an employee to feel left
out of the loop with loss of motivation which can cause things to spiral downward
thereafter.
6.    Change is almost a prerequisite
The act of transformation is such a core part of transformational leadership that it
is difficult to use when there is no need for change. This is nothing strange really.
A leadership style that is conceptually meant for change is unlikely to be the best
fit when the change element is lacking. This could for instance be in the very early
days of an organization’s existence. Setting structures and systems up and getting
organized is the key need here, and there is no existing structure to change.
Another example would be strictly transactional or bureaucratical organizations
where efficiency and productivity come from setting standards and regulations and
actually avoiding change on purpose.
How to Be an Effective Transformational Leader?
There are some golden rules to follow to effectively deploy and implement
transformational leadership. These rules are very focused on the team, passion,
communication, and having situational awareness.

1.   Take the time to understand your team

Each team member has a life outside of the job and the team. Get to know all your
team members on a personal level. Learn more about their values, interests,
hobbies, skills, and unique traits. They want to feel valued and want to believe that
you genuinely care about them. Furthermore, learning more about their skills and
interests can help you assign tasks that they will execute and complete well.

2.   Effectively communicate with and listen to your team    

Effective communication is time-consuming. However, it helps prevent dissonance

within the team. Communication isn’t restricted to keeping team members up-to-
date with what’s happening in the organization. It also involves listening to and
acting on their concerns as well as providing them with constructive feedback
about their performance. Open and honest communication is important for creating
a thriving business.

3.   Develop situational awareness

Consider the circumstances of each situation you get involved in and what you
should do as part of that interaction. Situation awareness is a mindset that you
should develop so that change can be effectively implemented to propel the
organization towards growth. Essentially, let the situation at hand influence your
actions and how you lead.
4.   Improve your change management skills
Study the process of change and the known pitfalls with implementing changes.
This will give you knowledge of potential problems so you can mitigate those
beforehand, and it will help you with understanding how communication can be
used in conjunction with change. The overall idea is to transform the company or
organization into something else – why would you want to embark on that journey
without essential skills in change management?

5.   Be passionate

Passion is contagious. However, too much passion can lead to an overwhelmed

workforce. You should learn to balance your passion and how you communicate it,
so you avoid overwhelming your team. Passion can also cause you to overlook the
minor details that will help you achieve those long-term stellar results that you are
aiming for. If you are planning on changing the world, all the operational things
might seem important in comparison, right? Organize your team in a way that
ensures that those minor tasks are completed, and everyone is clear about their
roles, while still retaining the long-term focus and the passion in getting there.

What Are the Situations in Which Transformational Leadership Works Best?

There are two types of organizations that usually need a transformational leader.
The first is an organization that is outdated and needs change before it becomes
completely obsolete. The second type is an organization that needs restructuring or
improvement to produce good results, such as a company turnaround. Essentially,
a transformational leader is often needed in organizations where radical change is
necessary.

Transformational leadership style examples in business

There is an abundance of examples when transformational leadership has been
used with success. Here are a few transformational leadership examples I have
experienced myself:

 A company turn-around, more than doubling the profit in a few years time
 Transformation of an organization’s mindset concerning quality, including the
clean up of long-lasting warranty issues and systematic improvements
minimizing future quality problems
 Transforming a quiet and subdued team to a vocal and opinionated team that
felt strong empowerment and accountability for the future of the organization
Transformational leadership vs transactional leadership
According to the original theory, transactional and transformational leadership
were opposites.

These two leadership styles are very different in general as well as in-depth.
Otherwise, they would not be suggested as a set of two styles being polar opposite
of each other. 

What are the differences between transformational leadership and

transactional leadership?

This list shows the major differences between transformational and transactional
leadership:

 Transactional leadership builds on rewards and punishments connected to

performance aimed at short-term results; transformational leadership builds on
vision, inspiration, and long-term development.
 Transactional leadership builds on people following strict rules and processes
as they perform tasks, whereas transformational leadership builds on change,
innovation, and creativity.
 Transformational leadership builds on inclusion and participation in decision-
making. Transactional leadership is directive and leaves minimal opportunity
for team involvement.
 Transformational leadership fits situations where change and development are
required, whereas transactional leadership fits conditions with repetitive and
precise tasks and easily measured processes.
 Transactional leadership is faster and easier to implement, and implementation
of transformational leadership is a longer and slower process