While there are several ways to lead a team, most leadership styles can be boiled down to two, transactional and transformational. The difference? Keep reading to discover which style your leadership methods fall under.
Transactional leaders look at how to get things done while maintaining the normal flow of operations. These types of leaders generally don’t look ahead to the big picture or overall business vision, but instead, focus on each stepping stone that helps achieve daily goals. These types of leaders are best when delivering defined results. Their main goal is to improve things that happen frequently such as client and service processes.
The term “transactional” refers to the fact that this type of leader essentially motivates his or her team by exchanging rewards for performance. They heavily focus on the role of supervision, organization, and group performance. This type of leadership exists to revamp the existing company culture and to enhance current policies and procedures.
Transformational leaders look at how to recharge and energize people while conveying a clear vision. These types of leaders look to bring about change and start solving a problem by finding an experience that shows that the old processes don’t work or fit the company culture. Transformational leadership styles focus on team-building, motivation, and collaboration with employees at different levels to accomplish change for the better.
These leaders inspire and motivate their team to do their best work and foster innovation within the company. They provide opportunities for personal and professional growth for each employee.
Comparing Leadership Styles
Here are four important differences between transactional and transformational leadership:
- Transactional leaders react to problems as they arise, whereas transformational leaders are more likely to address issues before they become problematic.
- Transactional leaders work within existing an company culture, while transformational leaders emphasize new ideas to “transform” company culture.
- Transactional leaders reward and punish in traditional ways; transformational leaders attempt to achieve positive results from employees by keeping them invested in the vision and rewarding accordingly.
- Transactional leaders appeal to the self-interest of employees who seek out rewards for themselves. Transformational leaders appeal to group interests and feelings of organizational success.
Why Both Are Important
In order for a business to thrive, both types of transactional and transformational leadership styles are needed in the same business to counterbalance each other and help achieve growth and development goals. Transactional leaders make sure the team is running smoothly and producing results today, while transformational leaders cultivate innovation and look toward tomorrow.