What is transformational leadership theory? And what is the difference between a transactional and transformational leader?
Both leadership styles have their place, but in today’s changing business landscape – where digital transformation and disruption are the norm – transformational leadership is becoming more relevant than ever.
Below, we’ll examine transformational leadership, compare it to other leadership models, then explore which styles are most useful in the change management world.
What Is Transformational Leadership Theory?
Transformational leadership theory is a theory of business leadership that focuses on implementing change in an organization.
This approach to leadership emphasizes processes such as:
- Identifying changes that need to occur
- Developing a vision for change
- Working with a committed change team to implement that change
Transformational leadership is a component within the Full Range Leadership Model, a theory of leadership that outlines a scale of leadership types.
These include:
- Laissez Faire. This leadership style essentially refers to a lack of leadership. Managers and business leaders at this level deny their responsibilities and let employees do what they want.
- Transactional management and leadership. Transactional leadership focuses on improving performance through accountability mechanisms such as incentives and penalties, or rewards and punishments.
- Transformational leadership. Transformational leadership is the highest level of leadership in the Full Range Leadership Model. Leaders who operate in this paradigm are more engaged and efficient than other leaders.
Transformational leadership has been further refined by academic researchers. Some, for example, have defined specific traits associated with transformational leaderships, such as individual support, future vision, and high performance expectations.
Today, as mentioned, business transformation is commonplace, which makes transformational leadership more relevant than ever – yet transactional leadership still has its place.
Transactional vs. Transformational Leadership Styles
On the surface, it may seem that transformational leadership is the “best” of the three styles listed above.
While it can certainly be argued that laissez faire leadership offers few benefits in a business context, both transactional and transformational leadership styles are both useful.
We can easily envision how this could be the case.
Imagine, for instance, a large organization with thousands of employees – not every manager can or should be attempting to envision and guide the direction of the organization. Senior business leaders certainly should, but leaders at other levels of the business should be focused on performance and efficiency.
Here are a few points to consider when considering which leadership style is best:
- What is your personality?
- What type of team do you want to lead?
- What is your role in the organization?
- What are the main priorities of your business unit?
- Are you trying to encourage growth and development in your team?
In short, not every team or business operates the same, so it is best to find a leadership style that suits the specific situation.
That being said, as mentioned above, in today’s world, continual change is the only constant – as a result, transformational leadership is becoming more important for more segments of the marketplace.
Beyond Transformational Leadership
The Full Range Leadership Model certainly offers useful insights into leadership, but it is by no means the only model that describes business leadership.
Below, we’ll look at other research and ideas related to leadership.
Strategic Leadership
According to academic research published in Harvard Business Review, leaders who master six skills can think more strategically.
These include:
- Anticipating threats, opportunities, and changes in the business environment
- Challenging the status quo
- Interpreting patterns correctly, even in the midst of complex and contradictory signals
- Decision-making that is effective and rational, even with incomplete information
- Aligning their own agendas with those of other stakeholders
- Learning and promoting a culture of learning
Importantly, the authors of this research suggest that these skills can be learned and cultivated. By assessing one’s own abilities, therefore, leaders can become more strategic and, ultimately, more effective.
The Seven Transformations of Leadership
More research published in the Harvard Business Review identified seven stages of leadership, or seven types of leaders, each with their own traits and styles.
These include:
- Opportunists who win by any means necessary
- Diplomats who focus on conflict avoidance
- Experts who rule by logic and expertise
- Achievers aim to meet strategic goals
- Individualists who combine their own action logics with the company’s
- Strategists focus on personal and organizational transformation
- Alchemists generate social transformation
As with the other models covered above, understanding these characteristics can certainly help leaders gain insight into their own styles, learn how to improve, and, ideally, add more value to their own organizations.
GLOBE’s Six Leadership Styles
The Global Leadership and Organizational Behavior Effectiveness Project (GLOBE) analyzed leadership styles in multiple countries around the world.
Rather than defining a scale of “leadership maturity,” such as those examined above, this study divided leadership styles into six categories.
GLOBE’s six leadership styles include:
- Charismatic/Value Based, which values traits such as innovation and passion
- Team-Oriented, which focuses on teamwork and cooperation
- Participative, a style that values delegation and input from others
- Humane, which focuses on compassion, patience, and generosity
- Self-Protective, an approach that emphasizes following procedure and protecting groups and individuals
- Autonomous, a style that prioritizes independence and autonomy
The GLOBE model, it should be noted, is quite complex when compared to those covered above. In addition to the six dimensions here, for example, this model also includes nine cultural dimensions, 112 leader characteristics, and more.
For those truly interested in understanding the dynamics of leaders and groups, this model can provide a great deal of insight.
Final Thoughts
The transactional leader is primarily concerned with getting things done and maximizing outcomes — the ultimate results are what matters to them, not the development of their employees.
The transformational leader, on the other hand, is primarily concerned with developing his or her employees and creating an environment that fosters long-term success for everyone involved.Both styles have their place, yet for those leading organizational change, transformational leadership is worth investigating. Those truly serious about becoming better leaders would also do well to research the other leadership models covered here.
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