Transactional and Transformational Leadership

What Is the Difference Between Transactional and Transformational Leadership?

Leadership is the process of influencing the activities of others in order to achieve corporate goals. Various management professionals have proposed a variety of leadership theories that take into account behavior, attributes, nature, and so on. Many individuals are perplexed by the distinction between transactional and transformational leadership.

What Is the Difference Between Transactional and Transformational Leadership?

Transactional Leadership is a style of management that places a focus on the interaction between the leader and their subordinates.

A leader who practices transformational leadership, on the other hand, is one who helps others through personal growth and development. When a leader uses this method, they work together to achieve the desired organizational transformation.

Both approaches are required in every organization, but transactional and transformational leadership are diametrically opposed in terms of what they are and how they are implemented.

Transactional and Transformational Leadership

About Transactional Leadership

Transactional Leadership is all about encouraging cooperation from the leader by either praising or penalizing them. Because it is not sustainable, it is mostly a short-term motivating tactic. It’s all about the here and now and getting things done. It is not about planning for the future for change and creativity.

The boss will sacrifice the effort and loyalty of their staff for immediate gratification or the prospect of repercussions since productivity is more essential than originality. Some of the qualities of transactional leadership are-

  • Exception-based management
  • Efficiency wins
  • Culture fit entails working inside the culture
  • It all comes down to incentives and penalties.
  • Adaptive management style
  • Motivated by reasoning
  • It involves obeying the rules

At what points does transactional leadership work?

This kind of leadership is ideal for disaster and emergency circumstances. There is no room for imagination with this. Similarly, if rigid HR procedures must be maintained in a disciplinary and grievance process, there is no room for skirting the rules or creativity. Processes must be followed precisely, as must policies.

Transactional leadership is therefore ideal when duties, processes, work, projects, and rules must be followed exactly as written.

About transformational leadership

It’s about getting people to stick with you by inspiring and motivating them instead of punishing and rewarding them. People who follow you don’t do things because they have to or are compelled to. Instead, they do things because they want to. Some of the qualities of transformational leadership are-

  • It is a kind of pull leadership
  • In the end, long-term change and innovation triumph
  • It’s a proactive way to lead
  • It’s all about a person’s drive and motivation
  • It involves earning your people’s hearts and minds
  • People contribute to the culture by sharing their thoughts and experiences

What are the four elements of transformational leadership?

Barnard Bass came up with the main parts. He came up with the idea of the “four I’s.”

Idealised Influence

It’s all about serving as a good example for the next generation. Is the leader a role model for their subordinates? Is their behavior consistent with the goals they have set for themselves? Is their behavior consistent?

The leader must model the high-performance behaviors they want their followers to exhibit so they may inspire them to join them on the journey.

Inspirational Motivation

Bring your friends and family with you, that’s what this is all about. Motivating and inspiring your employees is the key to winning their trust and respect. An inspiring vision, one that goes beyond the scope of a single work, must be developed.

It is all about bringing out the best in each of your employees via personal development, establishing challenging objectives and expectations, and assisting them in whatever they do to reach their full potential.

Intellectual Stimulation

It’s all about upending the established order here. When it comes to driving the company ahead, it’s all about coming up with new ideas and unique goods and services.

Creativity is an important part of this. It’s about thinking outside of the box and having a positive mindset so that they can see opportunities and make them.

Individualised Consideration

This is about handling each person uniquely in light of their unique set of aspirations, concerns, and hopes for the future. By gaining a thorough understanding of the needs of your team, you will be able to customize your approach to each individual and maximize their potential.

At what points does transformational leadership work?

Many individuals believe it works because it is a pull leadership approach. Is it truly desirable to be dominated with an iron rod every day? Instead, it is more satisfying if your workers believe they are a part of something larger than the job at hand.

As a result of their commitment to the cause, you will get superior service from them. It’s essential that you have visionary leadership in order to be a senior associate. A more transformative style of leadership will be required of you. It’s all about capturing your audience’s attention and gaining their loyalty.

Key Differences Between Transactional and Transformational Leadership

The fundamental distinctions between transactional and transformational leadership are as follows:

  • The goal of Transactional Leadership is to make improvements to the current state of the company. Transformational Leadership, on the other hand, aims to change the current state of the organization.
  • While transformational leadership is charismatic, transactional leadership is bureaucratic.
  • Transactional Leadership is a kind of leadership characterized by the use of incentives and punishments as a foundation for introducing followers. Transformational Leadership is a type of leadership in which the leader use charm and zeal to inspire his followers.
  • In contrast to transformational leadership, transactional leadership is reactive.
  • Transactional leadership focuses on the leader’s interactions with his subordinates. In contrast, a leader who practices transformational leadership places an emphasis on his or her followers’ values, beliefs, and needs.
  • Transactional leadership works best in a calm setting, while transformational leadership works well in a chaotic setting.
  • As contrast to transformational leadership, transactional leadership focuses on strategy and implementation.
  • There is only one leader in a transactional leadership group. While there may be more than one leader in a group with transformative leadership.

Comparison Chart:

Determinations factors



Time frame

Short term

Long term

Where change happens

Follower behavior

Follower attitude, values.

Where leadership found

Leader’s behavior

Follower’s heart



Less important


Pay, Promotion etc.

Pride, Self-esteem etc.

Follower reaction



Leader’s Source of Power

Rank, Position

Character, Competence

Is it possible to be a leader in both transactional and transformational ways?

It’s easy to argue about whether leadership style is superior, but it misses the purpose. Both techniques are legitimate, and context is what counts. Some companies need strictness and a clear line of authority.

Many people do their best work in a dynamic workplace where a strong sense of direction is provided by strong leadership. It’s impossible to apply military leadership approaches to Google and vice versa.

When it comes to achieving growth and development, both sorts of leadership styles may be necessary in the same firm.

Transactional leaders ensure that the team is working smoothly and achieving results today, but transformational leaders encourage innovation and look forward. In any instance, education and training may be a beneficial instrument for developing one’s leadership talents.


Transactional leadership is favored by certain scholars, whereas transformational leadership is valued by others. As a result, the dispute over the two leadership styles will never be settled.

There is, in my view, no one leadership style that is ideally suited to all situations. As a result, a company should not depend on a single leadership style. It must use the appropriate leadership style for its requirements and current situations.

It’s impossible to choose between transactional and transformational leadership styles without acknowledging that both have their advantages and disadvantages. It’s up to the scenario to choose which leadership style is best suited to it.



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