Transformational and Transactional Leaders

What are the Transformational Management and transactional management styles?

Transformational management style is when managers engage with and influence others, enhancing the motivation, morale and performance of their employees. This is done by paying attention to employee needs, connecting their sense of self to the goals of the organisation, and providing an ethical framework for decisions¹. This differs to transactional management style which is centred around a reward system to encourage employees to complete their tasks².

What is the difference between transformational and transactional leaders?

Transformational managers have a passion for the work they do and use their charisma to help the rest of the group feel recharged and energised. These leaders are energetic, enthusiastic and passionate, concerned with supporting every member of the team to ensure success.

They have a clear vision they can articulate to their employees and an ability to help others experience the same motivation and drive to achieve these goals¹. Unlike transactional leaders, transformational leadership is not based on “give and take” but on a leader’s ability to make a change through example and articulate their vision and goals³.

Pros of Transformational Management

Encourage creativity

Transformational leaders challenge their team to try things in new ways, and foster an environment where it's safe to have conversations, think creatively and voice different perspectives⁵.
These managers motivate and encourage people to think independently, providing intellectual stimulation. They value learning and see unexpected situations as opportunities to learn¹.
To further encourage creativity, transformational managers can provide quality workplace coffee during meetings to allow teams to effectively collaborate and spark new ideas together⁸.

Improved well-being

58.4% of people revealed a significant relationship between transformational leadership and employee well-being⁴.
Employees with leaders of this kind are encouraged to take control and excel, leading to increased `well-being as they feel trusted and valued in the company.
When employee well-being is taken care of they are much more productive, work better together as a team and are better able to contribute to the overall business performance⁶.

Higher motivation

Transformational managers believe that their employees already have the skills to produce great work, and it is their job to channel these skills to produce the right outcome, leading their team members to feel inspired and motivated³.
They encourage creative thinking and are open to new ideas, this not only ensures that the company remains competitive and innovative but it also means that employees will be more motivated to come up with fresh ideas as there is a higher chance of their ideas being included in projects⁴.
Employees who receive recognition for their work tend to have more confidence in themselves and less fear of taking initiatives thanks to their transformational leaders.

two colleagues working on their tablets together

Cons of Transformational Leadership

Neglects short term success

The transformational management style is better suited to leaders who focus on big picture situations to motivate their team. This may lead to people forgetting about important details or short-term goals⁷.
With a lack of focus on short-term success, employees may feel that their short-term goals are being neglected and lose motivation.
For focusing on more defined short-term goals, a transactional management style may lead to less chaos and better results³.

Lack of employee guidance

Transformational leadership works by inspiring team members to motivate themselves, which can cause a lack of focus on core tasks.
Unless clear expectations are set for each member of the team and they are encouraged to set clear goals each day, this management style can lead to a lack of productivity and confusion about who is responsible for tasks being carried out⁶.
While transformational managers lead by example and model ideal employee behaviour, this may not be enough structure or guidance for every employee.

Potential for burnout

In transformational management, employee success doesn’t rely on outside rewards and validation. Instead transformational leaders inspire their employees to develop internal drive towards a unified vision.
If employees do not receive external validation while they maintain their internal motivation, they may start to feel overworked and burnt out⁷.
Keeping employee morale and well-being up in the workplace is key to avoiding burnout and keeping productivity high. Managers can do this through encouraging employees to take regular breaks or micro-breaks, such as grabbing a quick coffee or doing a short breathing exercise⁹.

The transformational management style creates leaders who serve as role models for employees. Team members trust and respect the transformational manager, they seek to emulate them and internalise their ideas. Through these leaders, the individuals’ goals can become more aligned with the purpose of the entire group, so that each team member’s success furthers the goals of the business³.

This style of management can create a positive company culture, as long as managers are aware of the possible downsides and do what they can to avoid them, such as paying attention to long-term goals as well as short-term success, setting clear expectations around employee roles, and addressing the risks of burnout in the workplace through regular breaks and employee wellbeing initiatives.

Discover more about transformational management and why not check explore coaching management:

Transformational and Transactional Leaders: Pros & Cons

What are the Transformational Management and transactional management styles?

What is the difference between transformational and transactional leaders?