Transformational vs Transactional Leadership Styles: Which Delivers Better Results? 

Leadership styles can make or break an organization. Two of the most talked-about styles are transformational and transactional leadership. While both can get you results, they will not be the same. Both are very different in their ways.

Transformational leaders inspire and motivate their teams. They push them to achieve more than they thought possible. However, following the transactional style means you will be using clear goals and rewards to drive performance.

But which style actually delivers better results? In this blog, we will tell you the ins and outs of both these leadership approaches. You will get to know which one is best for you and how transformational and transactional leadership differ. 

What is Transactional Leadership?

Transactional leadership is a comparatively simpler way of managing people. It involves following rules to stay organized and check off short-term goals. Leaders who use this style rely on clear instructions and well-defined roles, so everyone knows exactly what they need to do. 

In this style, you see the use of rewards (praise, promotion, or bonus) to encourage good work. Alternatively, if you make a mistake, you might get a warning or face other consequences. This fits in well when you have routine tasks.

It is also best when strict guidelines are needed, like in jobs where safety or accuracy is very important. But, it might not work well for jobs that need people to think out of the box and bring new ideas to the table. 

Benefits and Drawbacks of Transactional Leadership

You commonly get to see this leadership style being used in the military. Soldiers follow a strict clear chain of command. Leaders provide rewards (like promotions or commendations) for good performance and enforce consequences for failing to follow orders. Here are some of the benefits of transactional leadership style:

• Clear expectations: Everyone knows their role and what is expected of them. This reduces confusion and makes it easier to manage people (even bigger teams).
• Quick results: It is best for short-term goals because it focuses on following rules and completing tasks efficiently.
• Accountability: Rewards and consequences encourage responsibility to keep everyone on track.
• Structure: The clear chain of command helps create order, especially in jobs that need strict rules (like construction or healthcare).

Even though you could easily ace your position through this style if you are a first-time leader, there are some drawbacks of the transactional leadership style that make it less of a hero when heading a company. Here are some of those drawbacks:

• Lack of creativity: It focuses on rules and routines. This often limits new ideas and kills flexible thinking.
• Low motivation: Some team members might feel uninspired because it only uses rewards and punishments. They don’t see their personal growth or passion tied to the tasks.
• Overdependence on rewards: Relying on external rewards is often a disaster in the workplace. It kills long-term commitment to the work.
• Limited adaptability: It may not work well in situations that need change or innovation because it sticks to fixed methods. Transactional leadership works best in structured settings but might not be ideal for jobs requiring creativity or constant change.

What is Transformational Leadership?

This style is about inspiring people to work together towards a big goal instead of just checking off daily tasks. Leaders who use this style try to get everyone to share the same vision and feel excited about what they are working towards. They motivate their team to go beyond basic expectations.

A key characteristic of transformational leadership is building a shared vision. Leaders work with their teams to define goals that everyone believes in. This creates a sense of unity and shared responsibility. Such leaders will encourage creative ideas. They will allow their team to come up with new ideas and try to bring fresh solutions.

Benefits and Drawbacks of Transformational Leadership

This is the leadership style you need to develop if you are eyeing a top-level or executive position in your company. You need to learn how to inspire people and unite all towards a common vision that benefits everyone. Ultimately, this is what brings in long-term success. Here are some of the top benefits of transformational leadership style:

• Personal growth: An important aspect is promoting personal growth. Good leaders will take the time to mentor their team members. They will offer the helping hand required to develop new skills, grow their confidence, and reach their full potential. 
• Increased motivation: This leadership style inspires teams through a clear, exciting vision which makes people more eager to work hard and achieve goals.
• Encourages creativity: This style supports new ideas and finding better ways to do things – aka, innovation and problem-solving – both of which are winners for company growth.
• Stronger teamwork: Since everyone shares the same vision, teamwork improves and people are more likely to collaborate effectively.
• Long-term success: By focusing on big goals and personal growth, transformational leadership helps build a stronger, more motivated team that can succeed in the long run.

The best part is you do not need to be an inborn leader. All this can be learned through comprehensive leadership training programs offered by EducationNest. Being India’s top training provider, they are known for their robust courses designed by top experts in the industry.

This one is a clear winner in terms of benefits but even then, you are likely to face some challenges like:

• Can take time: Transformational leadership focuses on big changes and growth, which can take time and patience. It may not be fast enough for situations that need quick results.
• Requires strong leadership: Not every leader can inspire and motivate others in this way. It takes someone who is highly skilled at guiding and supporting their team.
• Risk of overload: Sometimes, the big vision and high expectations can overwhelm team members if the leader does not manage the workload properly.
• May not work in all situations: In highly structured environments where tasks are routine or require strict rules, transformational leadership may not be as effective.

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When to Apply Transactional vs. Transformational Leadership for Maximum Impact

You will mostly see new leaders following the first style because it is easier to master and practice. But the key is to know which one to apply when for the best results. Here is a quick summary to help you decide between transactional vs. transformational leadership:

1. Transactional Leadership is best:

• If the work involves clear, repetitive tasks with well-established rules. It works well in jobs where you need to follow specific processes down to the T (like in manufacturing or customer service).
• When you need quick results, this style can help you focus on meeting immediate, short-term objectives.
• If the team or company needs more structure, transactional leadership can help set clear roles, expectations, and rewards. It can ensure everyone knows what they are responsible for.

2. Transformational Leadership is best:

• When you are looking to grow or innovate. You will need new inspiration, and ideas, and need to encourage employees to think creatively. 
• It is great for companies in industries that need constant adaptation – say tech or marketing.
• If the company has a big, long-term goal, you can keep all motivated and make them feel part of something bigger.
• When you want to improve team performance and morale in the long run by helping team members grow and become better at their jobs.

Conclusion

If you are building a leadership pipeline in your company, your leaders will need to be well-versed in both styles of leadership. They must be capable of fulfilling the responsibilities that come with holding those high positions. This blog sheds some light on the basics of the two styles in brief. But, you will need a comprehensive training program in place to build a robust leadership pipeline.

If you are looking for effective leadership training programs for corporates, look no further than EducationNest. They are India’s biggest corporate training program with numerous courses on leadership, soft skills, cybersecurity, digital marketing, and more.