Management Sciences Research

Transactional and Transformational Leadership

To understanding the meaning of “leadership” we can define it as the ability to influence a group toward the achievement of a vision or a set of goals. All managers lead but not all leaders are managers and there are different theories that attempt to explain leadership, but those that receive more attention are those that refer to the transactional and transformational leadership.

What traits and behavior characterize leaders?

Extroversion, conscientiousness, and openness to experience are some of the personal traits that are positively correlated with followers’ leadership perceptions, while there is also some evidence of a positive relationship between leadership and emotional intelligence. We can also refer to some personal traits, like core-self evaluations, to find from there a connection to both, transactional and transformational leadership.
Regarding the way the leaders tend to behave, we can differentiate them by those who have task orientation or are transactional leaders, and those who have a relationship orientation or consideration or are transformational leaders. A recent review of 160 studies done by scholars found that followers of leaders that are high in consideration (transformational leaders) were more satisfied with their jobs, were more motivated, and had more respect for their leader. On the other hand, transactional leaders were more connected with productivity of their followers.

Task oriented, transactional leader

If a leader is high in terms of task orientation, he will tend to define results that must be achieved (objectives), organize tasks (who will do what), give precise instructions (what must be done and how to do it), follow up on the work that is being done and provide feedback, and intervene when there are problems while showing how to face them.

Relationship oriented, transformational leader

A leader who has relationship orientation will tend to explain why something needs to be done, show interest in employees’ opinions, incentivize that employees take responsibility of their own work by encouraging them to make their own decisions, encourage employees to assess their performance and think of ways to improve, support and “cheer up” employees, give praise when the job is well done, and show interest in employees’ welfare.

Situational leadership theory

According to Hersey and Blanchard, the right type of leadership will depend on the person or group being led.

  • If the person/group does not know, and not willing –> Coaching leadership.
  • If the person/group does not know, but is willing –> Directive leadership.
  • If the person/group knows, but is not willing –> Supportive leadership.
  • If the person/group knows, and is willing –> Delegating leadership.

Authoritarian decision making

Authoritarian decision making appears in those situations when there is urgency and the decision must be made immediately, there is a high degree of uncertainty (lack of experience or ability) and the employees are confused, there is a lack of willingness  or interest on behalf of employees in taking more responsibility for the decision, or there is likely to be a conflict among team members for determining what solution is the best one.

Participative decision making

Participative decision making tends to appear in those situations when the employees accept or share the objective that needs to be achieved, the decision quality is key and employees have the needed experience or knowledge to make the best decision, or when it is very important that employees accept the decision and it is unlikely that they do if they do not intervene in the decision making process.

Transactional leadership

The main traits of the transactional type of leadership, apart from being task oriented, is that transactional leaders are those that guide or motivate their followers in the direction of established goals by clarifying role and task requirements, recognize needs and wants, and see how they will be satisfied. This type of leadership is based on the exchange and mutual benefit and is aimed at improving the efficacy and efficiency of the organization or business unit, while the vision tends to be taken-for-granted.
Transactional leadership is also directed towards contingent rewards through contracts that exchange rewards for effort, promise rewards for good performance and recognize accomplishments. The management by exception can be “active“, when the leader proactively watches and searches for deviations from rules and standards and takes correct action, or “passive“, when the leader intervenes only if standards are not met. Overall, transactional leadership can also be characterized by a “laissez-faire” approach.

Transformational leadership

A transformational style of leadership tend to support the qualitative change of the organization or business unit. The transformational leadership also tends to be based on commitment through intrinsic motives, tend to inspire followers to transcend their own self-interests and is capable of having a profound and extraordinary effect on followers.
Transformational leaders rely on inspirational motivation, idealized influence, individual consideration and intellectual stimulation.
Transformational leaders tend to motivate us to do more than we originally expected by raising our level of consciousness about the importance and value of designated outcomes, by getting us transcend our own self-interests, and by getting at higher order needs beyond security or affiliation, such as recognition, self-esteem, and self-actualization. Transformation leaders also tend to exert idealized influence by providing a role model for high ethical behavior, instilling pride, and gaining respect and trust. Transformational leaders also exert inspirational motivation by articulating a vision that is inspiring for the followers, communicating high expectations, using symbols to focus efforts, and expressing important purposes in simple ways. Transformational leaders also offer individualized consideration as they stop treating all subordinates alike, set examples and assign tasks on an individual basis to followers to help significantly improve their abilities and motivations and act as coach and advisor while keeping their team members always “in the loop”.
In terms of ethics, transformational leaders are more likely to emerge in times of crisis and uncertainty. Given that transformational leaders can provide followers with a vision for the future, transformational leaders also tend to be moral leaders. Nevertheless, transformational leaders can be immoral when they provide visions not backed by reality, which create false hopes and expectations on followers.

Intellectual stimulation in transactional and transformational leadership

The transformational leader may be less willing to accept the status quo and more likely to seek new ways of doing things while taking maximum advantage of opportunities. On the other hand, transactional leaders will focus on what can clearly work, will keep time constraints in mind, and will do what seems to be most efficient and free of risk. Overall, transformational leaders are more proactive, more creative, innovative, and less inhibited in their search for solutions, while transactional leaders although being equally bright, will rather focus on how best to keep running the system for which they are responsible.


Transactional and transformational leadership styles are hard to isolate from each other as they tend to be present at least in some degree in any leader. It is neither possible to judge what type of leadership is better because that will depend on the characteristics and circumstances of each organization, the type of “followers” and the goals of the organization. Nevertheless, understanding transactional and transformational leadership allows us to be more aware of our own behavior and guides us with some hints towards the right type of leadership depending on what challenge we have to face.