Having good leaders is an essential component of any company’s success. The leaders are those who set goals and empower the employees to perform well. Furthermore, the leader’s role goes beyond carrying out the managerial tasks. Rosenbach (10) argues that there is a significant difference between a good manager and a good leader. Indeed, leaders have a role of inspiring and helping people to do their job correctly and to express their thoughts to improve the organization. “Leadership is all about getting people to work together to make things happen that might not otherwise occur or to prevent things from happening that would ordinarily take place” (Rosenbach 11). It involves more than just knowledge on how to work with people. Leadership requires character, integrity, and confidence (Rosenbach 11). The field of study for the topic has been an object of fascination (Storey et al. 15). It can be argued that any organization strives to maximize its performance efficiency; therefore, these organizations are looking for ways to do so. Although there have been many concepts that attempt to identify the most effective way to lead people, in the modern day only two of those are regarded as useful – transactional and transformational models. Due to the fact that the topic is of particular importance, one must sift through the contemporary approaches to leadership and choose the best one to lead the organization most efficiently.
McCleskey (122) argued that the study of leadership spans for more than 100 years, yet according to Rosenbach (10), there is no precise definition of the term. Therefore, it can be concluded that each leader can have a specific and unique explanation of the word. People interested in the topic strived to determine what distinguishes a good leader from a bad one. At first, the studies focused on the traits of people as the primary determinant of leadership (McCleskey 122). However, further studies focused on other determining factors. In the modern day, there are two primary models of leadership – transactional and transformational. While those who attempt to become a good leader for the organization should learn from these models, it is essential to understand that there is no universal way to succeed. One must strive to gain new knowledge and adopt different techniques of leadership yet not forget that coming up with new approaches that work in a particular setting is the key to successfully managing an organization.
The transactional model is based on the process of interchanging. “Equitable transaction or exchange between the leader and followers … the leader influences followers by focusing on the self-interest of both” (Rosenbach 16). The purpose of it is to reach the set goals for the organization by rewarding people for the performed tasks. According to Breevaart et al., such a leader’s primary objective is to ensure that the goals are met (138). It can be argued that this is the purpose of all leadership styles. However, the transactional model highlighted it in particular. For the followers, the model emphasized the importance of full filling personal interests (McCleskey 122). It can be argued that this model is more structure based as it involves defined rules one must follow to achieve the set goal. Rosenbach (16) adds that this style can be considered more of a managerial approach. As was mentioned earlier, it is essential to distinguish between leadership and management. The administrative aspect of this approach can be an issue for the leader. Additionally, Breevaart + argues that transformational leaders are more effective than transactional (139).
McCleskey argues that the theory has gained criticism as it is mainly focused on short-term achievements (122). Therefore, an organization led by a transactional leader can struggle with its long-term goals. In addition, the exchange process can be regarded as “shallow” and lead to “resentment between the participants” (McCleskey 123). This can have an adverse effect on the motivation of the employees. Additionally, many have criticized it for providing a single approach regardless of other factors, such as the size of the company or its values (McCleskey 123). The said approach can lead to issues as every company’s environment is different and it can be challenging to adapt the model.
The transformational leadership focuses on the qualities of the person and his or her ability to motivate the employees. As the name implies, the focus of this theory is on changing or transforming people in a specific group (Mujkic et al. 259). Transformational leadership is a popular contemporary concept. Diaz-Saenz argued that this model had been the most crucial topic of studies and debates in the past thirty years (qtd. in McCleskey 123). The model aims to inspire the employees by giving them a leader that can empower them. Such a person “motivates followers to perform beyond expectations by creating awareness” (Rosenbach 12). The awareness relates to the values (including mission and vision) of the organization. The aim is to connect the employees and the organization by explaining the importance of these factors. Rosenbach (12) stated that such leaders encourage the followers to outperform the expectations. The studies in the field identified the contributing components that determine the efficiency of this model. They are “idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration” (McCleskey 120). Therefore, the personal traits of the leader are essential for this model. Mujkic et al. argued that a necessary factor of the theory is the feedback that a leader provides and his or her relationship with the followers (120). All in all, the model is focused on the leader’s perception of what the organization is trying to achieve and his or her relationship with the employees.
As McCleskey stated, many types of research in the filed have provided evidence that supports this leadership theory (120). Although there are critics of the transformational model, overall their arguments do not object that it is efficient. Mujkic et al. have conducted the review literature and concluded that this leadership model creates a favorable environment for the employees (260). This leadership style was proven to be an effective way of managing the organization and creating a positive environment in it.
The two models are different in the methods, one uses the approach of exchange, and the other strives to align the values of the employees and the organization. However, the long-term goal for both of them is the same – to motivate the employees, create a friendly environment for them to share ideas, and to increase the efficiency of the company. It is difficult to determine which model would be the most effective as the research suggests that both provide the needed result. A study by Breevaart et al. have concluded that both transactional and transformational leadership contribute to the work engagement (153). These models can add to how freely people in the organization share their ideas. A study by Deichmann and Stam examined a relationship between the concepts and organization-focused ideas (204). They found a correlation between what tactics the leader uses to guide the employees in achieving the set goals and the willingness of the employees to generate and express their thoughts on the issue within the organization. Deichmann and Stam stated that both leaderships are effective in motivating people and persuading them to commit to the goals of the company. This in its turn leads to more ideas, generated by the employees, which benefits the organization (204). The study found that with the two leadership styles both frequency and quantity of the submitted ideas increases. However, Mujkic et al. argue that transformational leadership offers a synthesis of the previous techniques, theoretically and practically (266).
Overall, both transactional and transformational leadership approaches offer practical ways to motivate the employees. The transactional model is focused on the interchange between the leader and the workforce. The transformational model is based on the ability of a person to align the mission of the company with what matters to the employees. Both theories received criticism for certain aspects of how they function. However, studies have proved that both can be beneficial for the productivity of the people. While some researchers have suggested that the transformational model is more effective than the transactional, both can be used to leverage the organization’s capabilities. It can be argued that a leader should choose a model that suits his or her values more, which would be the most efficient way to manage a company.
Works Cited
Breevaart, Kimberly, et al. Daily transactional and transformational leadership and daily employee engagement. Journal of Occupational and Organizational Psychology, vol. 87, no. 1, 2014, pp. 138-157.
Deichmann, Dirk, and Daam Stam. Leveraging transformational and transactional leadership to cultivate the generation of organization-focused ideas. The Leadership Quarterly, vol. 26, no. 2, pp. 204-219.
McCleskey, Jim. “Situational, transformational, and transactional leadership and leadership development.” Journal of Business Studies Quarterly, vol. 5, no. 4, 2014, pp. 117-130.
Mujkic, Alisa, et al. Transformational leadership and employee satisfaction. Ekonomski Vjesnik/Econviews, vol. 27, no. 2, 2014, pp. 259-270.
Rosenbach, William. Contemporary Issues in Leadership. Routledge, 2018
Storey, John, et al., editors. The Routledge Companion to Leadership. Routledge, 2017