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Transactional and Transformational Leadership: Advantages and Disadvantages


There are two widely discussed leadership types, which are usually applied to different organizations and industries. One of them is transactional leadership, which focuses on rewards and punishments as tools to motivate workers. The second is the transformational style, which encourages employees by demonstrating an organization’s path. Both of them have their advantages and disadvantages. In this paper, both leadership styles will be discussed, applying to the field of social work.

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Transactional Style

To begin with, the transactional approach to leadership focuses on the organization’s staff, not the firm itself. According to Ahmad and Ejaz (2019), “transactional leadership bases its argument on contingent rewards and management-by-exception” (p. 98). Thus, the basic principle of the leadership approach lies in the emphasis on specific workers’ results, making other employees target the same high outcomes as they. Moreover, transactional leadership includes the following components: the sake of praise, rewards, or the avoidance of disciplinary actions (Alrowwad & Abualoush, 2020). Therefore, this style uses contingent rewards and disciplinary actions as means to motivate employees to work and make organizations’ outcomes higher.

The scheme of the transactional approach looks like an exchange between the leaders and followers: the former tries to promote specific behaviors and eliminate unwanted ones, while the latter tries to achieve rewards and avoid punishments (Alrowwad & Abualoush, 2020). Thus, the transactional style may have benefits when a firm has a strong hierarchy in its organization or strong personalities of leaders that can inspire subordinates with their achievements. However, in horizontal organizations, in which workers are equal in their rights and obligations, it will be challenging to achieve higher performance by applying the system of rewards and punishments.

Transformational Leadership

At the same time, the basic principle of transformational leadership lies in applying values and ideology while motivating employees. As it is claimed by Mathole et al. (2018), a leader in a transformational type of organization “encourages teamwork, collaboration, empathy and the acceptance and use of innovativeness which results in improvement of outcomes” (p. ii14). Therefore, transformational leadership consists of four components: inspirational motivation, idealized influence, individual consideration, and intellectual stimulation (Ahmad & Ejaz, 2019). Thus, the behavior of a transformational leader originates in his own beliefs and values, which help him make workers cooperate, applying four crucial components and emphasizing the significance of their development.

Contrasting Two Styles of Leadership

The difference between the two types of leadership lies in the means managers use to motivate employees. Transformational leaders encourage people to work by telling them about organizations’ achievements and showing the future development path. At the same time, “transactional leader emphasizes on tasks performed by the organization staffs rather than the organization” (Ahmad & Ejaz, 2019, p. 102).

This negatively impacts firms’ performances, which is outlined by some scholars (Ahmad & Ejaz, 2019, p. 98). Concerning transformational style, it has shown high results in the performance of the rural hospital in South Africa, as well as in the banking sector of Pakistan and the public health industry in Central Java (Mathole et al., 2018; Ahmad & Ejaz, 2019; Purwanto et al., 2020). However, transactional leadership demonstrated a more significant impact on the performance in the textile sector of Pakistan because there were people that inspired their subordinates (Ahmad & Ejaz, 2019). Therefore, one can claim that differences in motivation may influence the level of trust and confidence in the community of workers, affecting collective performance.


It is risky to apply the transactional approach in the work of social practitioners because of possible consequences. However, in organizations with strong personalities who are respected by their subordinates, as in the textile sector of Pakistan, transactional principles may inspire employees in their work. The transformational style may support the social work practitioner in the leadership role because it makes people cooperate, encourages them to innovate, and develops their personal and professional skills, demonstrating the goals of an organization.

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Ahmad, M., & Ejaz, T. (2019). Transactional and Transformational leadership impact on Organizational Performance: Evidence from Textile sector of Pakistan. European Online Journal of Natural and Social Sciences: Proceedings, 8(2(s)), 97-103.

Alrowwad, A. A., & Abualoush, S. H. (2020). Innovation and intellectual capital as intermediary variables among transformational leadership, transactional leadership, and organizational performance. Journal of Management Development, 32(9), 196-222.

Mathole, T., Lembani, M., Jackson, D., Zarowsky, C., Bijlmakers, L., & Sanders, D. (2018). Leadership and the functioning of maternal health services in two rural district hospitals in South Africa. Health Policy and Planning, 33(2), ii5-ii15.

Purwanto, A., Bernarto, I., Asbari, M., Wijayanti, L. M., & Hyun, C. C. (2020). Effect of transformational and transactional leadership style on public health centre performance. Journal of Research in Business, Economics, and Education, 2(1).

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