The leadership is defined as the quality of person with recognizable goal or clear vision and which can generate willingness in the peers and co-workers by following the path and mutually advantageous action of the leader (Parry, 1996). According to experts there are various leadership styles which display according to situations.
Burns (1978) described two style of leadership, transformational and transactional leadership. The leader who can set a clear vision of the future and stimulate the co-workers and subordinates by sharing the same vision called as transformational leadership (Yammarino & Bass, 1990a). According to Bass (1985) Charisma, Inspiration, Intellectual Stimulation and Individualized Consideration are main characteristics of transformational leadership.
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Transactional leadership is characterised by the discipline, responsibility and expectation of the leader. The goal must have to be complete with the given way of leader (Bass, 1985). Transactional leadership provides conditional rewards and leader interact with subordinates when things go wrong (Bass & Avolio, 1993). Contingent Rewards, Active and Passive Management Expectation and Laissez Faire are the identified characteristics of the transactional leadership (Bass 1985; Avolio, Bass, & Goodheim, 1987).
Difference between Transactional and Transformational Leadership
According to Burns (1978) transformational leadership and transactional leadership are like two end of river. Transformational leadership results in proactive influence and transactional leadership leads to more reactive. Burns (1978) described transformational leader always engage in building bridge with co-workers and colleague which motivate them to achieve their goal. Transformational leadership succeed when leaders increase the interest and focus of employees. Transformational leaders try to increase enthusiasm in the employee. As a result they think more about goal and group than self-interest (Bass, 1985). Transformational leaders try to achieve this goal in different ways like more appreciation, understanding emotional need or by motivating them with personal experience and achievements (Bass, 1985).
Avolio & Bass (1993) proposed that in transactional leadership co-workers and leaders influence each other. They are more dependent on each other. Leaders are influenced by the action of followers and employees are influenced due to expectation of the leader. According to Bass (1985), transactional leadership act like exchange process in which rewards and appreciations are provided to the employer on the basis of his individual performance and efforts so transactional leadership is dependent on leader as well as co-workers. Burns (1978) and Bass (1985) both described that transactional leadership leads to practical relationship in between co-workers and leaders. In this type of practical relationship leader explain the goal and followers should have to complete order to achieve their personal goal by completing target and mission of organisation.
According to Gronn (1995), transactional leaders are well aware about hard work and suitable rewards on the other hand transformational leaders are proactive and they creates more expectations in the followers. Transformational leaders create new learning opportunity for co-workers and it increases motivation within co-worker to solve the problem (Popper & Zakkai, 1994). Transformational leadership believe in emotional attachment with followers which help them to think altruistically and out of the box. In contrast transactional leadership promises rewards to the followers according to performance (Curphy, Ginnett, Hughes, 1994). They also proposed that transactional leaders believe in rewards, punishments and permission to control the worker. Transformational leaders believe in inspiration, individual space and putting idealised examples in front of co-workers.
Advantages of Transactional and Transformational Leadership
Bass (1985) describe, transformational leadership provide clear vision and increase willpower to complete mission. It also increases trust and respect in the organisation. Followers of transformational leader feel pride and job satisfaction ( Avolio & Bass, 1993). Transformational leadership increases problem solving skills and work attendance (Onnen, 1987). Transformational leaders articulate vision of followers by providing appropriate goal and role model. They provide moral support and intellectual stimulation which leads to high performance expectation (Fetter, MacKenzie, Moorman, and Podsakoff, 1990). According to Bass (1985), transformational leaders gives personal attention towards the follower which gave them mental stability and security. Transactional leadership maintain better relation with staff and management which help organisation to fill the communication gap between workers and management (Bass, 1985).
Contingent rewards by the transactional leader increases efforts of followers. Good performance can give rewards this feeling make them more energetic and enthusiastic ( Avolio & Bass, 1993). Transactional leadership give space and independence to followers to achieve organisation goal. It has no concert efforts to change the basic moral thinking and personal values of transactional leadership followers. Transactional leaders try to fulfil current need of followers on the outcome of desired result. As a result followers concentrate more on work than emotional and personal issues (Podsakoff et al., 1990).
Limitation of transactional and Transformational Leadership
Various study examined that transactional leadership has some positive relationship with individual performance (Hunt & Schuler, 1976), however some negative relationship also found within leaders and co-workers (Avolio & Howell, 1993). Burns (1978) proposed that promises and rewards are the basic rooted values of transactional leadership. These exchangeable values lead to strong commitment and need of leaders as well as followers. Basic order and lower transaction are depends on leaders resources like increments, incentives, pay increase and gift vouchers which followers always desired (Yukl, 1981). If leader do not have direct control to give such kind of rewards to the follower then trust diminished between followers and leaders. Bass (1985) describes transactional management by exception which is one of the forms of transactional leadership. In this form, behaviour of leader provides negative feedback to the followers. Criticism, punishment and correction are the basic examples of this behaviour which results due to poor performance (Podsakoff et al. 1984). Transactional leadership not allow greater in-role performance and it lack in motivational function (Lawler & Porter, 1968; Podsakoff et al. 1984).
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Transformational leadership increases high performance expectation from the followers (Fetter, MacKenzie, Moorman, & Podsakoff, 1990). Followers of transactional leaders feel themselves secure and satisfied with their efforts so it can lead to decrease in input in works (Yukl, 1981). Podsakoff et al. (1984) also propose that transformational leader’s motivate followers beyond expectation by emotional support affect in-role behaviour than extra-role behaviours.
Integration
While consideration of integration of transformation and transactional leadership, Bass (1985) found that employers do better job when the feel they have transformational leader, however they are happier with the organisations increment, incentive and appraisal system.
Bass (1985) describes, transformational leadership is not a universal remedy. It is unsuitable in many situations where transactional leadership make huge impact. For example, sudden drop in the sales of product in stable market could not improve only by transformational leadership. Incentive, rewards to the salesperson with the clear, disciplined goal and transactional motivation can improve the sales in stable market (MacKenzie, Podsakoff and Rich, 2001). Most leaders’ profiles include both transactional and transformational leadership. The attitudes and behaviours of Otto Von Bismarck, whose efforts lead to the unification of Germany in 1871, illustrate how transformational and transactional leadership can be directive or participative, democratic or authoritative (Avolio & Bass, 1991).
Conclusion
Manager’s leadership plays pivotal role in success of organisation in market. There is various behaviour types are implicated in both type of leadership but pattern and application of leader’s behaviour is different in both type of leadership. Leaders can identify with their behavioural action such as transactional and transformational leadership behaviour. Transactional leadership explain practical, independent relationship and mutual beneficial exchange between leaders and followers. In contrast transformational leadership results into self-motivation and enhance group thinking apart from self-interest. Most of the researchers clearly suggested implication of transformational leadership as a new leadership theory which overcome the drawbacks of transactional leadership. Bass (1985) proposes, transformational leadership can be used effectively to increase organisational performance.
In conclusion, study from last two decade by various researchers states that transformational leadership provide high importance in the business organisation but we can’t ignore the effectiveness of transactional leadership theory. The theoretical weakness explain by researcher suggest some correction from both transactional and transformational leadership theory (Yukl, 1999). The study between transactional and transformational leadership demonstrate work environment of the organisation. It provides interaction between leaders and followers which is very essential for growth of organisation. Perhaps the growth and cultural understanding of organisation is determined by the leader and co-workers interaction.
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