Difference Between Transactional And Transformational Leadership

There are different ways of leading companies; however, most of the styles tend to be divided into either transactional or transformative.

Both styles are different and help the organization to approach different ways of getting work done as well as achieving its goals.

To understand the differences between these two, here is what you need.

Transactional And Transformational Leadership

Will, the transaction, and transformational leadership are not about which is right or wrong; while they can be opposite, they do have their advantages and offer the solution suitable for certain situations.

To understand better, here is what you should know about both leadership styles.

What is Transactional Leadership?

A transactional leadership style has the managerial philosophy where the reinforcement and exchanges, managing employees by basing the goals. Also, to reward them if they successfully achieve it.

This is what ‘ transactional’ means in the leadership/

It includes –

  • Effective transactional leaders offer rewards to the followers who do the work on time.
  • According to a study in psychiatric services, leadership is more practical in nature as it emphasizes meeting the targets which are specific and have objectives.
  • Transactional leadership is often seen in the manufacturing industry as line workers have the expected objective where they have to hit the quote per shift.
  • It’s also used where the mindset is sales, as team and ideas are given the keratin speech goals to hit.
  • Transactional leaders are also effective when the employees have to perform tasks within a set of time and limited resources.

What is Transformational Leadership?

The leadership grounded four components which he referred to as Four I’s.

It includes –

  • Intellectual Stimulation: This encourages employees to have new experiences and ways of thinking to express themselves.
  • Individual Consideration: This monitors the employee to support the development of professionalism.
  • Idealized Influence: This serves as role models on how they can expect employees to handle themselves,
  • Inspiral Motivation: This impairs the vision of an organization for the employees, which they make their own.

With these four I’s, transformation leaders focus on the employees, nurturing, and positive motivation.

The leaders focus on the personal and professional growth of employees.

They work better when the goal includes the talent of employees, and meeting the immediate sales or production quota is not that important.

Key Differences Between Transactional And Transformational Leadership

In 1947, Transactional leadership was proposed by Max Weber, and Bernard Bass followed it in 1981.

His leadership uses the authority and responsibility of the power as well as the style of the formal approach.

In 1978, James MacGreoger Burns proposed the concept of Trasformazione leadership. 

The idea was to uplift each other by improving the motivation and morale of subordinates and superiors.

There are differences between both leaders.

  • The transactional leadership style rewards and punishes the basis for initiating the employees who follow the rules.
  • Transformational leadership uses the charisma and enthusiasm of the leaders to influence the flowers.
  • Transactional leaders put stress on those who are following the leaders, but the information focuses on the values, needs, and beliefs of the followers.
  • Transactional leadership is reactive in nature. But the transformation is proactive.
  • Transfection leadership is suitable for the settlement’s environment. As for transformation, it’s good for the turbulent environment.
  • Transactional leadership works to improve the organization’s current condition.
  • The transformation works the change the present for the organization’s present condition.
  • The leadership in translation is bureaucratic but transformational leadership is charismatic.
  • Transactional leadership focuses much more on planning and executing, while transformational leadership is much more focused on innovation.
  • Transactional leaders have only one leader; in transformational leadership, they can have more than one leader.

Characteristics-Based Differences In Transformational And Transactional Leadership

Transactional leaders are known as managerial leaders as they primarily focus on the management of groups. And they expect to complement and ensure that all the followers have their rewards and punishments.

Whereas the transformation approach to innovation focuses on creating a more authentic, visionary, and collaborative environment in the organization.

Well, there are differences between their characters, too, which include:

  • Transactional leaders motivate the team through praise, money, and recanalization. And they need extrinsic motivation. 
  • The leadership is based on practicality which makes the approach pragmatic and classical and includes all the obstacles and constraints into consideration.
  • Traditional leaders have a proactive approach, which has advantages like understanding risks and avoiding problems since it gets identified first and turns challenges into opportunities.
  • Transactional leaders rely on the orders they also resist when it comes to change.
  • The transformation leaders are fast to adapt and change quickly as the atmosphere is. They are more willing to change and have the beauty to find new opportunities in new settings.
  • The transaction leader discourages autonomous actions.
  • A transformational leader shares the collecting organizational consciousness, also understanding, among others. They approve more approaches and participants from the team.
  • Transactional leaders monitor all the performances of their employees based on given targets and goals. The reward and punishment are given based on the performance.
  • Transformational leaders focus on self-management, and they don’t set the direction for others. However, they encourage the employees to be able to prioritize, select courses of action, and help people who are accountable.
  • Transactional leadership is shorter-term. They prefer to handle situations as soon as they arise.
  • Transformational leader seeks to inspire others as they motivate others to unlock the values and talent they have, which helps the organization in the long run.
  • The transactional leaders have the authority and decision-making rights; they have the direct orders that are passed to employees.
  • The transformation leaders are more achievable, realistic, and displaying, which they share with others. 

Which One Is Better?

However, it depends on what the organization requires and what type they are,

There is no better approach, but despite having the differences, they are not mutually effective.

Here the blended approach oak is better often because both styles have their effectiveness and work better in different situations.

Here are a few of the points that might help in understanding.

The Effectiveness of Leadership

Well, when it comes to transactional and transformational leadership, they both have the IN effectiveness and help in achieving the results for the organization.

  • Transactional leaders are much more focused on the performance of origination and employee supervision.
  • The leaders are not looking toward innovation but maintaining productivity is their motto.
  • They have more focus on what’s happening in the present and day-to-day in business so the flow can be smooth.
  • Transformational leaders whereas focusing on organizational change and development for employees.
  • The leaders are more devoted to developing the strategy that can serve the organization and the team’s future.
  • They are more into inspiring and motivating the employees to have the same vision.
  • Leadership is highly effective when the organization and team require a leader through positive change.

As for choosing which one is better, the effective leader are those who know what elements can be used from both leadership,

For example, your company sales might be transactional at the core, but the team is driving towards success as well as the continuous target.

It can be monthly, quarterly, or annual goals for sales.

However, the sales include the people who need to develop as well as manage the relationship with customers.

Being a sales team, it’s important to understand what makes your team feel inspired and motivated; the same goes for your customer.

It’s important to look forward and beyond the sales transaction so the team can be innovative.

Promoting Creativity, Growth, And Innovation

Transformational leadership has the advantage when of promoting innovation, creativity, and promoting growth.

A study conducted by Frontier in Psychology reported that transactional leadership prefers to perceive the culture as the goal instead of being oriented and innovative.

Transformational leadership, whereas employees see culture as innovative.

Employees feel more motivated when they are developing as professionals and as well as growing their base of skills and experience.

The overall key part is a transformational leader to boost the innovation and certainty in the workplace,e

The focus is to make more employee development as important the cultivating the leadership for future leadership.

How Do They Complement Each Other?

Well, both leaders have the development, adaptation, and application which makes them balance out their advantages and disadvantages.  

Transactional Leadership

While the best apps that you can code here are to maximize operational efficiency, leadership can fall short when it comes to innovation, long-term strategy creation, and the development of employees.

transformational Leadership

The Best is for creating strength and fostering change in the organization.

But the style can lack when it comes to attention towards stealing.

The leadership has less focus on the daily work play as well as the process in an organization.

Leadership relies on the type of leaders who have a great deal of motivation and passion, which goes on for a long time.

Transactional And Transformational Leadership Differences

Transactional LeadershipTransformational Leadership
Focuses on maintaining the status quo and achieving specific goals.Focuses on inspiring change and achieving a vision.
Uses rewards and punishments to motivate followers.Motivates followers through shared values and a compelling vision.
Emphasises the importance of structure, rules, and procedures.Encourages creativity and innovation by empowering followers.
Relies on a clear chain of command and hierarchy.Emphasizes collaboration and teamwork.
Monitors performance closely and corrects deviations.Focuses on individual growth and development.
Uses extrinsic rewards (such as bonuses or promotions) to motivate followers.Uses intrinsic rewards (such as personal satisfaction or a sense of purpose) to motivate followers.
Values efficiency and productivity above all else.Values personal growth and development as well as organizational success.
Does not encourage followers to challenge assumptions or think outside the box.Encourages followers to challenge assumptions and think creatively.
Provides clear expectations and instructions.Encourages followers to take ownership and initiative.
It may limit creativity and innovation.Encourages creativity and innovation.
This may lead to a rigid or inflexible organizational culture.Encourages a dynamic and adaptable organisational culture.
This may lead to low morale or disengagement among followers.This can lead to high levels of motivation, engagement, and commitment among followers.
It may be effective in stable or predictable environments.It may be effective in changing or uncertain environments.
It may be more appropriate for routine or repetitive tasks.May be more appropriate for complex or challenging tasks.
It may be less effective in situations that require adaptive or flexible responses.May be more effective in situations that require adaptive or flexible responses.
Transactional And Transformational Leadership Difference


What is transactional leadership?

Transactional leadership is a leadership style that focuses on maintaining the status quo and achieving specific goals through the use of rewards and punishments.

What is transformational leadership?

Transformational leadership is a leadership style that focuses on inspiring change and achieving a vision through the use of shared values, empowerment, and collaboration.

What are some key differences between transactional and transformational leadership?

Some key differences include their focus on maintaining the status quo versus inspiring change, their use of rewards and punishments versus shared values and empowerment, and their emphasis on efficiency and productivity versus personal growth and development.

Which leadership style is more effective?

The effectiveness of each leadership style depends on the situation and the goals of the organization. Transactional leadership may be more effective in stable or predictable environments, while transformational leadership may be more effective in changing or uncertain environments.

Can a leader use both transactional and transformational leadership styles?

Yes, leaders can use both transactional and transformational leadership styles depending on the situation and the needs of their followers and the organization.

What are some potential drawbacks of transactional leadership?

Some potential drawbacks of transactional leadership include a rigid or inflexible organizational culture, limited creativity and innovation, and low morale or disengagement among followers.

What are some potential drawbacks of transformational leadership?

Some potential drawbacks of transformational leadership include a lack of focus on efficiency and productivity, a potential for unrealistic or unattainable goals, and a potential for burnout or overextension among followers.

More To Explore:

Was this article helpful?