Wednesday, October 21, 2009

Transactional vs Transformational Leadership

Hi there,

Here is a quick overview of the differences between transactional and transformational managers and leaders.

The transactional leader influences others by appealing to self-interest, primarily through the exchange of rewards and services. The relationship between this type of leader and the follower is seen as a series of rational exchanges that enable each to reach their own goals. Transactional managers supply all the ideas and use rewards as their primary source of power. Followers comply with the leader when it’s in their own interest - the relationship continues as long as the reward is desirable to the follower, and both the leader and the follower see the exchange as a way of achieving their own ends. Traditional management is focussed on this way of leading, particularly if looked at through the lens of budgeting and cost control.

The transformational leader inspires followers to not only perform as expected, but to exceed expectations - transformational leaders motivate followers to work for goals that go beyond immediate self-interest, where what is right and good becomes important - these leaders transform the needs, values, preferences and aspirations of followers. They do this so that the interests of the wider group replaces the self-interest of individuals within that group. Leaders and managers that take this approach are more focussed on the intrinsic value of the human and the potential lying within.

It is not that one style is better than the other. Both are neccessary, but using one to the exclusion of the other will lead to limited results.

Richard

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