The Difference Between Transactional and Transformational Leadership

Leadership is very important for a person as well as for an organization. Without leadership, the organization (and the individual, too) is like a boat without a rudder. It will be aimless and will just follow the flow of the powerful forces in the organization.

But leadership takes on different forms in an organization. One way of looking at it is by classifying between transaction and transformational leadership. Another is by looking at formal and informal leadership. Formal position and authority matter less than influence. Influence is raw power within an organization. A person who has influence does not need formal authority to tip the organizational balance towards himself.

Leaders who do have formal authority and leadership position may simply use transactional leadership for their subordinates and followers. This kind of leadership works in certain situations. Especially if the leader is but in transition and does not have to invest much time in the development of the people under him. Transactional leadership is not long term. It is short term. The key word here is transactions! The leader does not expect any “return business” with the people he is dealing with.

Transformational leadership, on the other hand, is a very different kind of leadership. It takes into account the motivation and the situation of the followers and subordinates. It primes up people for repeat business and continuous improvements!

As a leader, would you rather use short term transactional leadership or the long-term-impact transformational leadership? While I would advocate transformational leadership off-hand, the best leadership style depends on your circumstances and the organizational goals and objectives.

The important question to ask then is, how can you study the organizational context so as to understand the kind of leadership that is suited to it? Ask your people. Is there good morale in the organization? Or is it full of complaints and murmuring? Are the people happy to be part of the organization? Or are they simply waiting for one paycheck after another?

You also need to look at the performance of the organization. You can conduct an evaluation or even an internal audit of your organization. This way, you can assess the strengths and the weaknesses of the organization. Based on that, you can make important decisions as to the style of leadership suited for the organization.

There is no right or wrong styles of leadership to be used in an organization. What matters is how you use one style of leadership to accomplish your goals as a leader.

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