Transactional versus Transformational Leadership

The discussions of leader-member exchanges and charismatic leadership highlight the contrast between two major leadership styles currently being discussed by leadership experts: transactional and transformational leadership.

Transactional leadership is more traditional, with managers engaging in both task- and consideration-oriented behaviours in an exchange manner - you do things for me and I will do things for you. Transactional leaders get things done by promising and providing recognition, praise, pay increases, and advancements in return for higher performance. They also impose punishments on workers who perform poorly. Some managers actively engage in these types of transactions by seeking out opportunities to improve performance and thus reward employees. Other less-effective managers use a more passive management-by-exception approach and often concentrate on punishing non-standard performance. Although the active-reward approach has shown better results than the passive-punishment approach, both can result in average performance. The leaders' effectiveness is limited in many cases by lack of control over organizational rewards and punishments as well as the inability to inspire or foster commitment in employees.

Transformational leadership goes beyond mere exchange relationships by inspiring employees to look beyond their own self-interests and by generating awareness and acceptance of the group's purposes and mission. Transformational leaders often appeal to higher ideals and moral values such as justice, humanitarianism, peace, and equality or to baser emotions such as fear or hatred. Consequently, some transformational leaders, such as Adolf Hitler can have extremely negative effects on their followers. Transformational leaders in business, though, stimulate employees to perform beyond what they thought they were capable of doing, doing so to satisfy the higher-order needs identified in Maslow's hierarchy. Examples would be Lee Iacocca, who rescued Chrysler from bankruptcy; and Wal-Mart's Sam Walton, who inspired his employees to be service-oriented even in a low-cost retail business.

A number of characteristics seem to distinguish transformational leaders from the more traditional transactional leaders:

1. Charisma: Transformational leaders provide an idea and sense of mission and inspire a sense of trust and respect in followers. Charisma is a necessary condition for transformational leadership, but it is insufficient without the remaining traits.

2. Inspiration: Transformational leaders communicate through images, conveying a simple yet powerful message that inspires followers to a higher purpose.

3. Intellectual Stimulation and Empowerment: They stimulate their followers' intellectual process by promoting rationality and problem solving. They are ready to take risks and get their followers thoroughly involved in their purpose.

4. Individual Consideration: They give individualized and personal attention to followers. They act as coaches, developers, and supporters, admonishing when necessary, but emphasizing the positive.

5. Change Facilitation: They recognize the need for and promote change. They see themselves as agents of change who are ready to commit themselves and their subordinates' involvement to the future they envision.

6. Integrity: They promote the higher-order values noted above and model honesty and integrity with their own behaviour.

Transformational leadership, although not common in business and government, is certainly not a mystical phenomenon found only in a few "born" charismatics. Moreover, research has found that transformational leadership exists at all levels of organizational hierarchies and is positively related to a number of different performance criteria in an extremely broad range of organizations. Perhaps the most exciting aspect of transformational leadership is that there is increasing evidence that it can be learned.

1. Formulate the main idea of the text.

2. Find in the text English equivalents of these words and phrases.

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1. лідерство типу угоди	21. виходити за межі (чогось)	41. передавати повідомлення
2. лідерство, спрямоване на зміни	22. власні інтереси	42. наділення повноваженнями
3. висувати на передній план	23. усвідомлення	43. розумність, раціональність
4. протилежність, контраст	24. прийняття	44. індивідуальна увага
5. обіцяти	25. цілі й завдання групи	45. інструктор, тренер
6. надавати	26. апелювати, звертатися до	46. розробник
7. визнання	27. справедливість	47. опора
8. похвала	28. рівність	48. застерігати
9. підвищення оплати	29. страх	49. підкреслювати
10. просування	30. ненависть	50. сприяння змінам
11. накладати стягнення, карати	31. потреби вищого порядку	51. довіряти (когось чомусь)
12. шукати можливість	32. врятувати	52. уявляти
13. винагороджувати	33. недорогий	53. доброчесність, порядність (2)
14. підхід до управління шляхом виключення	34. роздрібний	54. цінності вищого порядку
15. зосереджуватися на	35. відрізняти (щось від чогось)	55. позитивно зв'язаний з
16. нестача, відсутність	36. віра	56. критерії виконання роботи
17. нездатність	37. повага	57. широкий діапазон
18. надихати, уселяти (почуття тощо)	38. послідовник, прибічник	58. усе більше доказів
19. сприяти	39. інші риси
20. натхненність	40. спілкуватися за допомогою образів

3. Are these statements true or false? Correct the false ones.

1. To get things done, transactional leaders are likely to promise and provide recognition, praise, pay rise, and advancements as payment for higher performance.

2. Transactional leaders who use a management-by-exception approach to improve performance usually give attention to praising non-standard performance.

3. Lack of control over organizational rewards and punishments usually adds to the effectiveness of transactional leaders.

4. Transformational leadership generates awareness and acceptance of the group's purposes and mission.

5. Transformational leaders in business motivate employees to perform so that they can satisfy the higher-order needs identified in Maslow's hierarchy.

6. Transformational leadership is positively related to some performance criteria in a very narrow range of organizations.

3. Answer the questions.

1. What does the exchange manner of task- and consideration-oriented behaviours mean?

2. What kind of behaviour does the active-reward approach to transactional leadership involve?

3. Is average performance the result of the active-reward approach or the passive-punishment approach?

4. What higher ideals and moral values do transformational leaders often appeal to?

5. Which transformational leader who had extremely negative effects on his followers is mentioned in the text?

6. Does the text give any examples of transformational leaders who had positive effects on their followers?

7. What characteristics distinguish transformational leaders from transactional leaders?

8. Is charisma the only condition for transformational leadership?

9. In what way do transformational leaders use inspiration?

10. What activities do intellectual stimulation and empowerment include?

11. What behaviours does individual consideration imply?

12. How can you characterize transformational leaders as agents of change?

13. What things does integrity mean for transformational leaders?

14. Is transformational leadership common in business and govern­ment?

15. Can trans­formational leadership be learned?

5. Write a summary of the text.