Transactional VS Transformational Leadership: What's Better?

You have just been given your first supervisor position and are excited about proving you deserve this great responsibility. Most likely, you have worked under different types of leaders in your life, borrowing something from each of them that helped get you to this place.

You want to do your best, but aren't sure which style is best suited for the position you are currently about to undertake. Of all the leadership styles, transactional vs transformational leadership is the most often discussed. We are going to examine these two leadership styles and see which one is better for the job you must accomplish. Let's get started.

Table of Contents

What is Transactional Leadership?

Transactional leadership is often the one we most think about. This type of leadership lays out all the rules for what is expected and how the task is to be carried out. You are given a specific reward for completing the task and often given some type of sanction if you fail.

This type of leadership can often be found in the military, manufacturing shops, and even schools and hospitals. First responders of all types work mainly under transactional leaders.

Transactional leadership leaves little to no room for creativity in doing your job because there is a set goal at hand and often a deadline to meet that goal. Transactional leadership is found in organizations that have a well-established work culture. Problems are taken care of only as they arise. The old saying “If it ain't broke, don't fix it.” applies to this type of leadership.

What is Transformational Leadership?

Transformational leadership is all about vision. It is seen in new or innovative areas where an established protocol is often non-existent. Think about social change organizations, rescue agencies, or the areas of computer game development. Leaders spend their energy and charisma motivating those they lead to become leaders in their own right.

Transformational leaders encourage free thought. They hold, share, and demonstrate core values and they exhibit trust in their followers to complete their tasks. Rewards are often internal, such as a sense of pride in doing a job well.

Transformational leaders are willing to give their followers the opportunity to learn and grow. Creativity is encouraged and the leader takes personal needs and wants into consideration. Think about the employer who will allow workers to set their own hours or work remotely when necessary. This type of leadership is highly dependent upon cooperation and communication.

Pros and Cons of Transactional Leadership

There are pros and cons with both types of leadership. That is why it is often beneficial to have a leader who can demonstrate both styles and knows when each is appropriate. Let's take a closer look at the advantages and disadvantages of transactional leadership.

Pros of Transactional Leadership

The pros of transactional leadership include:

Clear expectations. Workers know exactly what is expected of them and what will happen if they don't meet those expectations. They also know how their success will be rewarded.
Perfect for crisis situations. Knowing exact procedures allows for quicker action when the situation calls for it.
Tangible rewards for a job well done. Successful meeting of goals shows tangible rewards.
Shows results quickly. Goals are met quickly and efficiently without everyone second-guessing what is needed.
Everyone knows their role. Leaders are in charge and everyone else knows exactly where they fit into the scheme of things and what their individual tasks are.

Cons of Transactional Leadership

Disadvantages of transactional leadership include:

Unyielding leadership. Leaders have the potential of allowing the power to go to their heads and become dictatorial in nature.
Pressure to perform. If expectations aren't met, there is the chance of losing your position or experiencing other sanctions.
Personal needs are not accounted for. Workers must meet company needs while rearranging their own wants and needs around expectations.

Pros and Cons of Transformational Leadership

Transformational leadership is more laid-back in its approach, which can be both a good and a bad thing, depending on the circumstances.

Pros of Transformational Leadership

The advantages of transformational leadership include:

There is a lot of room for growth. Followers are being trained to become leaders themselves.
Creativity is highly encouraged. Free-thinkers are given the chance to show what they are capable of doing. With more people providing input, the chances of success are often increased.
Individual needs are provided for. The individual is considered and tasks are designed to meet the needs of those who perform them.
Issues are fixed before they become problems. Potential issues are often anticipated and can be avoided.
There's less pressure to meet deadlines. Without time constraints, there is less pressure to meet deadlines, so stress can be reduced.

Cons of Transformational Leadership

Just as with other leadership styles, there are also disadvantages of transformational leadership. These include:

There's a potential for burnout. People with a high internal drive may not take breaks and can burn out quickly by doing too much at once.
There are fewer checks and balances. With less teamwork, there is a potential for the tasks to be unevenly distributed and one person can potentially disregard their contribution.
Lack of focus can become a problem. Workers need to have the type of personality that keeps them internally motivated or they can lose track of the bigger picture.

To Sum Up the Pros and Cons…

The infographic below will give you a general overview of the pros and cons of both transactional and transformational leadership.

transactional vs transformational leadership examples | transactional vs transformational leadership advantages and disadvantages | transactional leadership examples

How to Decide Between Transactional Leadership and Transformational Leadership

Creating goals for yourself should include goals on how you want your leadership to play out in terms of getting things done. Examine the situation and your intended outcome carefully before choosing which style is needed. The following should give you a general guideline.

Focus on Transactional Leadership If:

You have a tight deadline or must reach a given quota. If the sole goal is to get the job done, and done quickly, set the goal and leave no room for variation.
Rules can't be altered and must be followed without question. If the job is dependent upon a certain method and altering the procedure could cause chaos, you need strict guidelines.
Expectations are clearly laid out. You know what you need and you let everyone know exactly what is expected and what the rewards for completion are.
Teamwork is necessary. Everyone working as a team with each member having a specific task is necessary for smooth operation and a specific outcome.

Focus on Transformational Leadership If:

You need a variety of ideas. If the project is a visionary one or one that can be approached from many different angles, this works best.
People's feelings and needs are essential, or preparing people to become leaders themselves is part of your ultimate goal.
You want to inspire learning new things. Use it when you want to encourage learning new things or improving current skills.
Focus is on the big picture. This is best used when your ultimate goal requires time, patience, and innovation. The individual steps aren't as important as the final outcome.

Final Thoughts on Transactional vs Transformational Leadership

Do you want to be a boss or a leader? Deciding between transactional and transformational leadership styles all boils down to what the situation calls for. You’ve gotten this far, so you should have the tools needed to figure out what’s going to work for you… and what won’t.

In most cases, any individual workplace can greatly benefit from a leader who knows when each method is necessary. A person who can utilize both styles appropriately is someone who has great potential to not only rise to the top, but also bring their followers along with them.

Check out these articles on the characteristics of a good leader and our roundup of the best leadership quotes for more useful information and inspiration as you climb your way up the ladder to success.