2 Leadership Styles: Transactional and Transformational

Transformational and Transactional Leadership The global market place that is today's business environment is highly competitive, and organizational survival is increasingly perceived as being dependent upon the efficiency and effectiveness of its leadership. Changes such as the online markets and workforce, alteration of ethical and legal issues, demographic and social trends (global 'graying' of the populace), technological advances and increased globalization mean that leaders of businesses must re-evaluate and alter their styles as necessary to bring about and maintain success.

Competitive advantage is the predominant goal of most business strategies - how to sustain it once achieved, and how to achieve it in the first place. Thus, understanding the effect(s) of leadership, its role in an organization, and how leadership style impacts an organization is fundamentally important. As stated by Ekuma (2014) the manner in which a company is directed affects its internal and external ethics as well as the morale, level of engagement by employees, and overall performance by those employees.

While effective management is comprised of a variety of factors, perhaps the most important is leadership. As discussed by Odumeru & Ifeanyi (2013), the general well being of nations and organizations is dependent upon, or at least highly influenced by leadership. Aspects of an organization, such as its communications, climate, and culture are all influenced indirectly and/or directly by the leadership at each of the different levels.

Indeed, a significant factor in terms of an organization's communication comes down to the style of leadership that is used and the overall 'tone' which this sets for the organization as a whole, and for employees at every level. Leadership Styles & Theory From the perspective of 'leadership theory', there are a variety of different leadership styles. Our focus in this work is initially to review four of these: (a) Situational Leadership;(b) Transactional Leadership;(c) Transformational Leadership; and (d) Multifactor Leadership.

From this analysis, we will then focus on the single 'best' leadership style. Situational Leadership: As discussed by McClesky (2014), situational leadership theory is based upon specific situations and 'situational response' as needed and as appropriate, rather than being a style that depends on a leader's personal charisma. The evolution of SLT, situational leadership theory, is derived from a focus upon task completion rather than an employee- or people-orientation.

Some have viewed this as a continuum with tasks at one end and employees/followers on the other and the role of the leader being to move along that continuum as necessary for the good of the organization. McClesky (2014) points out that Hershey and Blancard originally described SLT with an emphasis upon employee maturity as a factor in appropriate leadership style.

Other authors consider SLT to be a contingency and/or behavioral theory, with the net focus of the leader being either 'task' or 'people', depending upon the type of followers/employees involved in the given situation. Psychological and job maturity are considered as determining factors for appropriate style of leadership, based upon the training and educational level of the employees. As McClesky (2014) states, there are criticisms of SLT as well. Transformational Leadership: Charismatic and/or transformational leadership have been 'popular' since approximately the 1980s.

This approach has been viewed as highly effective and has been studied extensively. Transformational leadership is based upon creation of a 'bond' between followers and the leader. As well, such leadership is said to engender "empathy, compassion, sensitivity, relationship building, and innovation" (Rita-Men, 2014). Essentially, transformational leadership is an approach that works to convert employees into 'followers', and then appeal to what are called 'higher order needs' of these followers. Specifically, this involves inducing employee/followers to place organizational/group needs above their own personal needs.

In general, transformational leaders encourage development and confidence of the individual, engender trust, and are individuals who are genuinely interested in their employees' well-being. This is likely to include the fostering of closer interpersonal relationships with employee/followers, which results in better handling of both task and personal needs. Followers are generally empowered to make decisions by a transformational leader, who delegates significant authority and seeks to decrease dependence and increase independent action; this includes power sharing.

The communication style of the transformational leader is empowering, passionate, caring, visionary, and interactive (Rita-Men, 2014). To date, transformational leadership is the concept that has been most fully studied; it demonstrates a straight-forward and logical path to successful achievement of outcomes for both the organization and the employees as teams and individuals. Braun and colleagues (2013) conducted a study with respect to leadership styles, focusing on team performance, job satisfaction, team/supervisor trust, and the correlation of these factors with transformational leadership.

This multilevel analysis compared team and individual precepts of leaders and outcomes, focusing on both team performance and job satisfaction, with the operational hypothesis that transformational leadership would affect not only individuals but also teams. Results from the study by Braun et al. (2013) indicated that team performance, team satisfaction, and individual satisfaction were all positively related to transformational leadership, with trust in the team as well as trust in the supervisor/leader mediating the individual's perceptions. There was not a direct correlation to trust 'in the team', however.

This study showed that the role of the transformational leader was important in terms of both team performance and job satisfaction for teams and individuals. One actionable conclusion was that training in transformational leadership would be valuable at a variety of organizational levels, both for teams and individuals, to enhance skills of team supervisors (Braun, Peus, Weisweiler & Frey, 2013). Transactional Leadership: In contrast to transformational leadership, transactional leadership does not use the personal 'charisma' of the leader, but rather focuses on the task.

We can consider this to be on the 'task end' of the continuum discussed for situational leadership. The manner by which a transaction leader functions is to provide rewards and recognition for performance, to specify specific task expectations, to negotiate contracts, and to clarify responsibilities. As discussed by Liu et al.

(2011), transactional leaders provide rewards when followers successfully carry out assigned tasks; followers/employees must comply with expectations of the leader, and are not only provided with rewards but are aware of the potential for negative interactions such as discipline if they fail to achieve assigned goals. Thus, in contrast to the transformational leader, a transactional leader is more likely to operate according to the 'status quo' and less likely to institute or originate change.

The transactional leader is far less likely to exhibit a 'laissez-faire' attitude, but rather is closely attentive to any performance deviations as well. Thus the interaction process between the transactional leader and the follower/employee is more like an exchange or 'transaction', where positive job performance receives a reward and negative job performance receives discipline of some sort. There is less encouragement to surpass expectations, and no real motivation to innovate or explore positive organizational options.

Given the increasingly critical role of innovation for business success, and in particular innovation as a part of team work, this means that transactional leadership is less likely to help an organization to move forward. In the work of Liu and colleagues (2011), team innovation in the context of transactional leadership was explored: if 'emotional labor is high' then transactional leadership depressed innovation for the team; conversely if 'emotional labor was low', this leadership style had a positive effect.

The term 'emotional labor' specifically relates to jobs such as flight attendant, social worker, teacher, call center worker, store clerk, doctor, nurse, daycare worker, etc., where employees must interact with customers and/or clients. Thus, organizations for which emotional labor is an important component do not do as well when the leadership uses a transactional style. Furthermore, with a shift from manufacturing to service jobs, it is also obvious that a shift away from transactional leadership may be beneficial to organizations.

Clearly the 'carrot and stick' approach of transactional leadership can be effective, however it turns out to be far more situationally related than is the case for transformational leadership (Liu, Liu & Zeng, 2011). Comparative Evaluation of the Transactional & Transformational Leadership: Some theorists consider transactional leadership to be a different type of transformational leadership (Odumeru & Ifeanyi, 2013), while others feel that the two are distinct.

As discussed in the section on Corporate Social Responsibility (vide infra), recognizing that one is inspirational while the other is practical, reveals that each leadership style might be appropriate in different situations and settings, as well as with different groups of employees. Some suggest simply that transformational leadership enhances and/or augments transactional leadership, leading to higher employee achievement as well as job satisfaction. As discussed by Odumeru & Ifeanyi (2013), the transactional leader establishes 'transactions' with employees - a reward for loyalty and performance.

This is in contrast to transformational leaders, who inspire employees and may often elicit innovation and change as well as encouraging collaborative or group interactions that benefit the organization without providing direct benefits to the employees. Transactional leaders are more focused on tasks, performance, and outcomes, whereas transformational leaders are more focused on people, visionary attitudes, and innovation. Transactional Vs.

Transformational Responsive Leadership Proactive Leadership Works from within culture of organization Works to transform culture of organization Leader uses 'carrot & stick' to motivate employees Leader uses ideas/morals to motivate employees Appeals to employees' self-interests Appeals to employee's sense of group cohesiveness Management style: status quo dominates management makes 'exceptions' 'correct' performance is focus Management style: innovation & excellence dominate management works with individuals 'creativity' is focus Multifactor Leadership Theory: MLT, multifactor leadership theory (MLT), approaches leadership from the perspective that both transformational and transactional leadership are required to achieve goals; transformational leadership is seen as enhancing transactional leadership.

If we again consider the continuum between task and individual that was expressed in situational leadership, we see that MLT expects leadership not to simply act at one end of the continuum, on either task (transactional leadership) or individual (transformational leadership) but along the entire continuum as necessary. With MLT, leadership is seen to combine transactional, laissez-faire, and transformational modes of action.

The work of Hargis and colleagues (2011) focused on leadership as it affected different organizations, such as health care and military, as well as different outcomes, such as job performance, team cohesion, and team efficacy. The results demonstrated that transactional leadership was more relevant and useful in terms of effort and task performance (practical expression), while transformational leadership was more relevant and useful in terms of team efficacy and cohesion (interpersonal dynamics).

Thesis Statement: Transformational Leadership as the Most Appropriate Choice Although every leadership style has its merits, evidence suggests that transformational leadership is best overall because it exemplifies a leader who is engaged, inspirational, and proactive. The last 30 years have led to a consensus that transformational leadership is the most "studied and debated idea with the field of leadership." Transformational leadership encourages performance, morale and motivation of employees/followers through several different means.

Among these are the manner in which the transformational leader enhances the individual's sense of personal importance to the community/organization as well as providing an inspiration and role model. The transformational leader inspires employees/followers to take greater personal responsibility and ownership for their own performance; he/she enhances the individual and makes them personally stronger and helps to align them with the organizational goals (Odumeru & Ifeanyi, 2013). According to Warrilow (2012, as cited in, Odumeru & Ifeanyi, 2013), the transformational style of leadership has four components.

First, attention paid by the leader to the follower/employee: this is a mentor/coach relationship, including respect for and appreciation of the individual and their contribution(s). This attention to the individual provides inspiration and encouragement to grow and achieve. Second, the charisma or personal attributes of the leader: the manner in which the leader is a person to be admired and/or emulated, including holding and displaying convictions that encourage followers to reach for higher ideas themselves; the leader becomes a role model.

Third, intellectual encouragement of the follower/employee by the leader - this encourages, stimulates, and challenges the individual to become more innovative and creative, and is connected to a greater vision which the individual is encouraged to accept and seek to contribute to. Finally, fourth, motivation and inspiration - in this aspect the leader inspires and appeals to the 'higher sense' of the individual and encourages better achievements as well as enhancing current meaning.

Impact of training on psychological reactions of leaders Mason and colleagues (2014) addressed training as a factor in the behavior of leaders, with a focus on psychological factors involved in improvement of transformational leadership qualities following dedicated training. Some 56 respondents in a training program for transformational leadership participated by completion of questionnaires. These instruments assessed, pre -- and post-transformational leadership training, the individual's personal perspective, positive affect, and self-efficacy. The researchers followed 56 leaders taking part in a transformational leadership training program.

Questionnaires measured leaders' self-efficacy, positive affect, perspective taking, and transformational leadership behavior pre- and post-training. Outside assessment of these leaders, by peers, team members, and supervisors found that their skills in transformational leadership had increased. It was found that leaders whose perspective taking, self-efficacy, along with positive affect augmented over the training period additionally reported improvements in their individual transformational leadership behavior. In addition, leaders who exhibited increased positive affect were more likely to receive better transformational leadership behavior rankings from their supervisors, team members and peers.

The internal/psychological changes experienced by the leaders were correlated with their increased behavior as transformational leaders. Sociological Aspects of Leadership: Gender & Conflict; Group & Individual Effects In terms of gender in leadership, the data are conflicting. Some suggest that the leadership style of women is generally transformational, with a simultaneously higher use of the reward-aspect (contingency behavior) of transactional leadership than is typical of men.

However, research also indicates that female leaders are less likely to engender the charismatic effect than men, and are thus less likely to generate the outcomes more typical of male transformational leaders. To address this observation, Wolfram and Gratton (2014) proposed that female managers needed to act more 'male' in order to generate stronger effects upon their work groups, whereas a softer, more androgynous approach would benefit male managers.

However, the results of the study totally contradicted any benefit in androgyny for female leaders, particularly if they sought to 'inspire'; whereas it was indeed the case that certain 'female' attributes of leadership, such as more rewards based on results (contingency) and intellectual stimulation were viewed positively. In terms of workplace conflict, Zhang, Cao and Tjosvold (2011) propose that the effectiveness of transformational leadership can readily be seen in cases of conflict management.

Considering organizational conflict as related to team interactions and their performance, the work of Zhang and colleagues (2011) studied a large Chinese enterprise with 108 teams. In those cases where transformational leadership existed, the teams were cooperative rather than competitive particularly concerning management of conflict. Zhang and colleagues (2011) state that this is a vital mechanism via which transformational leadership increases team coordination and, consequently, acquires higher team performance.

The workplace concept of 'symmetrical communication' is one that is defined as 'employee-centered', including negotiation, openness and trust, credible interactions including reciprocity, and feedback as well as transparency. The work of Rita-Men (2014) addressed the correlation of transformational leadership with 'symmetrical internal communication', particularly with respect to public relations within an organization. In an online survey of employees in United States corporations, results from 400 respondents indicated that employee satisfaction was positively affected by transformational leadership.

The top employee preference for internal communication was emails with respect to internal changes, new decisions, events and/or policies; secondly, manager-interpersonal communications and general employee meetings were selected. It was generally shown that leader-follower communications were often information-rich, and/or face-to-face in the case of transformational leaders. Leadership Traits The internal energy required to be a leader comes from within the person, and apparently can come from any individual.

Character traits of leaders seem to vary, and it appears that almost any individual can become a leader provided that one realizes that leadership stems from what has been called 'self-realization' - the drive to be and/or become one's best. While some attribute change to the leader him/herself, others acknowledge that leadership is rather a matter of relational traits - the interaction between the leader and the other individuals involved in the given situation.

The change, whether organizational or societal, that a leader brings to bear is more a function of a collective interaction between the leader and the related followers. While all factors are not understood, it is clear that the relationship is one of nurturance such that growth and expansion of individuals can occur within the particular focus which the leader may bring to bear. As stated by Wills (2011), there is a 'strong collective energy and spirit', such that the leader and followers become an active team with a high-level of performance.

According to Ekuma (2014), transformational leadership provides a major contribution to organizations in terms of competitive advantage and effectiveness. This leadership model has been proven to enhance and maximize the potential of workers to achieve objectives. Both Chrysler and General Electric were rescued from bankruptcy by transformational leaders like Lee Iacocca and Jack Welch. Nations have also risen to prominence due to great leadership, because effective leaders make things happen. Leadership is defined herein as the process of goal achievement through influences of great leaders.

Indeed, the combination of transformational and transactional leadership results in improved organizational performance as well as higher levels of individual, group, and organizational effectiveness (Odumeru & Ifeanyi, 2013). Role of Ethics Ethics are important in every portion of daily life from personal to organizational and business. As well ethics and ethical leadership are critical parts of businesses as well as contributing to society. As stated by Derr (2012), ethics in business help the global community and protect it as well.

Ethics guide leadership to provide a positive model for organizations and thus for employees. For many individuals, leaders assist them to remain on the correct path. Ethics are an important component.