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Transactional vs Transformational Leadership: Which Style Suits You?

Transactional versus transformational leadership: this is a great debate. Which one is better? Should you be a transformative or a transactional leader? In short: it depends on your team. There are several key traits to each leadership style. This article will take a look at the key traits of transactional leadership and transformative leadership. By the end, you should, hopefully, know which style is best suited to you and can help take your team forward. Let’s start with transactional leadership.

What is Transactional Leadership?

transactional leadership

This is probably the more common of these two types of leadership. Put simply, transactional leaders use something like a reward and punishment system. You put a rewards system in place for when your team does well, a bonus system, for example. But here, ‘punishment’ does not necessarily mean punishment.

When one of your team makes a mistake, you walk them through what went wrong and how a repeat of that mistake can be avoided. This form of ‘punishment’ is far more effective in building a strong team than a simple reprimand is. 

Alongside this broad form of ‘reward and punishment’, transactional leaders also have several common traits. 

Transactional leaders tend to work towards more short-term goals. They put a clear emphasis on self-motivation for their team with a clearly defined rewards system and incentives for reaching goals quickly.

Transactional leadership also has another added advantage in that it ensures that there are clear team structures and hierarchies in place. All team members know where they stand and what their duties include. As it is reliant on structures, transactional leadership is widely scalable to teams of all sizes - be they small teams of four or five through to larger teams of twenty or more. 

Another major trait in great transactional leaders - and arguably the most important of all - is that they drive success by inspiring their team, engaging with them and making sure that goals are clearly defined, set out and achievable for their team. 

Transactional leadership is a great style of leadership to use in a team that works from project to project or sets smaller target goals en route to a major goal. Mid-sized teams, in particular, can benefit from this style as its clearly defined structures and hierarchies mean that there is a clear chain of command up to the manager as well as a clear path to achieving their team’s goals.

Just as transactional leadership is great for shorter-term goals, transformational leadership is great for longer-term goals.

What is Transformational Leadership?

transformational leadership

Transformational leadership can suit most teams, but works particularly well in more creative environments and in teams with larger numbers of young people and interns. 

Transformational leadership is more collectivist than transactional leadership as it requires managers to take a more whole-team approach to problem-solving and goal-setting. Managers normally have a broad end goal in mind. They then sit down with their team and work out how to break it down into manageable pieces with them. The team then generally goes away with a clear, self-crafted idea of what is required of them.

Under transformational leadership, goals can be made more bespoke so that they complement the skills of each team member as well as potentially helping to upskill them. 

Great transformational leaders have some common traits.

The most common trait is that transformational leaders know how to keep their entire team motivated and how to positively develop the skills of each team member. Unsurprisingly, this means that a great transformational leader has to know their team inside and out.

This is where the next major trait of transformational leaders comes into play: brilliant emotional intelligence. Understanding each member of a medium-sized team takes time, patience and a degree of trial and error.

As well as knowing their team extremely well, transformational leaders also lead by example. They are open and candid about their mistakes and place an important emphasis on their own personal development as well as that of their team. Doing this successfully is achieved through another key trait of transformational leaders: open communication. 

All great leaders have fantastic communication skills, but transformational leaders need to also be open in their style, allowing for coaching and mentorship within their team - and empowering their team to take ownership of their development, their mistakes and their achievements. 

Which Style is Right for Your Team?

This question is individual to each manager and their team. Take some time to think about your team and the goals you have set them or are wanting to set them. Think about the strengths and qualities of your team. What do they excel at? Where is there scope for development? Where do you as a manager want to develop?

Taking the time to think about the answers to these questions can guide your next steps. Once you know what your team needs, you can answer the question: am I a transactional leader or a transformational leader?

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About the Author

Luke Sandford is a writer and content producer at Educations Media Group. Currently based in Lund, he is originally from the UK and graduated from Goldsmiths College, University of London in 2018 with a BA in Education. He has since written for several outlets and has worked as an English teacher, both at home and abroad. Luke's passion for travelling and experiencing new cultures directly impacts his work as he seeks to create engaging, informative and useful content for a wide audience.

Last updated: 02 Oct 2020

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