Comparing Transformational and Transactional Leadership
For this research paper, I wanted to study the differences between transformational leadership and transactional leadership. “Transformation has become a buzzword in the business world and its meaning has been diluted” (J. King, personal communication, March 2018) and I wanted to distinguish these two different kinds of leadership modalities which often become convoluted and collapsed in the culture. My hope is that by distinguishing these two leadership modalities, readers will be able to observe and locate their own styles within these two categories and bring some consciousness to what kind of leadership is called for at any given time.
As someone who has a decade’s worth of experience coaching others through transformational methodologies, I have found it can sometimes be challenging to explain the field of transformational leadership to those who have not experienced it for themselves. I also want to make clear that this paper is not intended to teach people transformational leadership or transactional leadership as both methods require different means of learning. “Transactional leadership requires learning management tools and really isn’t leadership. People who are good transactional leaders are really doing management on steroids” (J. King, personal communication, March 2018). Furthermore, “transformational leadership is not something that can be learned informatively and when transformational leadership is learned, it becomes an authentic natural self-expression” (J. King, personal communication, March 2018).
“The concept of transactional leadership was first mentioned by Max Weber in his socio-economic considerations of the organization.” (Nikezić, Purić, & Purić, 2012, p. 285). The term transformational leadership was first described by James Downton (1973) in his book Rebel Leadership. However, it was James MacGregor Burns (1978) who distinguished transactional leadership from transformational leadership in his book Leadership. Burns (1978) did this by first stating what leadership is not. Burns (1978) says that “some define leadership as leaders making followers do what followers would not otherwise do, or as leaders making followers do what the leaders want them to do” (p. 19). Burns (1978) then goes on to define leadership as “leaders inducing followers to act for certain goals that represent the values and the motivations—the wants and needs, the aspirations and expectations—of both leaders and followers” (p.19). From here Burns (1978) writes something historic where he distinguishes for the first time the difference between transactional and transformational leadership. Burns (1978) defines transactional leadership as “when one person takes the initiative in making contact with others for the purpose of an exchange of valued things. The exchange could be economic or political or psychological in nature: a swap of goods or of one good for money; a trading of votes between candidate and citizen or between legislators; hospitality to another person in exchange for willingness to listen to one’s troubles. Each party to the bargain is conscious of the power resources and attitudes of the other. Each person recognizes the other as a person. Their purposes are related, at least to the extent that the purposes stand within the bargaining process and can be advanced by maintaining that process. But beyond this the relationship does not go. The bargainers have no enduring purpose that holds them together; hence they may go their separate ways. A leadership act took place, but it was not one that binds leader and follower together in a mutual and continuing pursuit of a higher purpose” (p. 19). Burns (1978) then distinguishes transformational leadership from transactional leadership in which he defined the term as “when one or more persons engage with others in such a way that leaders and followers raise one another to higher levels of motivation and morality. Their purposes, which might have started out as separate but related, as in the case of transactional leadership, become fused. Power bases are linked not as counterweights but as mutual support for common purpose” (p. 20).
I am a graduate of the Landmark Forum which is the course that started my own journey of learning transformational leadership. One of the things that commonly gets talked about in those circles is that if Adolf Hitler had done the Landmark Forum, he would have never committed genocide. Burns (1978) validates the view that transformational leadership brings people to a more moral place authentically (p. 20). King (personal communication, March 2018) notes that “transformational leadership empowers others to operate from their higher self and is the natural space for human beings to operate in when they are not in survival.” Burns (1978) uses the example of Gandhi to describe transformational leadership (p. 20) when he talks about how he “aroused and elevated the hopes and demands of millions of Indians and whose life and personality were enhanced in the process” (p. 20). Burns (1978) describes this kind of leadership as one where “the leaders throw themselves into a relationship with followers who will feel ‘elevated’ by it and often become more active themselves…” (p. 20).
When I coach people, one of the things that I say when coaching others in building social and community-based projects is that their self-expression is a function of the listening of others. When people build projects and are trained in transformational leadership to empower their environment, one of the natural byproducts is that the way people hear them shifts and in the process it allows for a more expanded sense of self-expression. Burns (1978) validates this principle (p. 20).
Burns (1978) uses an example of politicians spreading a message to gain support as an example of transactional leadership (p. 274). Nobody is being empowered and there is simply a commoditized relationship between the two or more parties exchanging value. This shows up in environments where people are simply doing what they’re told and there’s no need to develop trust or any kind of actual relationship (Judge & Piccolo, 2004, p. 755).
One of the insights I had from my research is that transformational leadership is rooted in values-based relationships and transactional leadership is rooted in commoditized relationships. Bass (1990) expands upon the work of Burns (1978) in an article he wrote called “From Transactional to Transformational Leadership: Learning to Share the Vision”. Unlike transactional leadership which is commoditized in nature (Burns, 1978), transformational leadership allows for people coming together around something greater than themselves and where the followers feel a sense of a larger mission and vision (Bass, 1990, p. 21).
One of the things that were clearly missing from the work of Burns (1978) is the concept of morality. “Burns originally believed that the transforming leader is a moral leader because the ultimate products of transformational leadership are higher ethical standards and more ethical performance. However, his definition didn’t account for the fact that some leaders can use transformational strategies to reach immoral ends. A leader can act as a role model, provide intellectual stimulation, and be passionate about a cause. Yet the end products of her or his efforts can be evil. Hitler had a clear vision for Germany but left a trail of unprecedented death and destruction” (Ciulla, Uhl-Biel & Werhane, 2013). Bass and Steidlmeier (1999) rectified this dilemma by coining and defining pseudo-transformational leadership (p. 181). Bass and Steidlmeier (1999) argued that “to be truly transformational, leadership must be grounded in moral foundations” (p. 181). Bass and Steidlmeier (1999) make the connection that “authentic transformational leadership must rest on a moral foundation of legitimate values” (p. 181).
In my experience, being in environments that elicit transformational leadership feels more effective and empowering than those that are purely transactional. However, I was curious if this was possible to quantify and decided to research ways to measure outcomes between transactional and transformational leadership. It turns out there have been numerous studies conducted to test the effectiveness of transformational and transactional leadership.
Judge and Piccolo (2004) attempted to measure the impact that transformational and transactional leadership had on job performance and their results failed to come up with any definitive conclusion (pp. 755-765). They did concede that more research was needed to further understand the relationship between transformational and transactional leadership but it was clear that they weren’t mutually exclusive in nature (Jude & Piccolo, 2004, p. 765). This conclusion validates the model of the cultural map (J. King, personal interview, March 2018) which makes the implication that transformational leadership is more effective in cultures where values-based triadic relationships are in place and is less effective in the first three stages of the cultural map where the interpersonal relationship structures lead to more survival based outcomes and less social outcomes rooted in common values (John King, personal interview, March 2018). There is less space for transformational leadership to exist in these structures (John King, personal interview) and the study done by Judge and Piccolo (2004) didn’t take this variable into account which I believe is the source of their inconclusive data.
Nazim and Mahmood (2016) conducted a study in which they discovered that there was a clear correlation between effective leadership and job satisfaction (pp. 18-22). What was interesting is that the study showed correlations between both effective transactional leadership and effective transformational leadership (Nazim & Mahmood, 2016, p. 21). This validates the widely held view that transactional and transformational leadership go hand in hand and aren’t mutually exclusive (Bass, 1990, p. 53).
DeGroot, Kiker, & Cross (2000) showed that charismatic leadership, which Conger (1999) aligned with transformational leadership (pp. 145-179), had a strong correlation to group performance but only a minor correlation to individual performance (pp. 356-371). I believe the reason for this could be correlated to the cultural map (John King, personal interview, March 2018) but more research would be needed to fully understand that.
My interest in investigating the difference between transformational and transactional leadership came from my own background in transformational coaching where I have coached thousands in the art of transformational leadership. However, my lack of academic understanding in the field opened up a lot of ideas for me. From exploring the difference between these two leadership types, there were a few insights I made. The first is that it seems to me that Bass (1990) is correct in his view that both transactional and transformational leadership aren’t mutually exclusive (p. 53). From the studies mentioned above which were based off previous research over the past few decades, it does seem that transformational leadership is more impactful to the performance of organizations than a high-quality level of transactional leadership alone. However, a common theme in the research is the lack of clarity as to why certain forms of leadership work better in certain situations. Judge & Piccolo (2004) even make the suggestion for further research in studying the relationship between transformational leadership and contingent rewards which is akin to transactional leadership (p. 765).
It is my view that what is missing from the vast majority of current academic research is the structural component of organizations. One thing that I failed to find in my research is the understanding that talking about followers in relationship to leaders implies that leadership comes from the individual. However, I would make the argument that leadership is granted by permission and management is granted by authority. It’s the followers who give ontological being to leadership and much of what is discussed around both transformational and transactional leadership is collapsed into conversations around management. When being authentic or charismatic degrades into a tactic, it becomes inauthentic in it of itself. The vast majority of what is discussed around leadership is based on what the leader is doing but not who the leader is being. Werner Erhard (2018) makes the argument that leadership is an ontological phenomenon (p. 4). Erhard (2018) notes that “while ontology as a general subject is concerned with the being of anything, here we are concerned with the ontology of human beings (the nature and function of being for human beings). Specifically we are concerned with the ontology of leader and leadership (the nature and function of being for a leader and the actions of effective leadership). Who one is being when being a leader shapes one’s perceptions, emotions, creative imagination, thinking, planning, and consequently one’s actions in the exercise of leadership” (p. 4). This ontological realm of leadership is mostly missing from academic texts. Furthermore, John King discovered that this ontological phenomenon is influenced by our social structure within any given environment (personal interview, March 2018).
I believe that further research on transactional and transformational leadership from both an ontological lens and a structural lens would bring clarity to much of the current research being done on this topic today.
References
Bass, B.M. (1990). From transactional to transformational leadership: Learning to share the vision. Organizational Dynamics, 18(3), 19-31. doi: 10.1016/0090-2616(90)90061-S
Bass, B.M. (1990) Bass and Stodgill’s handbook of leadership. New York, NY: Free Press, p. 53.
Bass, B. M., & Steidlmeier, P. (1999). Ethics, character, and authentic transformational leadership behavior. Leadership Quarterly, 10(2), pp. 181-217. doi: 10.1016/S1048-9843(99)00016-8
Burns, J.M. (1978). Leadership. New York, NY: Harper & Row.
Ciulla, J., Uhl-Biel, M. & Werhane, P. (2013). Leadership ethics. Thousand Oaks, CA: SAGE.
Conger, J. A. (1999). Charismatic and transformational leadership in organizations: An insider’s perspective on these developing streams of research. Leadership Quarterly, 10(2), 145-179. doi: 10.1016/S1048-9843(99)00012-0
DeGroot, T., Kiker, D. S., & Cross, T. C. (2000). A meta-analysis to review organizational outcomes related to charismatic leadership. Canadian Journal Of Administrative Sciences, 17(4), 356-371. doi: 10.1111/j.1936-4490.2000.tb00234.x
Downton, J.V. (1973). Rebel leadership: Commitment and charisma in a revolutionary process. New York: Free Press.
Erhard, W., Jensen, M.C., Zaffron, S. & Echeverria, J., (January 6, 2018) Course Materials for: ‘Being a Leader and the Effective Exercise of Leadership: An Ontological/Phenomenological Model’. Harvard Business School NOM Working Paper; 9(38), 3-4. doi: 10.2139/ssrn.1263835
Judge, T.A. & Piccolo, R.F. (2004). Transformational and transactional leadership: A meta-analytic test of their relative validity. Journal of Applied Psychology, 89(5), 755-768. doi: 10.1037/0021-9010.89.5.755
King, J. (2018, March). Personal Interview.
Nazim, F. and Mahmood, A. (2016). Principals’ Transformational and Transactional Leadership Style and Job Satisfaction of College Teachers. Journal of Education and Practice, 7(34), pp.18-22. Retrieved from: http://www.iiste.org/
Nikezić, S., Purić, S., & Purić, J. (2012). Transactional and transformational leadership: Development through changes. International Journal for Quality Research, 6(3), 285-296. Retrieved from: http://www.ijqr.net