Transformational and Transactional Leadership

Abstract

Transformational and transactional leadership, identified in the 1970s, characterize two of the most prominent types of leadership seen in modern groups and organizations. Understanding the roles that transformational and transactional leadership play in groups and organizations is vital for all those interested in the sociology of social interaction. This article explores the sociology of transformational and transactional leadership in four parts: an overview of the basic principles of transformational and transactional leadership; a review of the main theories of group and organizational leadership; a description of tools for measuring the effectiveness of transformational and transactional leaders; and a discussion of the effects that different leadership styles have on groups and organizations.

Overview

Leadership refers to the process by which one individual works to influence other group members to work toward the achievement of group goals (Greenberg & Baron, 1997). Sociologists study leadership in small group settings, formal organizations, and social movements. Small group leadership is called "micro leadership." Leadership of large formal organizations is called "macro leadership." Leadership of social movements is called "meta leadership" (Bass, 1999). Social interaction in groups and organizations is affected by the type and character of leadership found in the group or organization. Leaders in organizations and groups may or may not be officially chosen or appointed. Leadership in groups and organizations may be formal or informal. Formal leadership refers to the leadership role that comes from holding a ranked position in management. Informal leadership, also called non-sanctioned leadership, refers to the ability to influence that exists outside of the formal organizational structure (Hearda-Rapp, 1998).

Sociologists classify different types of leadership. Each different type of leadership affects groups and organizations in different ways. This article discusses transformational and transactional leadership. These two types of leadership, identified in the 1970s, characterize two of the most prominent types of leadership seen in modern groups and organizations. Understanding the role that transformational and transactional leadership play in groups and organizations is vital for all those interested in the sociology of social interaction. This article explores the sociology of transformational and transactional leadership in four parts:

• An overview of the basic principles of transformational and transactional leadership;
• A review of the main theories of group and organizational leadership;
• A description of tools for measuring transformational and transactional leaders; and
• A discussion of the effects that different leadership styles have on groups and organizations.

The Basic Principles of Transformational & Transactional Leadership. The current predominant theory of leadership classifies leaders into two categories: transformational and transactional leaders. Bernard Bass, in 1985, developed the transformational/transactional model of leadership. Bass based his model on the work of James McGregor Burns, who originated the concepts of transactional and transforming leadership in the 1970s. Burns argued that every leadership process can be classified as either transactional or transforming leadership. Bass's model includes two predominant modes of leadership, transactional and transformational leadership, along with a third less common mode of leadership called laissez-faire leadership. In Bass's model, transactional leadership refers to a leadership style in which the leader exchanges rewards for subordinate effort. Transformational leadership refers to a leadership style in which the leader encourages his or her subordinates to achieve higher and higher levels of performance for the sake of the organization. Laissez-faire leadership refers to a type of non-leadership in which leaders make no efforts to meet subordinate needs and do not react to and may withdraw from subordinate deviance.

Transactional leadership is considered a traditional approach to leadership studies, while transformational leadership is considered a new leadership approach. In Bass's transformational/transactional model of leadership, transactional leaders use the following techniques for achieving their goals: contingent reward, active management by expectation, and passive management by exception. Contingent reward refers to leader-follower relationships in which rewards and punishments are tied to performance. Active management by expectation refers to scenarios in which leaders observe, correct, and punish any deviance in subordinate behavior. Passive management, by exception, refers to leaders who wait for, but do not seek out, subordinate deviance.

Transactional leaders refer to leaders who motivate their followers in the direction of the stated goals by clarifying work role and task requirements. Transactional leadership is a common management style that involves a chain of command and defined structure in which subordinates relinquish authority to their supervisors. In transactional leadership systems, subordinates are expected to do what their supervisor tells them to do. People are motivated by reward and punishment, such as increased pay or termination.

Transformational leaders exhibit established behaviors, including embracing a large-scale vision of the organization, exerting great effort in the achievement of goals, and performing beyond specified expectations. Transformational leadership qualities are considered to be learned and developed behaviors. In Bass's transformational/transactional model of leadership, transformational leaders use the following techniques for achieving their goals: attributed charisma, idealized influence, inspiration, intellectual stimulation, and individualized consideration. Attributed charisma refers to a leader's self-confidence and assertiveness in inspiring trust and respect in their subordinates. Idealized influence refers to a respected leader's effort to promote his beliefs and influence subordinates. Inspiration refers to a leader's effort to convey belief in and high expectations of subordinates. Intellectual stimulation refers to a leader's effort to encourage creative and proactive problem-solving approaches. Individualized consideration refers to a leader's efforts to promote interpersonal connection with each individual subordinate (Doherty, 1997).

Transformational leaders refer to leaders who look beyond their own interests to act for the good of the organization. Transformational leaders tend to share similar traits, characteristics, and behaviors. For example, transformational leaders exhibit vision, staff development, supportive leadership, empowerment, innovative thinking, and charisma. Transformational leaders give their followers a cogent and inspiring vision of the future, treat them as individuals and encourage their development, give them encouragement and recognition, promote trust and cooperation among them, help them develop novel approaches to old problems, and instill in them pride and respect for one another and for their work. Research shows that followers of transformational leaders tend to be more productive and satisfied workers than followers of transactional leaders (Carless, 2000).

Theories of Group & Organizational Leadership. Interest in group and organizational leadership began as a result of twentieth-century society's concern for social relations, motivation, and employee productivity. Sociologists began to study human social interaction and relations to explain motivation. The field of organizational behavior, an interdisciplinary field including sociology, psychology, and business management, sought to understand how leaders motivate their followers. The study of group and organizational leadership changed significantly during the twentieth century. In the 1930s, trait theories of leadership predominated; in the 1950s, behavior theories of leadership were predominant. In the 1970s, situational or contingency theories of leadership were popular. And, in the late 1970s, the "new leadership" perspective emerged. The new leadership perspective, characterized by transformational and transactional leadership, is concerned with leadership that is charismatic, visionary, and transformational.

Trait theories of leadership identify the social, physical, attitudinal, and intellectual traits that characterize leaders and separate leaders from non-leaders. In the early twentieth century, research in organizational leadership was driven by the belief that the traits of effective leaders could be identified, defined, and measured. Research on leadership traits searched for universal personality traits that leaders possessed and non-leaders lacked. The trait theories of leadership are built upon the “great man” or “great person” theory. The great person theory refers to the idea that the fate of societies, as well as groups and organizations, is in the hands of powerful individuals who reached their positions by strength of great and special personality and intellect. Despite significant research efforts studying individual leaders, no universal traits were discovered. Research on trait theories of leadership was largely abandoned in the late 1940s (Sudbrack & Trombley, 2007).

The behavioral approach to leadership identifies, defines, and generalizes how the behavior of effective leaders differs from less effective leaders or followers. In the 1950s, behavioral studies of group and organizational behavior attempted to identify the consistent patterns between leadership styles and work performance. Behavioral studies of organizational behavior, as an exclusive focus, were largely abandoned in the 1960s as they lacked an explanation for behavioral variation across different contexts and settings. Behavioral studies could not account for situational factors that promoted leadership success or failure. Behavioral studies could not explain the significance and effect of context on group and organizational leadership (Biggs, 1966).

Contingency theories of leadership are based upon the idea that the most effective style of leadership will always be determined by the factors of membership and setting. The four most common contingency theories of organizational leadership include: Fiedler's contingency theory, the situational leadership model, the normative decision model, and the path-goal theory. The Fiedler contingency model argues that group performance is a result of the match between the leader's interaction style and the degree to which the situation or context gives control to the leader. The situational leadership model explains how to match leadership style to the readiness of group members to follow directions. Readiness refers to the degree to which an individual group member possesses the ability or inclination to accomplish a task established by the leader. The normative decision model defines leadership as a decision-making process in which the leaders examine key factors to determine which decision-making style will be the most effective. The path-goal theory of leadership focuses on what a leader must do to achieve high morale and high productivity in a certain situation. This model presents different leadership styles that may be used in different situations: directive leadership, supportive leadership, participative leadership, and achievement-oriented leadership (Saha, 1979).

The theory of transformational and transactional leadership emerged in the 1970s in response to the traditional theories of leadership, namely trait, behavior, and contingency theories, which dominated leadership studies through much of the twentieth century. In 1978, James McGregor Burns developed the concepts of transactional and transforming leadership. Burns's work broadened the concept of a leader and developed a way to identify and recognize exceptional leadership. In 1985, Bernard Bass further developed these concepts into his transactional/transformational model of leadership. Both Burns and Bass argued that transactional and transforming or transformational leadership represent distinct types of leadership rather than opposites. Bass developed his model to make up for the problems he perceived to be inherent in traditional leadership theories. Bass believed that traditional leadership theories could not explain the motivation that workers may feel when they are part of an effective organization. In addition, critics of traditional theories of leadership have argued that early theories are more closely related to management rather than leadership practices. The identification of the transforming leader changed previously held beliefs about the character and limits of leadership behavior and leader-follower relationships. The evolution of leadership theories has been tied to social, political, industrial, and military changes in society (Doherty & Danylchuk, 1996).

Applications

Measuring Transformational & Transactional Leadership. Sociologists measure and assess leadership styles. In 1991, Bass and Avolio developed the Multifactor Leadership Questionnaire (MLQ) to facilitate the study and measurement of transactional and transformational leadership. The Multifactor Leadership Questionnaire is used to measure the levels of leadership quality and performance. The MLQ includes the following categories: attributed charisma, idealized influence, inspiration, intellectual stimulation, individualized consideration, contingent reward, active management by expectation, and passive management by exception. Measuring transformational and transactional leadership is complicated by the qualitative, subjective, and emotional nature of leader-follower relationships (Bass, 1999).

Bass and Avolio's Multifactor Leadership Questionnaire Form 5X includes seventy-eight items that reflect eight leadership and one non-leadership factors in their theoretical framework. The MLQ requires that subordinates, otherwise known as non-leaders or followers, assess how many times they have observed their leaders exhibiting each of the seventy-eight traits or behaviors. The data from the Multifactor Leadership Questionnaire are used to measure and assess the leader's frequency of times that the leader inspires subordinates to exert extra effort, followers’ satisfaction with leadership, and perceived leader effectiveness in meeting the needs of subordinates and the organization in general. Organizations use the MLQ to create leadership profiles (Doherty & Danylchuk, 1996).

Social scientists Doherty and Danylchuk used the Multifactor Leadership Questionnaire to measure transformational and transactional leadership in interuniversity athletics management. The researchers sought to use Bass's transformational/transactional leadership model to study how leaders' behavior can impact subordinates' opinion of their leadership abilities. Researchers asked head coaches from Ontario universities to evaluate their athletic administrators using the Multifactor Leadership Questionnaire Form 5X. They found that the coaches tended to have more positive opinions about administrators who practiced transformational leadership than administrators who practiced transactional leadership (Doherty & Danylchuk, 1996).

Issues

The Organizational Effects of Different Leadership Styles. Different leadership styles, notably transformational and transactional leadership, have different effects on the dynamics of groups and organizations. Sociologists study the results of different leadership styles. Transformational leaders are generally perceived to be more effective than transactional or laissez-faire leaders. Research has demonstrated that transformational leaders are more effective than other types of leaders in business, medical, industrial, educational, and military environments.

Transformational leaders are concerned with the motivation, morale, and morals of their followers, while transactional leaders focus on the self-interest of followers. Transformational leaders help followers move past their immediate self-interest to embrace concern for the organization. Transformational leadership promotes employee satisfaction and flexibility. Transformational leadership promotes positivity, increasing employees' personal resources and improving work engagement (Wang et al. 2017), and increases team output (Choi et al., 2017). Transformational leadership characterizes the teams to which they belong. Transformational work teams tend to be high-performing, empowered, motivated, and flexible. Transformational leaders are affected by their moral and personal development, as well as their training and education. Transformational leaders are found to have mature moral and emotional development.

In the knowledge economy, transformational leadership may foster employees' knowledge sharing behaviors within their organization (Le et al., 2017 cited in Le et al., 2018). It also appears to build employees' self-efficacy and optimism, contributing to greater knowledge collecting and sharing (Le et al, 2018).

Organizational leaders interested in becoming transformational leaders or in enhancing their transformational qualities can engage in training seminars. A leader's perceived obstacles to change are reviewed, and training exercises are developed and followed. In contrast to the success and positive feelings generated from transformational leadership, transactional leadership tends to foster feelings of self-protection, selfishness, and greed among followers. Ultimately, leaders shape their organizational culture. Transformational leaders are more likely than transactional leaders to promote organizational renewal through policies that facilitate creative problem solving, risk taking, and experimentation. Research suggests that women tend to be transformational leaders more often than men. Transformational and transactional leadership has been observed across cultures and languages (Bass, 1999).

In addition to transformational and transactional leadership, sociologists study other types of leadership (including charismatic leadership, participative leadership, situational leadership, quiet leadership, and servant leadership) to discover their effects on groups and organizations. Each of these different leadership types and styles has a different effect on the groups and organizations they lead. Charismatic leaders influence followers with personality and charm. Charismatic leaders emphasize personal relationships, group unity, and the needs and moods of individuals and groups. Participative leadership is a democratic style in which leaders and managers consult other people during the decision-making process; research suggests such shared leadership may be better suited to team organization and planning activities than increasing output (Choi et al., 2017). Quiet leaders lead by example rather than by force of will, ego, or personality. Servant leadership is characterized by leaders who serve their followers and puts the well-being of followers and the organization before their own. Situational leadership is determined by the specific situation at hand and by the specific qualities of leaders and followers. Ultimately, leadership styles within groups and organizations vary significantly as well as influence the morale and morals of their leaders (Jung & Sosik, 2006).

Followers. In addition to leadership style, the character and number of followers affect groups and organizations. All leaders have followers. Followers refer to the people willing to agree with the instructions and objectives of their leader. A follower refers to an employee or group member who is not currently in a leadership role. Followers tend to exhibit compliance or a willingness to follow orders. Effective followers exhibit many of the same traits required of effective leaders such as cognitive intelligence, emotional intelligence, personal motivation, higher moral reasoning, and communication skills. In addition to these, positive, effective followers share four essential qualities:

• Self-management refers to the ability to work well without close supervision.
• Commitment refers to caring strongly for something beyond oneself, such as an organization, cause, or value.
• Competence refers to mastering skills useful to the larger group or organization.
• Courage refers to the act of independent thinkers defending their beliefs.

In the final analysis, leadership style and follower characteristics determine the culture and success of a group or organization (Montesino, 2003).

Conclusion

Leadership is a social process through which one influences the behavior of others with intelligence and personality rather than threat or punishment. Effective leadership contributes to organizational productivity and influences group dynamics. Leaders vary in their style, type, and effectiveness. This article explored transformational and transactional leadership.

Terms & Concepts

Followers: The people willing to agree with the instructions and objectives of their leader.

Formal Leadership: The leadership role that comes from holding a ranked position in management.

Group: Any number of people who interact with each other and share common expectations about each other's behavior.

Informal Leadership: The ability to influence, which exists outside of the formal organizational structure.

Leadership: The process by which one individual works to influence other group members to work toward the achievement of group goals.

Laissez-Faire Leadership: A type of non-leadership in which leaders make no efforts to meet subordinate needs and do not react to and may withdraw from subordinate deviance.

Multifactor Leadership Questionnaire: A research tool developed by Bass and Avolio used to measure and assess the effectiveness of transformational and transactional leaders.

Organization: Social arrangement, separated from society as a whole, which pursues collective goals and controls their own performance.

Society: A group of individuals united by values, norms, culture, or affiliation.

Sociology: The scientific study of human social behavior, human association, and the results of social activities.

Transactional Leadership: A leadership style in which the leader exchanges rewards in exchange for subordinate effort.

Transformational Leadership: A leadership style in which the leader encourages his or her subordinates to achieve higher and higher levels of performance for the sake of the organization.

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Suggested Reading

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Lambert, L. (2003). Leadership redefined: An evocative context for teacher leadership. School Leadership & Management, 23, 421–430. Retrieved August 3, 2008 from EBSCO online database Academic Search Complete.

Viator, R. (2001). The relevance of transformational leadership to nontraditional accounting services: Information systems assurance and business consulting. Journal of Information Systems, 15, 99. Retrieved August 3, 2008 from EBSCO online database Business Source Complete.