Transformation vs Transactional Leadership

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August 28, 2008


Distinguish Between Transactional and Transformational Leadership (Block 7, Question 2,)

Leadership is the process by which a person exerts influence over others, and inspires, motivates, and directs their activities to help achieve group or organisational goals. It is about coping with change.

A leader is faced with many challenges, particularly in complex, rapidly changing environments. This means more than just sustaining a competitive advantage and strengthening profitability; it also means establishing ethical standards, ensuring the organisation is fostering a safe and equitable work environment, as well as attending to civic responsibilities.

What makes an individual an effective leader? There is a vast amount of literature on this topic , but we will focus on the broader and more compassing way to define leadership, which is to identify them as either transactional or transformational;

Transactional Leadership
Transactional leadership is characterised by an exchange relationship in which leaders motivate followers by providing them with rewards (or punishment) in return for follower effort (or lack of it). The primary objective is to ensure that subordinate behaviour is consistent with overall organisational goals.

There are four dimensions of transactional leadership.
□ Contingent Rewards: Leaders provide a variety of rewards in exchange for mutually agreed upon goal achievement. □ Active Management by exception: Leaders take corrective action for any deviation from rules and standards. □ Passive Management by exception: Leaders intervene only in circumstances where standards are not met. □ Laissez-faire: Sometimes abdicates responsibilities and avoids making decisions.

Transformational Leadership
Transformational leadership is quite distinct from transactional leadership. The concept of transformational leadership describes those who motivate...
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