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Thursday 03 Dec 20

The TakeawayWhich is the Best Management Approach?

Transactional Management vs Transformational Leadership

There are 13 different leadership styles.

While these styles each have their own individual traits and characteristics, they all fall under either transactional management or transformational leadership.

What’s the difference between transactional management and transformational leadership and which is the better approach?

Transactional Management

Transactional management is a heavily task-orientated management approach; it focuses primarily on processes, procedures and outcomes and often uses a strict management structure that gives employees a clear chain of command.

The term “transactional” refers to the fact that this type of management essentially motivates employees by exchanging rewards for performance.

Transactional managers often rely on contingency to motivate staff; employees know that their reward is contingent upon them completing the tasks assigned to them which motivates them to perform to the standard expected. 

This form of motivation works well if employees are already relatively self-motivated, driven and don’t need a lot of encouragement.

The main role of a transactional manager is to ensure that the team is operating smoothly and producing results.

Transformational Leadership

The main difference between transactional management and transformational leadership is that transactional management focuses on getting people to do things where as transformational leadership looks at getting people to want to do things.

Psychologist Ronald E. Riggio identified The Four I’s which are four typical characteristics of a transformational leader:

  • Idealised Influence
    Holding, sharing and demonstrating core values

  • Inspirational Motivation
    Motivating employees by instilling confidence and a sense of purpose in teams

  • Individual Consideration
    Being aware and considerate of others’ emotions, views and needs

  • Intellectual Stimulation
    Not only allowing but encouraging personal and professional

“Transformational leaders hold positive expectations for followers, believing that they can do their best. As a result, they inspire, empower and stimulate followers to exceed normal levels of performance.” Riggio

In essence, transformational leaders go beyond managing day-to-day operations and implement forward-thinking plans to take their company, department or team to the next level of performance and success.

Transformational leadership is proactive in its nature and focuses on the future and continuous learning, development and improvement.

Because of this, it requires a high level of coordination, communication and cooperation. 

Which Is Better? 

Understanding your management style is essential if you’re looking to further develop your leadership skills and approach.

There are many debates and conflicting reports about which style of leadership is better however, the two styles often work best hand-in-hand as they counterbalance each other so it can be beneficial to have elements of both transactional management and transformational leadership in the workplace.

When thinking about leadership styles, it’s important to be able to adapt your leadership style to the person, situation and context.

Both leadership styles have their benefits and drawbacks; which one is better depends on your individual circumstances and employees.

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