Introduction


            Leadership is the ability to influence and motivate others toward the achievement of a common goal. Leadership is different from management. Management is about the coordination of activities in order to get the job done whereas; leadership is concerned with the development of mutual purposes. The aim of leadership is to create a multidirectional relationship where every member of the team or organization contributes, influences and are valued. This report is about leadership, particularly the paper discusses two forms of leadership – transactional leadership and transformational leadership.


 


Transactional Leadership


            Transactional leaders focus on the key purposes of the organization. A transactional leader assists people to recognize what needs to be done in order to reach the desired outcomes. When the parameters for success are well defined, transactional leaders can be very effective. A transactional leader tells the subordinate what to do, and the subordinate follows because of the rewards that he or she may get from following. Transactional leaders are authoritative, they create clear structures in which the expectations from the follower are clearly defined including the rewards and benefits that the followers will get from getting the job allocated by the leader done. A transactional leader allocates work to a subordinate who will be expected to take full responsibility of it. The work is expected to be accomplished whether or not the subordinate has the resources or capability to accomplish it. When things go wrong, the subordinate will be punished for his failure to carry out the task. Transactional leadership emphasizes the transaction or exchange that takes palace among leaders, colleagues, and followers. This exchange is based on the leader discussing with others what is required and specifying the conditions and rewards these others will receive if they fulfill the requirements. The transactional leader relies more on rational and logical thinking and free exchange of work in return for extrinsic rewards such as pay, vacations, hospitalization, and so on.


            Transactional leaders have a tendency to hand over responsibility to the followers who are left to their own devices. Transactional leaders often rely on contingent rewards. Meaning, they reward followers for attaining performance levels that the leader have specified. Oftentimes, the followers perform because of the rewards. Transactional leaders take action only when there is evidence of something not going according to plan.


 


Example of a Transactional Leader


            Jack Welch, former CEO of General Electric, is one of the celebrated transactional leaders of his generation. Welch was able to effectively lead General Electric to success during his time as CEO. During his early years as CEO of one of the world’s biggest company, Welch’s approach was contingency leadership, wherein he rewarded people in the organization for achieving the desired results. He was concerned with reaching the performance objectives that he set. He was a transactional leader, someone who believes that employees will do what he wants because it was to their best interest. Jack Welch was a successful transactional leader. GE achieved extraordinary growth during his term as CEO.


 


Transformational Leadership


            The focus of transformational leadership are the people and their relationships. Transactional leadership aims to transform feelings, attitudes and beliefs. Transformational leadership occurs when one or more persons engage with other sin such a away that leaders and followers raise one another to higher levels of motivation and morality. Transactional leadership leads to the transformation of the leader, the followers and the social system in which they function. There are different characteristics of a transformational leader. A transformational leader is Charismatic. By being charismatic, transformational leaders encourage change, cooperation, commitment, development and loyalty among employees. The transformational leader serves as a role model to his or her followers. The transformational leader earns the admiration, respect and trust of the followers. A transformational leader is Inspirational and Motivational. Transformational leaders inspire and motivate. Transformational leaders provide challenging yet rewarding and meaningful work. He or she is Able to Stimulate Minds. Transformational leaders stimulate the minds of their followers. They encourage innovation and creativity. Followers are encouraged to try new approaches, and are allowed to share their ideas. He or she is also Considerate. Transformational leaders act as mentors and coaches. They pay attention to the followers; development and growth needs. Transformational leaders support their followers. They facilitate continuous learning and development and realize that everyone has their special needs.


 


Example of a Transformational Leader


            Carly Fiorina, former CEO of Hewlett-Packard is a prime example of a transformational leader. When Fiorina was appointed as CEO in 1999, the company was in danger. The company according to the former CEO was sick and endangered, slow, complacent, and risk averse. As a transformational leader, Fiorina aimed to transform the organization. She accomplished this by introducing changes in short period of time. She established rules inside the organization. Among her rules were ‘no politics’, ‘no bureaucracy’, and ‘radical ideas are not bad ideas’. She changed the pay structure and made it more aligned with performance. She also reinforced key values and restructured the company. Fiorina is considered to be a transformational leader because she was able to reinvent HP and led the company to success.


 


Conclusion


            In the discussion, the differences of the leadership types became evident.


Transactional leadership is based on transactions or exchanges. Meaning, the follower acts to achieve the goals set by the leader because he or she expects to receive a reward. A follower also acts because he or she wants to avoid punishment for poor performance.  Transformational leadership is different. It is based on the belief that excellent performance can be achieved by transforming the followers and the organization. A transactional leader broadens and elevates the interests of followers, makes the followers aware of and makes them accept the purposes and missions of the group, and stirs the followers to look beyond their own self interest of the benefit of the organization.


            The two examples presented two leaders with different leadership strategies. Welch, former CEO of General Electric was a transactional leader while HP’s former CEO, Fiorina was a transformational leader. Both leaders were successful and they managed to lead their respective companies to success. I believe that both leadership types can be effective provided that they are aligned with the values, goals and strategies of the company.


           


 



Credit:ivythesis.typepad.com


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