Transactional &

Transformational
Leadership
 “Each of us puts in one little stone, and then
you get a great mosaic at the end” Alice
Paul
Two Types of “Leadership”
Transactional and Transformational Leadership

Transactional Leaders • Contingent Reward

Leaders who guide or motivate • Management by

Exception (active)
their followers in the direction of
established goals by clarifying role • Management by
Exception (passive)
and task requirements
• Laissez-Faire

Transformational Leaders
Leaders who provide the four “I’s”
(individualized consideration,
inspirational motivation, idealized
influence, and intellectual
stimulation)
• Idealized Influence
• Inspirational Motivation
• Intellectual Stimulation
• Individual Consideration
Characteristics of Transactional Leaders

Contingent Reward: Contracts exchange of rewards for

effort, promises rewards for good performance,
recognizes accomplishments
Management by Exception (active): Watches and
searches for deviations from rules and standards, takes
corrective action
Management by Exception (passive): Intervenes only
if standards are not met
Laissez-Faire: Abdicates responsibilities, avoids making
decisions
Transactional Leadership

❖ Based on the concept of exchange between

leader and group members
❖ Leader provides resources and rewards in exchange
for motivation, productivity, effective goal, or task
accomplishments
The Downside of
Transactional Leadership
❖ Low expectations
❖ Minimal accomplishments
❖ Low levels of satisfaction
❖ Focus is on short-term, immediate outcomes only
Characteristics of Transformational Leaders

Idealized Influence: Provides vision and sense of

mission, instills pride, gains respect and trust
Inspiration: Communicates high expectations, uses
symbols to focus efforts, expresses important purposes in
simple ways
Intellectual Stimulation: Promotes intelligence,
rationality, and careful problem solving
Individualized Consideration: Gives personal attention,
treats each employee individually, coaches, advises

“The ability to get people to want to change and to lead change.”

Transformational Leadership
• Idealized Influence
• Inspirational Motivation
• Intellectual Stimulation
• Individual Consideration
“One recent study of R&D firms found teams whose
project leaders scored high on transformational
leadership produced better-quality products as judged 1
year later and were more profitable 5 years later. A
review of 87 studies testing transformational
leadership found it was related to the motivation
and satisfaction of followers and the higher
performance and perceived effectiveness of
leaders.”
Judge and Robbins, 2014
“Leadership is 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. And the genius of leadership
lies in the manner in which leaders see
and act on their own and their followers’
values and motivations.”
-James MacGregor Burns, 1978
Idealized Influence

• Role Model Values

• Trust

• Self-Sacrifice

“The best leader does not ask

people to serve him but the
common end. The best leader
has not just followers, but men
and women working with him.”
-Mary Parker Follett
Inspirational Motivation
• Meaning

• Vision

• Optimism

“We choose to go to the moon. We choose to go to the moon in this

decade and do the other things, not because they are easy, but
because they are hard, because that goal will serve to organize and
measure the best of our energies and skills, because that challenge
is one that we are willing to accept, one we are unwilling to
postpone, and one which we intend to win.”
-September 12, 1962
Intellectual Stimulation

• New Ways of Viewing Problems

• Question Assumptions

• Tolerate Mistakes

“Nothing is too good, too fixed “The work of leaders is

too political, or too bureaucratic
that it can’t be challenged,
changed, retired, and/or
abandoned.”
Bruce J. Avolio, 1999
change. Leadership is
inextricably connected with
the process of innovation.”
- Rosabeth Moss Kanter
Individual Consideration

• Teach Efficacy

• See the Whole Person

• Recognition

“Further Analysis also indicated that these

gains from non-financial incentives were
sustained over time and, when compared to
financial incentives, had an equally significant
impact . . . ”
- Luthans and Stajkovic, 2009
“If you report that your
manager is a close friend,
you are 2.5 times more likely
to be satisfied with your
job.”
- The Leadership Challenge
 Authentic Leaders and Ethical Behavior

➢ Authentic leaders know who they are, what they

believe in and value, and act on those values openly
and candidly.
– Followers see them as ethical.
➢ Ethical leaders use ethical means to get followers to
achieve their goals, and the goals themselves are
ethical.
Transformational Leaders…

 Cultivate and Communicate Vision

 Act with ethical and moral purpose

 Hold High Expectations

 Foster Resonance

 Reform and change culture

 Able to “move” followers

Transformational Followers…

 Raise others to higher levels

 Share common purpose

 Intrinsically rewarded

 Experience Growth
Transformational Followers…

 Empowered (followers become

leaders)

 Create Change

 Maintain Positive environment

Environments

 Valued and Value Others

Transformational Vision

 There exists in excellent schools a strong culture &

clear sense of purpose that defines the general
thrust of & nature of life for their inhabitants.

 One of the challenges of moral leadership is to

engage oneself and others in the process of
decision-making without regard to self-interest.

Sergiovanni 1999
Transformational Vision

 When values and self-interest are in conflict, most

people will choose values over self-interest.

 A key role of leaders is “purposing”

 Leaders in excellent schools consistently call on

teachers and themselves to do the right things.
Sergiovanni 1999
3 Elements of Transformational
Leadership

1) Inspiration and Charisma

2) Intellectual Stimulation
3) Individual Consideration
Inspiration and Charisma

❖ Create an emotional bond between leader and

group

How can you do this?

Intellectual Stimulation

❖ Challenge the group to identify and solve

challenges (out of the box)
Individual Consideration

❖ Develop appropriate personal relationships with

members
❖ Treat members differently but equitably
Summary

1) Inspiration and Charisma: builds

and sustains an emotional bond
that overcomes the psychological
and emotional resistance to
change
2) Intellectual Stimulation: provides
the new solutions and innovations
that empowers members
3) Individual Consideration:
encourages members because
they actually know the leaders
Transcendent Leadership

❖ We are all connected. Humankind is not

divided by false distinctions such as race,
gender, or even culture but is one species
with a multitude of histories and
experiences.
Transcendence involves

1. A climate of trust by walking the talk

2. Information sharing transparency and
disclosure
3. Meaningful participation in all aspects
of the event
4. Collective decision-making Consensus
5. Protecting and valuing divergent
views
6. Redefinition of roles Associates
The Transcendent Leader

1. Reflective
2. Value-Centered
3. Global in perspective
4. Facilitator of dialogue and
deliberation
5. Open-minded
6. Service above Self
Summary

 Transactional = Give something to get something

 Transformational = Go beyond self interests for the
good of the whole
 Transcendental = Service above self
 “To Rule or Govern is easy – To Lead is Difficult.”
Lecture on how Case Analysis are done
 https://www.youtube.com/watch?v=Tk9loFrl308

Case Analysis in Classroom @HBS

 https://www.youtube.com/watch?v=p7iwXvBnbIE