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59
Transformational
Leadership

Leaders who can spark our imaginations with a compelling vision of a worth-
while end that stretches us beyond what is known today and who can show us a
clear path to our objectives are the ones we follow. In the future, the leadership
role will focus more on the development of an effective strategy, the creation of the
vision, and an understanding of their impact, and will empower others to carry
out the implementation of the plan.
—Goldsmith, Greenberg, Robertson, & Hu-Chan (2003, p. 118)

T
ransformational leadership is an involved, complex process that binds leaders and
followers together in the transformation or changing of followers, organizations, or
even whole nations. It involves leaders interacting with followers with respect to
their “emotions, values, ethics, standards, and long-term goals, and includes assessing
followers’ motives, satisfying their needs, and treating them as full human beings”
(Northouse, 2010). While all theories of leadership involve influence, transformational
leadership is about an extraordinary ability to influence that encourages followers to
achieve something well above what was expected by themselves or their leaders.
Early researchers in the area of transformational leadership coined the term
(Downton, 1973) and tried to integrate the responsibilities of leaders and followers
(Burns, 1978). In particular, Burns (1978) described leaders as people who could under-
stand the motives of followers and, therefore, be able to achieve the goals of followers and
leaders. As we discussed in Chapter 1, he considered leadership different from power
because leadership is a concept that cannot be separated from the needs of followers.

258
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Chapter 9: Transformational Leadership 259

Burns (1978) differentiated between transactional and transformational leadership.

He described transactional leadership as that which emphasizes exchanges between fol-
lowers and leaders. This idea of exchange is easily seen at most levels in many different
types of organizations.
He described transformational leadership as that process through which leaders
engage with followers and develop a connection (one that did not previously exist) that
increases the morals and motivation of the follower and the leader. Because of this
process, leaders assist followers in achieving their potential to the fullest (Yukl, 2006).
Bass and colleagues (Bass, 1998; Bass & Riggio, 2006; Bass & Steidlmeier, 1999) dif-
ferentiated between leadership that raised the morals of followers and that which trans-
formed people, organizations, and nations in a negative manner. They called this
pseudotransformational leadership, to describe leaders who are power hungry, have per-
verted moral values, and are exploitative. In particular, this form of leadership empha-
sizes the leader’s self-interest in a manner that is self-aggrandizing and contrary to the
interests of his or her followers (Northouse, 2010). Kenneth Lay and Jeff Skilling might
be examples of this form of leadership in their roles as chair and CEO of Enron, respec-
tively. Authentic transformational leaders put the interests of followers above their own
interests and, in so doing, emphasize the collective good for leaders and followers
(Howell & Avolio, 1992).

Charismatic Leadership
“Charisma is a special quality of leaders whose purposes, powers, and extraordinary
determination differentiate them from others” (Dubrin, 2007, p. 68). Weber (1947)
emphasized the extraordinary nature of this personality trait but also argued that follow-
ers were important in that they confirmed that their leaders had charisma (Bryman, 1992;
House, 1976). The influence exercised by charismatic leaders comes from their personal
power, not their position power. Their personal qualities help their personal power to
transcend the influence they have from position power (Daft, 2005).
House (1976) provided a theory of charismatic leadership that linked personality char-
acteristics to leader behaviors and, through leader behaviors, effects on followers. Weber
(1947) and House (1976) both argued that these effects would be more likely to happen
when followers were in stressful situations because this is when followers want deliverance
from their problems. A major revision to House’s conceptualization has been offered by
Shamir, House, and Arthur (1993). They argue that charismatic leadership transforms how
followers view themselves and strives to tie each follower’s identity to the organization’s col-
lective identity (Northouse, 2010). In other words, charismatic leadership is effective because
each follower’s sense of identity is linked to the identity of his or her organization.

A Transformational Leadership Model

Bass and his colleagues (Avolio, 1999; Bass, 1985, 1990; Bass & Avolio, 1993, 1994) refined
and expanded the models suggested by Burns (1978) and House (1976). Bass (1985) added
to Burns’s model by focusing more on the needs of followers than on the needs of leaders, by
focusing on situations where the outcomes could be negative, and by placing transforma-
tional and transactional leadership on a single continuum as opposed to considering them
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260 CASES IN LEADERSHIP

independent continua. He extended House’s model by emphasizing the emotional compo-

nents of charisma and by arguing that while charisma may be a necessary condition for
transformational leadership, it is not a sufficient condition—more than charisma is needed.
Transformational leadership inspires subordinates to achieve more than expected
because (a) it increases individuals’ awareness regarding the significance of task out-
comes, (b) it encourages subordinates to go beyond their own self-interest to the interests
of others in their team and organization, and (c) it motivates subordinates to take care of
needs that operate at a higher level (Bass, 1985; Yukl, 2006).
There are eight factors in the transformational and transactional leadership model.
These are separated into three types of factors: (1) transformational factors consisting of
idealized influence, individualized consideration, inspirational motivation, and intellec-
tual stimulation; (2) transactional factors consisting of contingent reward, management by
exception (active), and management by exception (passive); and (3) one nontransformational/
nontransactional factor, that being laissez-faire (Yukl, 2006).

Transformational Leadership Factors

This form of leadership is about improving each follower’s performance and helping fol-
lowers develop to their highest potential (Avolio, 1999; Bass & Avolio, 1990). In addition,
transformational leaders move subordinates to work for the interests of others over and
above their own interests and, in so doing, cause significant, positive changes to happen
for the good of the team and organization (Dubrin, 2007; Kuhnert, 1994).

Idealized Influence or Charisma. Leaders with this factor are strong role models followers
want to emulate and with whom they want to identify. They generally exhibit very high
moral and ethical standards of conduct and usually do the right thing when confronted
with ethical and moral choices. Followers develop a deep respect for these leaders and
generally have a high level of trust in them. These leaders give followers a shared vision
and a strong sense of mission with which followers identify (Northouse, 2010).

Inspirational Motivation. Leaders with this factor share high expectations with followers
and motivate them to share in the organization’s vision with a high degree of commitment.
These leaders encourage followers to achieve more in the interests of the group than they
would if they tried to achieve their own self-interests. These leaders increase team spirit
through coaching, encouraging, and supporting followers (Yukl, 2006).

Intellectual Stimulation. Leaders with this factor encourage subordinates to be innovative

and creative. These leaders support followers as they challenge the deeply held beliefs and
values of their leaders, their organizations, and themselves. This encourages followers to
innovatively handle organizational problems (Yukl, 2006).

Individualized Consideration. Leaders with this factor are very supportive and take great care
to listen to and understand their followers’ needs. They appropriately coach and give advice
to their followers and help them to achieve self-actualization. These leaders delegate to assist
followers in developing through work-related challenges and care for employees in a way
appropriate for each employee. If employees need nurturance, the leader will nurture; if
employees need task structure, the leader will provide structure (Northouse, 2010).
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Chapter 9: Transformational Leadership 261

Transformational leadership achieves different and more positive outcomes than

transactional leadership. The latter achieves expected results while the former achieves
much more than expected. The reason is that under transformational leaders, followers
are inspired to work for the good of the organization and subordinate their own self-
interests to those of the organization.

Transactional Leadership Factors

As suggested above, transactional leadership is different from transformational leadership
in expected outcomes. The reason is that under transactional leaders, there is no individ-
ualization of followers’ needs and no emphasis on followers’ personal development—
these leaders treat their followers as members of a homogeneous group. These leaders
develop a relationship with their followers based on the exchange of something valuable
to followers for the achievement of the leader’s goals and the goals of the followers. These
leaders are influential because their subordinates’ interests are connected to the interests
of each leader (Kuhnert, 1994; Kuhnert & Lewis, 1987).

Contingent Reward. This factor describes a process whereby leaders and followers
exchange effort by followers for specific rewards from leaders. This process implies agree-
ment between leaders and followers on what needs to be accomplished and what each
person in the process will receive. This agreement is usually done prior to the exchange of
effort and reward.

Management by Exception (MBE). This factor has two forms—active and passive. The for-
mer involves corrective criticism, while the latter involves negative feedback and negative
reinforcement. Leaders who use MBE (active) closely monitor their subordinates to see if
they are violating the rules or making mistakes. When rules are violated and/or mistakes
made, these leaders take corrective action by discussing with their subordinates what they
did wrong and how to do things right. Contrary to the MBE (active) way of leading, lead-
ers who use MBE (passive) do not closely monitor subordinates but wait until problems
occur and/or standards are violated. Based on their poor performance, these leaders give
subordinates low evaluations without discussing their performance and how to improve.
Both forms of MBE use a reinforcement pattern that is more negative than the more pos-
itive pattern used by leaders using contingent reward.

The Nonleadership Factor

As leaders move further from transformational leadership through transactional leader-
ship, they come to laissez-faire leadership. Individuals in leadership positions who exer-
cise this type of leadership actually abdicate their leadership responsibilities. This is
absentee leadership (Northouse, 2010). These leaders try to not make decisions or to
delay making decisions longer than they should, provide subordinates with little or no
performance feedback, and ignore the needs of subordinates. These leaders have a “what
will be will be” or “hands-off, let-things-ride” approach with no effort to even exchange
rewards for effort by subordinates. Leaders who do not communicate with their subordi-
nates or have any plans for their organization exemplify this type of leadership.