Situations to use Transactional Leadership in Team

Transactional leadership occurs when the leader rewards the team member, depending on the adequacy of the team member’s performance. Transactional leadership depends on contingent reinforcement, either positive contingent reward (CR) or the more negative active or passive forms of management-by-exception (MBE-A or MBE-P). [1]

Here are some situations I can think of.

* Use CR – when you found team member is motivated with some kind of reward & you can arrive a mutual agreement with your team member on reward he is getting after the work done is expected fashion.

* Use MBE-A – when you don’t want a mistake/error done by your team member propagates further that may jeopardize the project. You actively get the statuses, problems, challenges, develop processes, ensure adherence of project processes, conduct reviews, etc so that no error goes beyond certain time period. This really required when you manages a critical project & have time to do micro management. This is used when team member is having less experience in the work area. MBE-A may be required and effective in some situations, such as when safety is paramount in importance[2].

* Use MBE-P – when you don’t really care much about the errors or deviance as soon as it occurred. You have some time to correct them & they are not critical. This is followed when team member is having good experience in the area of working.
Leaders sometimes must practice passive MBE when required to supervise a large number of subordinates who report directly to the leaders[2]


1. Significant Behaviors of Transactional Leadership –
2. Transformational Leadership (Second Edition) BY Bernard M. Bass, Ronald E. Riggio, Lawrence Erlbaum Associates, Inc.,2006

Q & A – Which one to Adopt Transactional or Transformational Leadership?

One college student asked me a Question – “Which between the two should be adopted. My lecturer says transactional leader is best 4 efficiency and effectiveness. How true is this?”

My Answer:

To best of my knowledge, I agree with the existence of both leadership styles in everyone. As we displayed & practiced transactional leadership for many decades – it was considered as the best approach, but there is no complete truth in that. One need to evaluate the situation and decide whether to go with Transactional or Transformational & should not stick on to one in all situations.

Your lecturer says so because he practiced transactional in many (appropriate) situations & found to be producing results. Also transactional is practiced by teachers a lot – “praise the student who gets high grade and punish the one who takes lesser. As they get good results from their class, they will get good name from principal”. They will understand the real taste of teaching if they start practicing Transformational.

What is getting transformed in Transformational Leadership?

Whenever I take Transformational Leadership topic, one or the other person eagerly asks – “What is getting transformed?”. I thought it would be nice to share my answer views in a post quoting few references.

James MacGregor Burns says:

Transforming leadership occurs when one or more persons engage with others in such a way that leaders and followers raise one another to higher levels of motivation and morality by transforming leadership which ultimately becomes moral in that it raises the level of human conduct and ethical aspirations of both the leader and led and, thus, has a transforming effect on both.[1]

Transformation will elevate and discipline the inner soul of both leader & follower.  Hence goals, values, principles, motivation and morality of both leader and follower will be one and the same at one point of time — it is like one soul two body. In such case, no supervision needed — each one knows what to do in different situations.  This is the ultimate goal of leadership.

Due to difference in human thinking & nature,  each one of us differ in skill level to perform an activity. Kelley (1995) indicates that leadership and followership are equal but different activities often played by the same people at different times. Individuals who assume leadership roles have sound visioning, interpersonal and organizational skills, and the desire and willingness to lead. Effective followers are distinguished by their capacity for self-management, strong commitment and courage.[2]

Summation of Transformational Leadership was given excellently in Reference [2].  It is a nice gist and has almost all activities of Transformational Leadership.

1. Leaders have high moral and ethical values.
2. Leaders express genuine interest in followers.
3. Leaders have an inspirational vision.
4. Genuine trust exists between leaders and led.
5. Followers share leader’s values and vision.
6. Leaders and followers perform beyond self-interest.
7. Participatory decision-making is the rule.
8. Innovative thinking and action is expected.
9. Motivation is to do the right thing.
10. Leaders mentor.

1. James MacGregor Burns, Leadership , New York: Harper & Row, 1978), pp.4, 20

2. Transformational Leadership by Colonel Mark A. Homrig, 21 Dec 2001. Retrieved on 08th Jan 2009 from

What are the components of Transformational Leadership?

Leadership does not end with the person who shows the characteristics. Leadership is a journey; Journey is moving from one point to another – Leadership is moving from one level to another; even if you return to the same point you will have a different level of thinking and understanding. Leadership needs followers, it requires dedication and one needs to follow its principles throughout his/her life. This might be the reason why it is a bit complex to understand Leadership as a whole.

We already briefed about Transformational Leadership in earlier post, now it is required to know the constituents of it to practice it well. Transformational Leadership has a long history and it evolved after earlier theories on behavioral, trait, charismatic & situational leadership models. So, it has overlapping with those other theories. Especially, Charisma is one of the components of Transformational Leadership.

There are four components of Transformational Leadership[1]. Some time it is referred as four I‘s of Transformational Leadership. They are:

1. Idealized Influence(II)
2. Inspirational Motivation (IM)
3. Intellectual Stimulation (IS)
4. Individualized Consideration (IC)

Idealized Influence (II):

Whoever be the writer or presenter, everyone agrees that -‘Influence’ is the first and foremost out of all leadership qualities. The stress on influence is more with the word ‘Idealized’. About Influence –

Maxwell says – “The true measure of leadership is Influence nothing more, nothing less.”

You will understand more about Influence when you read Dale Carnegie’s “How to Win Friends and Influence People”. John P. Kotter dealt in detail on this topic in his book “Power and Influence”.

No matter whoever it is, as a Transformational Leader, you have the capability to become the role model for them. You are respected & admired by your followers. They have a separate place for you in their heart. You have absolute trust on your followers and they also have it for you. Your followers understand that you have great potential and determination which will take them to higher levels. You are having the willingness to take risks and be consistent. In any situation, you show high standards of conduct.

Inspirational Motivation (IM):

One or the other way, Inspiration and Motivation are always part of leadership. We know about Inspiration and motivation separately and they are used interchangeably. Let us see their connection in the below highlighted text before we get into Inspirational Motivation.

Motivation really comes down to inspiration. Since motivation comes from within, it is a form of self-inspiration. This process is nurtured by watching others achieve their goals. Most often it is developed by following the example of leaders who do the right thing for people, communicate frequently, empower vigorously, coach regularly, and sacrifice for others.[2]

As a Transformational Leader, you have a vision. You communicate expectations with followers and show optimism in reaching the goal. By your vision, activities and behavior, your followers get motivated and inspired. They all feel team spirit and work enthusiastic as a group. They start demonstrating their commitments towards the goal. Motivation can occur only if two-way communications happen.

Intellectual Stimulation (IS):

“People respond to a challenge because it taps their inner desire to succeed.”[2]

This component deals with stimulating followers’ analytical skills and problem solving ability. Everyone has the skill to analyze problems in their hand. Each one has a different approach to an issue. As a Transformational Leader, you need to allow followers’ to come up with their solution (it may be different from yours) for the same problem. If the issue is not understandable you can help them to re-frame it. Encourage them to approach old issues with new methods to come up with meaningful output.  Encourage their creativity and innovation. Don’t criticize or don’t pass sarcastic comments in public.

Individualized Consideration (IC):

Each individual is different. Followers’ have different needs & show different levels of potential. As a Transformational Leader, you need to accept this. You need to develop higher levels of potential. It cannot be achieved by showing the same level of attention. You should take special care of each individual follower’s need for achievement and growth. Provide supportive environment. Have clear two-way communication in understanding their concerns. Develop your follower by delegating tasks. Monitor and provide improvement tips on delegated activities and make them produce finer output. This increases followers’ confidence and morale.

Closing Notes:

I thought it is worth mentioning a quote and a Q & A from Steven Covey. Following is the quote by Steven Covey on Transformational Leadership:

“The goal of transformational leadership is to “transform” people and organizations in a literal sense – to change them in mind and heart; enlarge vision, insight, and understanding; clarify purposes; make behavior congruent with beliefs, principles, or values; and bring about changes that are permanent, self-perpetuating, and momentum building.”

Following is a Q & A from “The Mission Statement That Changed The World”, posted on March 3rd, 2008 in Steven Covey’s Blog (Link). You can match each of the transformational components with Gandhi’s mission statement listed below.

Q: Who is one of your personal heroes?

A: Mahatma Gandhi. Let me read you his personal mission statement:

“Let the first act of every morning be to make the following resolve for the day:
* I shall not fear anyone on Earth.
* I shall fear only God.
* I shall not bear ill will toward anyone.
* I shall not submit to injustice from anyone.
* I shall conquer untruth by truth. And in resisting untruth, I shall put up with all suffering.”

– Mahatma Gandhi


1. Transformational Leadership (Second Edition) BY Bernard M. Bass, Ronald E. Riggio, Lawrence Erlbaum Associates, Inc.,2006
2. Great Motivation Secrets of Great Leaders BY John Baldoni, McGraw-Hill,2005

My Other posts on Transactional & Transformational Leadership:

1. Transactional Leadership Vs. Transformational Leadership

2. Is anything called transactional leadership exists?

Transactional Leadership Vs. Transformational Leadership

Number of Leadership theories evolved on the basis of Trait, Behavioral, Transformational, Situational, Charisma. Researchers and thinkers made efforts linking some of the theories across these leadership islands. But each model has its own pros, cons, assumptions & limitations. Latest researches are conducted on Situational & Transformational leadership styles. Leadership gurus presented new models as variations to the already existing models. Max Weber, MacGregor Burns, Bernard M.Bass, Warren Bennis & Nanus are few important researchers in the area of transformational leadership.

Understanding the difference between transactional and transformational leadership is vital in getting the whole concept of transformational leadership theory.Transformational Vs Transactional

As a starting point, let us review our everyday life. In general, a relationship between two people is based on the level of exchange they have. Exchange need not be money or material; it can be anything. The more exchange they have the more stronger the relation. Your manager expects more productivity from you in order to give good rewards. In this way, if something is done to anyone based on the return then that relation is called as ‘Transactional’ type. In politics, leaders announces benefits in their agenda in exchange to the vote from the citizens.  In business, leaders announces rewards in turn to the productivity. These relation is all about requirements, conditions and rewards (or punishment). Leaders who show these kind of relationship are called ‘Transactional Leaders’.

In life, at one point of time, things happen without expectation from other side. Say, mom’s dedicated service to her kid. Mom doesn’t expect anything from the child and the service she provides in raising the child is  unconditional, dedicated, committed. Mom plays a major role in shaping up the kid’s future life. This type of relation is called as ‘Transformational’. Leaders do exist in this world with these behaviors. Transformational Leaders work toward a common goal with followers; put followers in front and develop them; take followers’ to next level; inspire followers to transcend their own self-interests in achieving superior results.

Transactional Leader:

approaches followers with an eye to exchanging one thing for another … Burns

pursues a cost benefit, economic exchange to met subordinates current material and psychic needs in return for “contracted” services rendered by the subordinate …. Bass

Transformational Leader:

“recognizes and exploits an existing need or demand of a potential follower… (and) looks for potential motives in followers, seeks to satisfy higher needs, and engages the full person of the follower” … Burns

The leader who recognizes the transactional needs in potential followers “but tends to go further, seeking to arouse and satisfy higher needs, to engage the full person of the follower … to a higher level of need according to Maslow’s hierarchy of needs” … Bass

 “Transformational Leader facilitates a redefinition of a people’s mission and vision, a renewal of their commitment and the restructuring of their systems for goal accomplishment. It is a relationship of mutual stimulation and elevation that converts followers into leaders and may convert leaders into moral agents. Hence, transformational leadership must be grounded in moral foundations”….(Leithwood, as cited in Cashin et al., 2000, p.1)

As exactly said by Bass – “the transactional leaders work within the organizational culture as it exists; the transformational leader changes the organizational culture”.

Following table shows difference of transactional and transformation leadership[1].

Transactional Leadership Transformational Leadership
* Leaders are aware of the link between the effort and reward

* Leadership is responsive and its basic orientation is dealing with present issues

* Leaders rely on standard forms of inducement, reward, punishment and sanction to control followers

* Leaders motivate followers by setting goals and promising rewards for desired performance

* Leadership depends on the leader’s power to reinforce subordinates for their successful completion of the bargain.

* Leaders arouse emotions in their followers which motivates them to act beyond the framework of what may be described as exchange relations

* Leadership is proactive and forms new expectations in followers

* Leaders are distinguished by their capacity to inspire and provide individualized consideration, intellectual stimulation and idealized influence to their followers

* Leaders create learning opportunities for their followers and stimulate followers to solve problems

* Leaders possess good visioning, rhetorical and management skills, to develop strong emotional bonds with followers

* Leaders motivate followers to work for goals that go beyond self-interest.

Initial studies portrayed Transactional Leadership and Transformational Leadership as mutually exclusive, but Bass viewed the transactional & transformational leadership as continuum rather than opposites. The transformational leadership style is complementary to the transactional style and likely to be ineffective in the total absence of a transactional relationship between leaders and subordinates.

Based on detailed studies of various works in Transformational Leadership reveals following broader characteristics of Transformational Leader which includes (not limited to) [3], [4]

  •     Clear sense of purpose, expressed simply
  •     Value driven (e.g. have core values and congruent behavior)
  •     Strong role model
  •     High expectations
  •     Persistent
  •     Self-knowing
  •     Perpetual desire for learning
  •     Love work
  •     Life-long learners
  •     Identify themselves as change agents
  •     Enthusiastic
  •     Able to attract and inspire others
  •     Strategic
  •     Effective communicator
  •     Emotionally mature
  •     Courageous
  •     Risk-taking
  •     Risk-sharing
  •     Visionary
  •     Unwilling to believe in failure
  •     Sense of public need
  •     Considerate of the personal needs of employee
  •     Listens to all viewpoints to develop spirit of cooperation
  •     Mentoring
  •     Able to deal with complexity, uncertainty and ambiguity


1. Comparison studies of different transformational authors – Bass, Cacioppe, Gronn,, Popper & Zakkai by Vanisha Balgobind in “The impact of Transformational Leadership on Subordinate Job satisfaction” dissertation work – June 2002.

2. Transformational Leadership by Colonel Mark A. Homrig, 21 Dec 2001. Retrieved from as on Aug 1st 2008.

3.Transformational Leadership: Characteristics and Criticisms by Iain Hay. Retrieved from as on 1st Apr 2012.

4. Bass (1990a); Cox (2001); Epitropaki; Hall, Johnson, Wysocki & Kepner (2002); Lussier & Achua (2004); Stone, Russell & Patterson (2003); Tichy & Devanna (1986); and University of Regina.

My Other posts on Transactional & Transformational Leadership:

1. Is anything called transactional leadership exists?

2. What are the components of Transformational Leadership?