Transformational Leadership vs. Transactional Leadership

Transactional leadership styles are more concerned with maintaining the normal flow of operations. Transactional leadership can be described as "keeping the ship afloat." Transactional leaders use disciplinary power and an array of incentives to motivate employees to perform at their best. A transactional leader generally does not look ahead in strategically guiding an organization to a position of market leadership; instead, these managers are solely concerned with making sure everything flows smoothly today.

A transformational leader goes beyond managing day-to-day operations and crafts strategies for taking his company, department or work team to the next level of performance and success. Transformational leadership styles focus on team-building, motivation and collaboration with employees at different levels of an organization to accomplish change for the better. Transformational leaders set goals and incentives to push their subordinates to higher performance levels, while providing opportunities for personal and professional growth for each employee.

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