Transactional vs. Transformational Leadership

by | Dec 24, 2019

Millennials have gotten a bad rap for being “entitled” and “unprepared” for independence. This generation, though, now makes up over a third of the workforce, and don’t look now but they are your exit strategy!

I think it’s safe to say that far from being a deadweight in the office. In fact, they are actually bringing a lot of value to the organizations they represent. Yes, it’s true they approach issues from a different perspective and have different thoughts and ideas about what is important in the workplace, but so has every generation before them.

Don’t be confused or disheartened by these changes. Instead, use transformational leadership to motivate this group into the next generation of leaders. 

Transactional vs. Transformational Leadership 

If you’ve never heard of transformational leadership, here is a quick run-down, and a few key differences from the transactional, or more management style of leadership.

First of all, transformational leaders base their success on the impact they have on others. It’s all about having the capability to grow your team from the inside out, with a focus on motivating others to care about a shared vision of the future. When done well, transformational leadership will empower your team to be more creative. It will establish a culture of trust and prepare your team to problem-solve and come up with new ideas about the future of your business. 

Transactional leadership is far more rooted in the status quo. It focuses on supervision and organization, with a goal of steady and predictable day-to-day progress towards goals.  It operates within established boundaries and processes.

Jeff Ruby

Jeff Ruby

Founder & CEO of RedRock Leadership

During the course of his professional career, he has worked in organizations ranging in size from a sole practitioner to Fortune 500. Included in his experience are roles in starting and selling companies, sales and sales management, training and development and executive coaching.

RedRock Leadership is a sales training and leadership development company committed to growing companies by growing individuals through on-going training infused with the competencies of emotional intelligence.

For certain departments or organizations, transactional leadership may be necessary. However, I strongly recommend that, no matter what your business, you thoroughly embrace the principles of transformational leadership -have a deep personal understanding of your behaviors and driving forces so that you can set the best positive example for those around you.

The Bottom Line About Transformational Leadership

  1. It focus on motivation, engagement, and inspiration of a team, while transactional leaders focus on supervision and organization. 
  2. It transfers the manager’s or supervisor’s commitment and confidence to the rest of the team, causing them to be internally driven and focused on the success of the company.
  3. It focuses more on an internal reward system, while transactional leaders are extrinsically motivated.

Why Does all This Matter?

According to the Deloitte Global Millennial Survey 2019, there are a few issues that your upcoming leaders want:

  • Support development through training, mentors, etc. 
  • Motivating and stimulating work environment
  • Flexible working practices 

In fact, far from being unprepared to work, millennials have expressed a strong desire to lead, with 50% of them stating in a Work Place Trends survey that leadership is the empowerment of others, while an American Express survey identified the core millennial values of creativity, autonomy, and reciprocity as “foundational to the future of business leadership.” Clearly, Millennials will aspire to positions of leadership when being raised under a transformational style of leadership.

If transforming your business into one of creativity and autonomy feels like taking a ship into uncharted waters, have no fear. There is actually a step-by-step guide to make it work for your business. It doesn’t have to mean changing everything you know and love about your organization. Instead, transformational leadership is about taking what you already have – you and your team – and understanding each other in a new way that will bring more life, focus, and power to all business processes.

If you’re interested in learning more, contact us today about our RedRock Leadership Membership plans.