Transformational Vs. Transactional Leadership

The term “Leadership” is often confused with Charisma, Titles, Power, Money, and Authority.  Leadership is simply the ability to make people believe in themselves, have faith, be self-motivated and confident.   Leadership is about setting an example.  Leadership is about having passion for the work that you are doing, having an ability to refuse to compromise under any circumstances on key principles.  Today’s leaders need to balance the needs of the external customers as well as the internal customers.  Leadership unfortunately cannot be taught.  It must be developed, cultivated.  Leaders work harder, take bigger risk, leaders do not worry about success, they make sure they learn from their mistakes.  Leadership is not a skill you are born with.  It is something you develop.  It is about others- it is about caring, hope and vision.  Leaders “do the right things” Managers “do things right.”

Leadership can also be classified in multiple ways depending on the style and intent of the leader.  How do you differentiate between transformational and transactional leadership?  Which is better and why?  Why do leaders focus on the internal asset of an organization more than the external customer? Under what circumstances would Transactional leadership work?

What does the term “Shu” (follow the rule) “Ha” (break the rules ) “Ri” (be the rules) indicate with respect to Leadership?

Let’s try to answer these questions on Leadership.

The difference between a transformational and a transactional leader stems from an understanding of what an organization dreams to be versus what an organization eventually grows into as money becomes a key source of success.  Here are examples of reality vs. perception.

What Organizations state as their Motto:

  • Serve their Stakeholders well (Build Value)
  • Be Lean (Reduce Waste)
  • Be Innovative (Lead)
  • Be Efficient (focus on productivity)
  • Serve as a role model for the Community (good deeds)
  • Create Smart products or services for their customers (be relevant)
  • Create Value (contribute to customer’s needs)
  • ü  Be Perceived as a “quality” organization (establish as a non-commodity)
  • Serve their employees well (internal value)
  • Take an active part in employee assessment and growth (internal asset optimization)
  • Think outside the box (vision for the future)
  • BE SUCCESSFUL (prove their confidence and effort)

The Reality for many Organizations:

  • Changing Management at the Top (no patience)
  • Corporate policies too rigid
  • Short term perspective
  • Focus on money not value
  • Human asset not valued (as much…)
  • Quality is more of a commodity
  • Too tired to think outside the box
  • Too political to think inside the box
  • Easier to fire than employee assessment and improvement programs
  • Changing global perspective
  • Culture change a much bigger issue than perceived
  • The Happy medium is mediocrity

There is no scarcity of definitions of leadership as well as experts preaching the classification and characteristics of leadership, however, leadership is not understood by reading books or articles, it is based on simple concepts of integrity and concern for fellow human beings, doing the right things in the midst of crisis and taking on responsibility and accountability in times of failures.  Leadership begins with a singular focus on doing the right things all the time

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Author: Dr. Abhay Trivedi, Senior Advisor, Tiba LLC

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