Transformational vs Transactional Leadership Essay Example

Transformational vs Transactional Leadership Paper Leadership Styles, High-Quality Leader-Follower (LMX) Relationships and Job Performance The current globalized economic environment is becoming increasingly dynamic and competitive forcing organizations to improve their business practices to overcome greater challenges with more flexibility, efficiency and innovation in products and internal processes (Walumbwa et al. 2005, p. 235). Certainly, there is fundamental evidence of the positive association of leadership style and the influence on follower’s behaviour as a consistent way to improve job performance and organizational outcomes (Vaccaro et al. 2010). The aim of this paper is to demonstrate the impact of transformational and transactional leadership styles on leader member exchange relationships, job performance and job satisfaction. By using theories such Weber’s conceptualization of charismatic leadership, Burns’ transactional leadership and Bass’ Four I’s of transformational leadership, this paper acknowledge the superiority of transformational over transactional leadership style in developing high-quality leader-follower (LMX) relationships, increasing followers’ job performance and Job satisfaction. Recalling previous studies which asserted the dependence of leadership effectiveness on culture and organizational size (Paul et al. 001), it seems clear that transformational leadership is a more suitable leadership style for small, large and complex companies across cultures facing the challenges of globalization of markets. The superiority of transformational leadership style in building high-quality leader-follower (LMX) relationships is given to the practice of one or more of the Four I’s leadership behaviour. Firstly, Idealized influence through a charismatic behavi our will illustrate the positive influence on followers and their performance. We will write a custom essay sample on Transformational vs Transactional Leadership specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Transformational vs Transactional Leadership specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Transformational vs Transactional Leadership specifically for you FOR ONLY $16.38 $13.9/page Hire Writer It is followed by the ability to motivate team work and the achievement of general goals that produce personal satisfaction and commitment with the company (inspirational motivation). Furthermore, intellectual stimulation will certainly demonstrate how innovation and creativeness is promoted and their impact on organizational results. Finally, individualized consideration in hand with LMX theory will provide an example of the undoubted benefits of dyadic relationships in ‘in-group’ such greater loyalty and commitment. Leadership styles, high-quality leader-follower (LMX) relationships and Job performance. Focusing in the work of Burns (1978) and Bass (1985) on leadership behaviours, transformational and transactional leadership have been the objective of various research in order to capture the extent to which leaders influence subordinates by involving them in the organization’s goals, or by specifying the rewards that will follow the accomplishment of those goals (Rubin et al. 2005; Yammarino et al. 1997) According to Podsakoff et al. 1990) a fundamental characteristic of transformational leadership behaviour is the ability to create a compelling vision for the organization, providing an appropriate model consistent with that vision, stimulating the acceptance of group goals, expecting high performance, providing individualized support and intellectual stimulation. In contrast, transactional leadership is primarily concern with gaining compliance from subordinates by using a contingent re ward dimension or a passive form of managing by exception. The leader specifies what is expected from organizational members and the subsequent reward for its accomplishment (Bass and Avolio 1990). According to LMX theory, a high-quality leader-follower (LMX) relationship, usually associated with dyads in the ‘in-groups’ of the organization, emphasizes in fundamental levels of loyalty, commitment, respect, affection, mutual trust and the possibility of mutual linking between leaders and followers (House et al. 1993). Transformational rather than transactional leadership is more likely to achieve this superior level in the follower-leader relationship by developing one or more of the Four I’s; Idealized influence, inspirational motivation, intellectual stimulation and individualized consideration (Bass, BM and Avolio, BJ (eds. ) 1994). Idealized influence A transformational leader acts in a way that becomes a role model or inspirational image for his/her followers (Zhang, X, Cao, Q and Tjosvold, D 2010) usually attributed to his/her charismatic approach. Certainly, charisma in meant to be a requirement for transformational leadership. According to Weber (1947) a charismatic leadership can inspire and motivate people to do more than originally intended. What is more, they can influence followers by arousing strong emotions in support of the organizational vision, creating a leader-follower relationship based on a common value system between leader, follower and organization (Paul et al. 2001). Towler (2003) demonstrated that workers who received a charismatic-training performed better on their knowledge test and were more satisfied with the task. Unlike, transactional leadership emphasizes in the transaction that takes place with followers based on explicit discussion of the rewards they will receive if they fulfil the requirements. As a consequence, the relationship with is limited to the leader’s ability to control the outcomes desired by followers. However, as Dorfman et al. (1999) argued, charismatic behaviour can have a negative implication on societies with a history of autocratic and despotic leaders. Inspirational motivation Undoubtedly, the contingent transactional reinforcement system motivates followers to perform in such adequate way in order to obtain the reward. However, through this system, followers’ job performance, as well as commitment, is strongly limited to fulfil the requirements of the contract in a self-satisfying attitude (Avolio,BJ, Bass, BM and Jung, DI 1999) rather than a commitment with the leader and organizational vision he/she has established. Contrary, transformational leaders promote an organizational citizenship behaviour in which team-supporting behaviours augment followers’ identification with group values. The leader motivates them to transcend from a self-concept to be committed with cooperative team goals. Followers find themself intrinsically motivated to fulfil a collective vision without expecting immediate personal and tangible gains (Wang et al. 2005). Intellectual stimulation Transformational leaders stimulate employees’ effort to be innovative and creative by questioning assumption, reframing problems and approaching situations in different ways (Vaccaro et al. 2010, p. 2). On the other hand, as Podsakoff et al, (1990) exposed, transactional leadership consist in two dimensions; Contingent reward systems, which emphasizes the institution of clear and precise agreements, and management by exception that promotes highly leadership involvement and intervention in order to monitor and ectify any divergence form standards. Amibile (1998) claims that both dimensions inhibit creativity and discourage the initiative to address new ways to facing the work. Although, currently research fail to demonstrate a universal leadership phenomena (Walumbwa et al. 2005, p. 235), transformational leadership, by using intellectual stimulation behaviours, exhibit a cross-cultural benefit on commitment, innovation and job performance, all of them being characteristics of high-quality leader-follower (LMX) relationship. Avolio, Zhu, Koh, and Puja (2004), by gathering data from staff nurses in a large public hospital in Singapore, found a positive association between transformational leadership and organizational commitment. Likewise, Geyer and Steyrer (1998), as a result of a research in Australian banks, reported that transformational leadership had positive effects on employees’ level of effort and task performance. Individual consideration A transactional leader properly identifies employees’ needs in order to make the accurate motivational transactions; as a result, both parts expectations are met and job satisfactions is improved. However the exchange is usually limited to economic or tangible benefits and does not promote leader-follower relationships. In contrast, a transformational leader pays special attention to follower’s individual needs in a widely range, such achievement and growth, by acting as a coach or mentor. The leader demonstrate acceptance for individual differences, promote two-way exchange communication and sees the individual as a person rather than as just an employee (Bass, BM and Avolio, BJ (eds. 1994). In this extent, transformational leader promotes the creation of dyadic relationships with ‘in-group’ members which usually have a high-quality relationship with the leader and are expected to be more loyal to the leader, and perform in a greater extent as an exchange for intangible benefits like career development, participation in decision making, and access to information, between others (Vaccaro et al. 2010, p. 2). According to Deluga (1992), individualized consideration and charisma were two transformational leadership factors that predicted LMX and are the cause for subordinates to behave in ways (such as making extra efforts) that strengthen relational ties with the leader. Conclusion It seems clear that transformational and transactional leadership have positive relationship with organization outcomes; however this paper clearly stated the superiority of transformational leadership on building high-quality leader-follower (LMX) relationships based on the development of the Four I’s. First, by using a charismatic approach, transformational leaders create an idealize influence that augment follower’s emotions and commitment with the leader and organizational vision. Second, this paper claimed that by using inspirational motivating behaviour, leaders motivates followers to transcend from self-interest to commitment cooperative goals which led them to perform without expecting immediate personal benefits. In contrast, the transactional exchange-relationship with followers was meant to be limited to the interest on the reward promised as exchange for their task accomplishment in a very self-satisfying attitude. Given the importance of innovation in today’s organizations, intellectual stimulation was consider to be fundamentally related to followers’ commitment and organization increase on job performance and competitiveness. Unlike, by delimiting the outcome expected from followers and the reward system, transactional leadership was appeared to harm innovation in organization. Not different is the outcome of using managing by exception dimension. Finally, by having an individual consideration, transformational leadership are more likely to developed high-quality relationship members that are expected to be more loyal and perform in greater extent without expecting immediate tangible benefits. In contrast, commitment and higher achievement with a transactional leadership was limited to the exchange of direct economic and tangible benefits. 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