Analyze and describe the differences between the characteristics of transactional and transformational leadership. Which do you feel is more effective and why? Provide an example, either from your organization or one you know well to illustrate your points.
As I read about transactional and transformational leadership, I couldn’t help but think about a conversation I had earlier in the day about transactional salespeople vs. salespeople who are capable of pivoting an organization. Also, I am happy to have a leadership use case which I can talk about in the third person. I work with salespeople every day, they have customer requirements, every requirement is super urgent and the feature that I need to build and deliver is positioned as the organizational equivalent of Shangri-La. Conversely, every feature request can derail all strategic initiatives and achieve corporate extinction.
We have plenty of transactional salespeople, and we have few transformational salespeople. Within our organization and many organizations, salespeople are the opportunity leaders (let’s consider marketing and sales synonymous for this post); they are the tone and tenor which creates an external perception of an organization, it’s products, go to market strategy, etc… The text mentions that transactional and transformational leadership complement each other, and I would agree. (Robbins & Judge, 2018, p. 197) Most of our transformative salespeople service both transactional needs like customer x needs to purchase widget y, but they also can identify more complex requirements, articulate the value proposition, understand how the customer requirement aligns with market demand, the strategic direction of our organization, metric opportunity cost, etc… These leaders are change agents for the organization, helping to drive the future direction in a meaningful way. Contrast the sophistication of a transactional and transformational salesperson, and you’ll observe that the transactional salesperson is far more focused on a near-term goal, you hear phrases like “I just wanna get the deal off the street.” In the case of a transactional salesperson, the velocity of reaching the goal always take precedence over a more lofty goal, many of these individuals will articulate response time as their primary value proposition. Transactional salespeople service a need where transformational salespeople create a vision and define a need.
Where it gets fascinating is the idea that most salespeople think they are all transformational leaders, of course, you have to be a transformational leader to be an entrepreneur, right? Wrong! We struggle with this as an organization; the same latitude afforded a transactional leader afforded to a transformational leader comes with immense opportunity cost. Opportunity cost is hard to metric, but it exists and impacts numerous facets of the organization.
David Ingram’s description of transactional and transformational leadership in his “Transformational Leadership Vs. Transactional Leadership Definition” article rings true. Transformational leaders are concerned with “keeping the ship afloat”, in the salesperson context, selling a widget and generating revenue. Transformational leaders are, well, transformative; they help develop strategies, pivot organizations into new markets, etc… (Ingram, 2018) I often think about the motivation of commission and salespeople, while transactional salespeople are highly motivated by commissions, should transformational salespeople be compensated differently to encourage their leadership? Maybe this is the ultimate example of “contingent reward” (Robbins & Judge, 2018, p. 199)
There is no doubt in my mind in the context of today’s “volatile, uncertain, complex and ambiguous (VUCA) business environment” we need “Transfor-sactional” leadership mix more than ever. (Dartey-Baah, 2015) “VUCA” conditions demand that leaders be able to solve both near-term tactical problems while considering the impact on long-term strategy. As far as which is more effective and why, I’ll take transformational leadership because I believe I can mentor someone to be a transactional leader, but the qualities required to be a transformational leader are harder to find and/or develop. With this said there is danger in a transformational leader being overly ethereal, but I’ll take my chances.
Dartey-Baah, K. (2015). Resilient leadership: A transformational-transactional leadership mix. Journal of Global Responsibility, 6(1), 99-112. Retrieved from https://search-proquest-com.portal.lib.fit.edu/docview/1675140305?accountid=27313
Ingram, D. (2018, February 26). Transformational Leadership Vs. Transactional Leadership Definition. Retrieved April 04, 2018, from http://smallbusiness.chron.com/transformational-leadership-vs-transactional-leadership-definition-13834.html
Robbins, S. P., & Judge, T. (2018). Essentials of organizational behavior. New York, NY: Pearson.
Scott, this was a very interesting read. Over the years I have observed all kinds of leadership styles in the CEO position, those who have come from differing backgrounds, some emerge from the sales ranks, some from finance, some from engineering and all have very different styles, which are often pretty predictable. I would be interested to know if you charismatic CEO has a pedigree in sales which often provides that charisma over substance feel, don’t bother me with the details, why aren’t you as excited two weeks later sort of presentation. I also found the description you provided of your Chief Human Resources Officer (CHRO) interesting. I think the CHRO position can vary widely from organization to organization and the leadership can span from abysmal to incredible, all depending on the value the organization places on human capital. I know my organization has been through a few CHROs. We now have a natural leader in the CHRO role, the type of leader who looks to their left and their right and puts other first.
In the past, we’ve had uninspired transactional leaders in the CHRO role and what I can say is an inspired CHRO in a market where every organization is competing to hire and develop human capital the CHRO role is a critical one.