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Distinguish Between Transactional and Transformational Leadership. Leadership is the process by which a person exerts influence over others, and inspires, motivates, and directs their activities to help achieve group or organisational goals. It is about coping with change. A leader is faced with many challenges, particularly in complex, rapidly changing environments.
This means more than just sustaining a competitive advantage and strengthening profitability; it also means establishing ethical standards, ensuring the organisation is fostering a safe and equitable work environment, as well as attending to civic responsibilities. What makes an individual an effective leader? There is a vast amount of literature on this topic , but we will focus on the broader and more compassing way to define leadership, which is to identify them as either transactional or transformational; Transactional Leadership
Transactional leadership is characterised by an exchange relationship in which leaders motivate followers by providing them with rewards (or punishment) in return for follower effort (or lack of it). The primary objective is to ensure that subordinate behaviour is consistent with overall organisational goals. There are four dimensions of transactional leadership. ? Contingent Rewards: Leaders provide a variety of rewards in exchange for mutually agreed upon goal achievement. ? Active Management by exception: Leaders take corrective action for any deviation from rules and standards. Passive Management by exception: Leaders intervene only in circumstances where standards are not met. ? Laissez-faire: Sometimes abdicates responsibilities and avoids making decisions. Transformational Leadership Transformational leadership is quite distinct from transactional leadership. The concept of transformational leadership describes those who motivate followers to do more than they intended to do by presenting followers with a compelling vision and encouraging them to transcend their own interest for those of the group or unit.
In fact a defining characteristic of transformational leadership is the enormous personal impact it has on followers’ values, aspirations, ways of thinking about work and interpreting events. Transformational leaders transform followers by transforming followers’ values and beliefs. Mahatma Ghandi, Martin Luther King Jr. Kwame Nkrumah and Jerry John Rawlings both of Ghana are some leaders that have been described as transformational. According to Bass and Avolio (1994), there are four dimensions of transformational leadership: ? Charisma: Leader provides a clear vision and sense of mission, instils pride, and gains respect and trust. Communication: Communicates high expectations using symbols to direct efforts and express important purposes in simple ways. ? Intellectual stimulation: Promotes intelligence, rationality and careful problem solving. ? Individualised consideration: Gives personal attention, treats each employee individually, coaches, and advises. The attached table highlights some further differences between Transactional and Transformation leadership theories. Charismatic leadership is a form of Transformational leadership, though some literature has identified the latter as different from the former.
They can be used interchangeably. Conger and Kanungo argue that Charismatic leaders ‘critically examine the status quo with a view of developing and articulating future strategic goals or vision for the organisation’ and then leading organisational members to achieve these goals through empowering strategies’. They identify five key characteristics of Charismatic leaders: ? Vision and Articulation: The leader has a vision that is expressed as an articulate goal. The goal suggests a future that is better than the status quo.
The leader is able to clarify the vision in a way that resonates with others (“I have a dream”). ? Personal Risk: Charismatic leaders are willing to take high personal risk and incur high costs and engage self – sacrifice to achieve vision. ? Environmental Sensitivity: Charismatic leaders make realistic assessments of the environment and its constraints; and are able to identify needed resources to effect change. ? Sensitivity to Follower Needs; they are perceptive of other’s abilities and are responsive to their needs and feelings. Albert Nyakotey Year 1 Student CEMBA Date submitted : August 30, 2008 ATTACHMENT [pic]