Effectiveness of Transactional and Transformational Leadership Styles

Leadership Models

Three models that have been studied in the evolution of leadership include situational, transformation, and transactional leadership theories. McCleskey (2014) proposes that leadership has been a focus of study for over a century. Leadership is viewed as a characteristic ability extraordinary individuals. This has been termed as a great man theory that has evolved in the study of leadership traits.

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Transformational leadership

Transformational leadership, on the other hand, is described method of leadership where the leadership strives to inspire and transform their employees and in so doing enhance their performance. This theory was a result of Burns but later developed further by Bernard Bass. Bass indicated that this form of leadership happens when leaders widen and raise the interests of their employee, increase awareness and acceptance of the purposes and mission of the organization and when they prompt the employees to look beyond their interest for the better good of the group (Hamilton, 2007).

A transformational leader is one who can increase the level of awareness among their followers to higher levels of realization of their importance and value of the set objectives as well the means to reach these goals. The components that have been used to describe the transformational leadership are inspirational motivation, intellectual stimulation, individualized consideration, and individualized influence (Hamilton, 2007). A leader who excels in these four aspects falls under the transformational leadership and thereby aims to influence his followers to bring the desired change in the organization. Transactional leadership, on the other hand, is considered as one that focuses on the form of exchanges that occurs between the leaders and their followers.

Transformational leadership, on the other hand, is comprised of four characteristics which include; charisma, inspiration, intellectual stimulation and individualized consideration. Charisma is said to be present when a leader offers vision and sense of mission, instills pride, and gains respect and trust. Idealized influence happens when a leader takes into his considerations the needs of his followers before his own needs (Hamilton, 2007). This implies that the leader behaves in a manner that matches articulated ethics, principles and values. The inspiration of a transformation leader is a said to occur when the leader can communicate high expectations, focuses on efforts and express the things that matter in a simplified manner. Inspiration brings about team spirit through enthusiasm and optimism for the future sustainability of the organization.

The other characteristic of a transformational leader is the intellectual stimulation that happens when a leader can promote intelligence, rationality, and problem-solving skills. Leaders portray this skill by always being open to new ideas and creative ideas to solve issues facing the organization. Transformational leaders also a characteristic referred to as an individualized consideration that requires the leader to give personal attention and treat each employee individually (Hamilton, 2007). Communication is an important element of bringing out this trait.

Transactional leadership

Transactional leadership is defined as a means of the relationships and interactions between the leaders and the subordinates. Change is introduced through collaborative process exchange process where the needs of the followers are met whenever the measures of performance are based on the agreement with their leader (Hamilton, 2007). Transactional leadership has four main characteristics which include; contingent reward, management by exception (active), management by exception (passive) and laissez-fire leadership.

 Effects of Leader Characteristics

Some factors such as gender, age, and education level, administrative and coaching experience have been considered to affect leadership behavior. The characteristics considered a true reflection of the real-life experiences. The study measured the leader’s behavior using multifactor Leadership Questionnaire. Through the study by Doherty (1997), some difference was found in the transformational /transactional leader behavior based on gender and age. Gender and age were found to be important factors that affected the effectiveness of leaders and the rate at which they would put extra effort. In this case, female and younger administrators were found to possess more transformational leadership traits while male and older leaders had more of transactional leadership behaviors. The younger and female leaders through the study were found to portray charisma, inspiration, and individualized consideration aspects of a transformational leader. Individualized consideration and charisma indicated a strong association with feminine gender-role orientation. Transformational leadership is however considered as both masculinity and femininity (Doherty, 1997).

Individualized consideration and charisma have been associated with involved leader behaviors which correspond with speculations on the nature of behaviors and observed gender variations. Management by variation has been on the other hand been describe being uninvolved leadership. Among the male leaders in the sports industry, this was found to reflect more propensity for greater autonomous, unlike their female counterparts. Another notable observation in the effects of leadership characteristics has been on the age-related variable of the sum of years of administrative experience where it is said to no effect the perceived leadership. This thereby indicates the importance of the two leader characteristics. It thereby points out to the effects of age of leaders on the corresponding experience. Other effects of leaders characteristics of gender and age are on the perception of the effectiveness of the leader and the extent to which they put extra efforts.

Role of transformational and transactional Leadership Styles on Job Satisfaction

The adoption of either transformational and transaction leadership has been closely linked to the success of an organization. In both these leadership styles assist in predicting subordinates satisfaction with the leaders. However ultimate satisfaction of the employees doesn’t solely depend on the leadership style but also affected by some explanatory. Studies have indicated followers were satisfied with contingent rewards dimension of transactional leaders and the individualized consideration of the transformational leaders. Transformational leadership is said to cause exploratory innovation. On the other hand, transactional leadership behaviors help to improve and extend the available knowledge and leads to exploitative innovation.

The two leadership styles provide different results in different scenarios. Transactional leadership styles provide high levels of satisfaction and identification with the organization as compared to transformational leadership. This was found to occur despite the fact the transactional leaders have a substantial influence on the follower.

Transformational leaders have been depicted by other studies as having a larger influence on the follower’s performance and innovation than transactional leaders. It was found to create team cohesiveness, work unit effectiveness and organizational learning were better achieved with transformational leadership than transactional leadership. Transformational leadership has also been found to facilitate the process of acceptance of organizational change especially in adoption and acceptance of technology and acquisition.

Having effective communication skills among transformational leader tends to have a higher acceptance of the strategic goals of the organization. The leaders thereby voluntarily help their employees and help deal with the occurrence of work-related issues. This thereby enhances job satisfaction among employees. The employees become committed and have with reduced turnover intentions.

The success of transformational leaders over the transactional leaders has been observed where the leader received extensive support in the most environment. Transformational behaviors have been associated with better sales performance and organizational citizenship trait as opposed to transactional. Transformational leadership has been known to enhance creativity by the individual and organization. This has been known to create a competitive advantage to an organization (Riaz & Haider, 2010). Studies indicated that transactional leadership was more significantly related to job success. On the other hand, transformational leadership was more related to job satisfaction. Through the regression analysis conducted, job success was more dependent on transformational and transactional leadership in relationship to career satisfaction (Riaz & Haider, 2010).

Fernandez and Awamleh (2004) carried out a study on the impacts of leadership styles on job satisfaction on the multicultural environment setting in UAE. The transformational leadership theory that is common among managers at different levels in UAE International companies. The UAE business sector forms a suitable population due to its significance to the regional economy as well as the largely sized contributions to the business development and technological advancements to the neighboring nations. The UAE economy is highly impacted by the inputs of the expatriate workers and professionals. This offers a rich workforce but provides a challenging environment for adoption of different leadership models (Fernandes & Awamleh, 2004).

The findings in this study seek to create an understanding of the effects of both transformational and transactional leadership styles adopted by managers on the satisfaction and self-perceived performance of the employees. It provides that self-esteem and leadership disposition act as moderators among the employees. The results indicated the existence of a strong effect of transformational leadership on satisfaction (Fernandes & Awamleh, 2004). The results posed a challenge to the commonly held perception that both leadership styles are necessities of leadership to be operationalized. The findings also pointed that cultural and demographic factors have a high impact on the leadership styles.

Influence of Gender and Culture on Leadership Styles

Some studies focused on determining the impact of gender and culture on transformational and transactional leadership styles by carrying out a comparative study of styles adopted by managers of SMEs in China and Sweden. It also sought to determine the factor with the greatest impact on leadership styles between gender and culture. The study used ten empirical hypotheses as a basis for formulating a hypothesis and coming up with a new model. The findings offered a revelation that both Chinese and Swedish manager of SMEs are prone to be transformational than transactional. The research did not find any influence of gender on the leadership styles. On the other hand, the culture was found to have higher levels of impact of leadership styles of SMEs in the two countries (Xiaoxia & Jing, 2006).

Effects of Transformational Leadership on Team Performance

Effective team performance is achieved from fundamental characteristics. In a successful team, the team members are required to integrate their actions. The environment in which team operates is becoming more complex and dynamic. An effective team is affected by the characteristic of the team leadership. Teams have an allocation of duties with some members given the task of defining team goals and coming up with relevant structures required for the team to accomplish these goals (Krishna, 2011). Team efficiency is also said to emerge from leaders who encourage their members to work hard and excel in their jobs. This empowerment process is mainly associated with transformation and inspirational leaders. The actions of the transformation leaders are relevant infusing the respective member’s individual goals with the team or organization goals. This implies that transformational leadership is important in directing the aligning the action and goals of the individuals with the aim of matching the focus of the team. The behavior of the transformational leadership affects the team performance through motivation of their followers (Krishna, 2011).

Organizational performance

The study by Ejere and Absilim (2014), offers great relevance to the understanding of organizational performance under either transformational or transactional leadership. It introduces an aspect that other studies have not done- the proposal to combine both the leadership styles concurrently but with due consideration of the situation and nature of employee to be impacted by the decision to adopt either style. To do this, the need for identifying critical factors which impact on organizational performance with the intention of improving such factors.

Organizational performance is an aspect of management that every manager always tries to improve. Ejere and Absilim (2014), focused on the impact of both transactional and transformational leadership styles and how they impact organizational performance. The study interpreted organizational performance on three frontiers; first, effort, second, satisfaction, and third, effectiveness. 184 randomly selected respondents were involved in the study, and it was found out that transformational leadership style yielded a rather positive effect on organizational performance while transactional leadership style yielded somewhat weak but positive organizational performance. The study did not, however, give reasons for the contradicting findings. To yield maximum output, the study concluded that management should come up with mechanisms that allow for the two leadership styles to be combined. The study warns that being aware of the situation as well as the type and demands of the task at hand before deployment of the leadership style is critical to ensuring success. It is, therefore, difficult to select one of the two leadership styles. One should have it in mind that combining both leadership styles rather than treat the leadership styles in isolation can be a better idea when it comes to performance.

Jiang et al., (2017) focused on two main facets of employee relationship with the executive branch; organizational citizenship behavior and employee’s sustainable performance. Organizational citizenship behavior has been demonstrated as a variable that determines sustainable performance and how well the variable gets manipulated is determined by how well leadership adopts transformational leadership. The behavior of organizational citizenship plays a critical role in transformational leadership and employee performance. Jiang et al. (2017), found out that transformational leadership positively influences the sustainable performance of employees. Further, the study found out that half the influence is mediated by their organizational behavior.

The current corporate leaders are torn between different leadership styles. Umme et al. (2015), came in and attempted to solve the debacle between both transactional and transformational leadership. Umme et al. (2015) recognize that culture has effectively changed with time and has become more complex. This complexity has been posed as the determinant of which leadership style a leader can successfully adopt. To drive to its conclusions, the study looked at both transformational and transactional leadership distinctively with the understanding that the current corporate context which demands leadership which is dotted with a clear vision and motivation power rather than dominance. The study, after looking critically at the pros and cons of each of the two leadership styles, came to a conclusion that transactional leadership is more forceful and as such, attracts little organizational performance. Umme et al. (2015) found transformational leadership to be more efficient regarding organizational performance.

    The assertions and evidence that has been laid by Umme et al. (2015), cannot be ignored in this study. It is often difficult to choose between two possible and working principles especially if evidence informs of conclusive studies is missing. When it comes to the two leadership styles, the puzzle has been solved with reasons that our study can refer to and borrow more effectively. Umme et al. (2015) are important when the need to carefully consider situations and using the evidence portrayed, determine the most applicable leadership style to impact performance given the circumstances.

Leadership styles and personality traits

    The adoption of either leadership styles is dependent on critical personality traits. Kuhnert and Lewis (1987), have expanded the two distinct levels of transactional leadership styles as well as a proposition of a three-stage developmental model of leadership. Kuhnert and Lewis (1987) acknowledge that transactional leadership rides on mutual dependence of leadership where leaders offer something subordinates, and in return, subordinates offer something that leaders want. Transformational leadership has been indicated by Kuhnert and Lewis (1987) to emanate from deeply entrenched personal value systems, for instance, justice and integrity. Such value systems have been indicated to be in a position to unite followers and to change their goals and beliefs. Kuhnert and Lewis (1987) examined a constructive/developmental theory which was shown to highlight the regularities in the way people construct meanings during their lives. Such meanings become complex as one grows. As the complexity grows, so is the personality and as a consequence, the thoughts, feelings, and actions are expanded. The growth has been modeled stage wise. A stage two leader is imperial and worries about personal goals and agendas, a stage three leader goes interpersonal while a stage four leader worries about institutional issues which help him model his standards and value system. The study is relevant in that is describes the trajectory a leader takes. As such, his personality is molded to effectively assume either transformational or transactional leadership.

    Leaders often subscribe to Theory X or Theory Y mostly depending on their training and personality. Odumeru and Ifeanyi (2013), is an analysis of previous works on the subject of transformational and transactional leadership with regards to McGregor’s theories. Kuhnert and Lewis (1987) ride on the perspective that the two; transformational and transactional leadership are distinctively different. Kuhnert and Lewis (1987) found out that transactional leadership is responsive, works within the organizational culture, entertains a system of rewards and punishments as well as maintenance of the status quo. On the other hand, transformational leadership is proactive, comes with new ideas, allows motivation to come from within, and it promotes creativity and innovativeness.

    Pastor and Mayo (2006) has compared both the leadership styles in a natural setting and as such conclusive and applicable evidence has been gathered and demonstrated. When the two leadership theories were compared to McGregor’s Theory X and Y, it was found out that transformational leadership rhymes well with Theory Y while transactional leadership rhymes with Theory X. Executives who support a culture of learning were more likely to adopt transformational leadership, while those executives oriented to performance goals seemed to adopt transactional leadership style as shown by Pastor and Mayo (2006). To add to the findings of Pastor and Mayo (2006), transformational leaders who rate themselves hold stronger Theory Y beliefs than transactional leaders who do the same. The mentioned traits were found to be more pronounced with executives with degrees than those without.

Odumeru and Ifeanyi (2013) makes a comparative analysis of the two leadership styles with respect to personalities and preferences. The study gives the distinctive characteristics of each style as well as compares that same characteristic in both leadership styles. Odumeru and Ifeanyi (2013), have gone ahead to comparatively look at the strengths and weaknesses of the two styles with regards to what each style demands from its subscribers in terms of personality traits. 


Doherty, A. (1997). The Effect of Leader Characteristics on the Perceived Transformational/Transactional Leadershi and Impact of Interuniversity Athletic Administrator. Journal of Sport Management , 275-285.

Ejere E.I. and Absilim U. D. (2014) Impact of Transactional and Transformational Leadership Styles on Organizational Performance: Empirical Evidence from Nigeria. The Journal of Commerce, Vol. 5(1) 30-41

Fernandes, C., & Awamleh, R. (2004). The Impact of Transformational and Transactional Leadership Styles on Employee’s Satisfaction and Perfromance: An Empirical Test in a Multicultural Environment . University of Wollongong, Dubai.

Hamilton, M. (2007). The Interaction of Transactional and Transformational Leadership. Online Journal of Workforce Education and Development.

Pastor J. C. and Mayo M. (2006) Transformational and Transactional Leadership: An Examination of Managerial Cognition among Spanish Upper Echelons. International Cross-Cultural Conference of Leadership-Seoul, Korea.

Jiang W. Zhao X. and Ni J. (2017) the Impact of Transformational Leadership on Employee Sustainable Performance: The Mediating Role of Organizational Citizenship Behavior. Sustainability.

Judge, T., & Piccolo, R. (2004). Transformational and Transactional Leadership: A Meta-Analytic Test for the Relative Validity . Journal of Applied Psychology , 755-768.

Kuhnert K.W. and Lewis P. (1987) Transactional and Transformational Leadership: A Constructive/Developmental Analysis. Academy of Management Review. Vol 12(4), 648-657

Krishna, R. (2011). Effects of Transformational Leadership on Team Perfomance . Internatiobal Journal of Business Management , 152-157.

McCleskey, J. A. (2014). Situational, Transformation, and Transactional Leadership and Leadership Development . Journal of Business Studies Quarterly.

Odumeru J.A. and Ifeanyi G.O. (2013) Transformational vs. Transactional Leadership Theories: Evidence in Literature. International Review of Management and Business Research. Vol 2(1)355-362.

Riaz, A., & Haider, M. H. (2010). Role of Transformational and Transactional Leadership on Job Satisfaction . Business and Economics Horizons, 29-38.

Umme S.S, Mohd R.D. and Liu Y. (2015) Transactional or Transformational Leadership: Which Works Best for Now? International Journal of Industrial Management. 1-9

Xiaoxia, P., & Jing, W. (2006). Transformational Leadership Vs. Transactional Leadership: The Influence of Gender and Culture on Leadership Styles of SMEs in China and Sweden . Kristianstad University.

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