Transactional Leadership vs. Transformational Leadership

“Effective leadership is putting first things first. Effective management is discipline, carrying it out.” – Stephen Covey

Are you a transactional leader or a transformational leader?

A transactional leader is focused more on completing a series of goals or “transactions”. Power is given to the leader to evaluate, correct and train followers when productivity is not up to the desired level and reward effectiveness when expected outcome is reached. Transactional leaders have short-term views and are focused on the present.

A transformational leader creates value and positive change in their followers. A transformational leader focuses on “transforming” others to help each other, to look out for each other, to be encouraging and harmonious, and to look out for the organization as a whole. In this leadership, the leader enhances the motivation, morale and performance of the group. Transformational leaders have long-term views and are focused on the future.

Any executive: CEO, CFO, or CIO needs to strike a balance between transactional and transformational leadership qualities. Creating forward movement in any company requires a mixture of both. There is no magic ratio. To be a successful leader one needs to find the right balance that works for him/her.

Qualities of a Boss

“The best executive is the one who has sense enough to pick good men to do what he wants done, and self-restraint to keep from meddling with them while they do it.” -Theodore Roosevelt

My CEO was a great chief executive officer, manager, and leader. I couldn’t ask for anyone better to lead a company or to report to. I started to think about the qualities that made him who he is–his leadership style. What is that “stuff” that made me stay with him for so long? I came up with three qualities: competence, trust, and loyalty.

Competence – My CEO was able to lead the organization successfully. Competence commands respect. While you can have the tile of CEO, can you lead as a CEO? Incompetent leaders have followers that do not respect them, which leads to a weak organization. Competence is developed over time and from different situations. It is a product of life and formed from the circumstances you encounter. My CEO led other financial firms prior to joining our company. He was also ex-military and a veteran. From those experiences he gained the competence to lead.

Trust – If competence is the foundation then trust is the house. Competence leads to trust. My CEO tried to form a relationship with his department heads. We were not just cogs in the machine, but to him we were vital to the operations of the business. There was mutual trust – he trusted us and we trusted him. He had high standards and communicated those standards to us and we knew why they were high.

Loyalty – How often can you say you are loyal to someone? There is your spouse, your parents, maybe even your best friend. But can you say the same for your boss? Loyalty is built over time and from events. I knew my CEO for over 11 years. We went through good times and bad. He took care of me until the very end. Even now that I am no longer with the firm I am still loyal to him.

Competence, trust, loyalty, are characteristics to being a good leader. My CEO gave me motivation, direction, and purpose. As I move into other positions my goal is to further develop and hone these characteristics myself to be a better manager, leader, and chief information officer.

The Clique: As CIO Are You Part of It?

One of the items that can make a CIO a success is the ability to be a part of the leadership team. Every firm has its own defined leadership team. As CIO you should be part of this team.

Within the leadership team there is yet another clique. The people in this club are the real power. They are the decision makers and power brokers. As CIO you might be part of the leadership team but not part of this clique. As CIO it is important to be a member of this clique-if nothing else but to successfully carry out your agenda.

The point of the clique is access-access to information, gossip, and politics. For example, I often had lunch with my CEO and COO-a privileged not given out to many. Not a formal scheduled lunch but more ad-hoc; a quick bite at the local diner. Therefore, it was a special honor to have lunch with them and engage in conversation. When I say conversation, I am not talking about the usually pleasantries about last night’s ball game, but conversations only heard by a few. The inner sanctum if you wish. This level of relationship is formed over time once trust, respect, and loyalty are built (loyalty being key). You should not expect to have these conversations immediately.

Becoming part of this clique is vital because most of a company’s operations are conducted outside of documented processes. Yes, I said it. If this comes as a shock then you are truly an outsider. Yes, there are processes in place but once you have these informal pre-conversations then pre-approval is granted. So the documented process is just a matter of dotting your ‘I’s and crossing your ‘T’s. This is important to further your agenda. I have seen IT executives at all levels fail to have these pre-conversations with the key power brokers – leading to problems and even failure.

If the CEO or COO searches you out to talk about non-business issues then chances are you are in a good position. Don’t abuse this position. As quickly as it comes it can also be quickly taken away.

As CIO you must be an executive officer-a leader, not only in title (those five letters in chief hold meaning and prominence), but also in how you carry yourself and act. The position of Chief Information Officer is an executive one. While you could say you are part of the team are you really part of the clique?