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.