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Ali Khan
Published On
January 23, 2024
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Transactional vs Transformational Leadership

Transactional vs Transformational Leadership: Transformational leadership be used to create a positive work culture transactional vs transformational leadership  transformational and transactional leadership  transactional leadership style  inspirational motivation  transactional leaders focus  leadership effectiveness  intellectual stimulation  personal and professional growth  idealized influence

Let's talk about leadership, shall we? It's the heart and soul of any team or organization. Now, there are a couple of styles you've probably heard about transactional and transformational leadership. They're like the hot trends in the leadership world! Understanding the difference between these two can be a game-changer for you and your team. 

Transactional leadership? It’s like having a coach who focuses on the rules of the game – they set clear goals, give direct feedback, and reward or correct based on your performance. Transformational leadership is more like that inspiring mentor who pushes you to grow and innovate. They’re all about firing up your passion. 

It's all about making smarter decisions and boosting your team's performance. So, in this blog post, we're going to dive into what these styles are all about, their pros and cons, and how to figure out which one is the perfect fit for your team. Let's get started!

Breaking Down the ABCs of Transactional and Transformational Leadership

Let's take a brief overview of what makes transactional and transformational leadership tick.

Main Components of Transactional

  • Setting clear expectations and goals
  • Establishing deadlines for completion
  • Offering rewards for meeting goals or penalties for failing to meet them 
  • Monitoring progress towards the goal
  • Encouraging employees to focus on the task at hand. 

Main Components of Transformational

  • Showing a genuine interest in each employee's development
  • Encouraging creative thinking and problem-solving 
  • Providing guidance and support to employees
  • Developing relationships with team members 
  • Promoting open, honest communication 
  • Fostering a strong team culture

What Is Transactional Leadership?

Transactional leadership is a type of business leadership based on creating an exchange between the leader and followers. The leader sets clear goals, outlines expectations, identifies rewards (or punishments) for success or failure, and provides consistent feedback to followers. In this leadership style, the leader's power is based on their position—they are a manager or supervisor.

The Characteristics of a Transactional Leader

Let’s get to know the transactional leader: focused, pragmatic, and results-oriented, they're the ones who keep the wheels turning smoothly.

1. Setting Crystal Clear Goals and Objectives

A transactional leader establishes clear goals and objectives for their team to follow. They set expectations, provide rewards or punishments for success or failure, and give consistent feedback. This ensures timely and efficient completion of tasks, optimizing productivity and effectiveness.

Additionally, a transactional leader is often seen as authoritative since they have a certain level of organizational power. They may also be seen as being strict regarding deadlines and quality standards since they are focused on quickly getting results from their team.

2. Rewarding the Good, Tweaking the Not-so-Good

A transactional leader focuses heavily on rewards and punishments for their team members. They set expectations and then assign rewards or punishments accordingly when those expectations are met or not met. This leadership style is often seen as a more traditional, authoritarian approach to managing people.

It can be effective for teams who need clear guidance and consistent feedback but may not work as well with teams who need more creative freedom and autonomy. Additionally, transactional leadership can create an environment of fear and tension if rewards or punishments are too harsh or unclear.

3. Keeping the Lines of Communication Wide Open

A transactional leader also maintains consistent communication with their team members. They provide task feedback, clarify goals and objectives, and address any issues. This helps ensure the team remains focused and productive while maintaining morale. Furthermore, it empowers the transactional leader to guarantee the accurate and timely completion of all tasks. By maintaining consistent communication, transactional leaders can help their teams grow and develop as they work towards meeting their goals.

4. Championing Discipline with a Smile

A transactional leader also emphasizes discipline in their team. They may do this by setting strict deadlines or standards for performance, and they are more likely to enforce rules that encourage creativity. This type of leadership can be effective when a company needs to quickly reach specific goals, but it can be detrimental if people feel that their ideas need to be heard and valued. Additionally, transactional leadership can create a culture of fear if punishments are too harsh or not explained clearly.

5. Results-Focused Approach

Transactional leaders are focused on results and may prioritize completing tasks quickly over collaboration or innovation. They may also be less likely to take risks to ensure their team efficiently meets their goals. This type of leadership can be effective for teams that need structure and clear direction, but it may work better when creativity or problem-solving is needed. Additionally, transactional leadership can place too much emphasis on the bottom line and need to recognize individual contributions or team effort.

Transactional Leadership Examples

See transactional leadership in action with compelling examples.

  • Performance-based incentives: A leader may set up a performance-based incentive system to reward employees for meeting or exceeding certain goals. 
  • Quality control: A transactional leader may focus on maintaining high standards and quality control to ensure the team produces quality work. 
  • Workflow management: Transactional leaders may also focus on managing their team's workflow to ensure that projects are completed on time and within budget. 
  • Team meetings: Transactional leaders also conduct regular team meetings where they discuss progress goals, and offer valuable feedback and guidance to the team.

What Are Some of the Advantages and Disadvantages of Transactional Leadership?

Let's examine the pros and cons of transactional leadership, balancing its efficiency and clarity with its limitations.


  • Creates an environment with clear expectations and goals, which can motivate team members.
  • Provides a structured framework for teams to operate within, making it easier for employees to stay organized and on task. 
  • Rewards and punishments provide a tangible incentive for team members to work hard and meet their goals.


  • Can be too rigid and inflexible, making employees feel overworked and underappreciated. 
  • Only sometimes fosters creativity or innovation, focusing on results rather than the process. 
  • Can also lead to a lack of trust between leaders and team members, as the rewards and punishments are based on performance rather than relationships.

What is Transformational Leadership?

Transformational leadership is a powerful leadership style that inspires followers to reach their full potential through motivation, engagement, and unwavering support. This type of leader does not rely solely on their position in the organization for power—they gain respect and admiration from followers through their actions. They foster an environment of collaboration and creativity while setting employees' goals and expectations. Transformational leaders strive to bring out the best in each team member by providing guidance, coaching, and feedback.

The Characteristics of Transformational Leaders

Let's look at the key traits that mark a transformational leader and how they spark change and ignite passion.

1. Fostering Collaboration

Transformational leaders foster a collaborative environment with open communication, empowering employees to contribute ideas that propel the team toward its goals. They also actively listen to their team members and provide feedback on how they can improve or develop new skills. 

This encourages employees to work together towards a common goal and fosters a sense of trust and respect between leader and followers. Transformational leaders also create an environment of open dialogue where everyone feels comfortable expressing their opinions and ideas. This fosters a culture of creativity and encourages employees to think outside the box, which can drive the discovery of innovative solutions.

2. Offering Guidance and Support

Transformational leaders provide both guidance and support to their teams. They offer advice on how best to tackle projects, as well as helping individuals with any challenges they may be facing. Transformational leaders understand that everyone learns differently and adjust their approach accordingly. 

They also praise team members for their achievements and successes to motivate them and encourage growth within the team. Furthermore, they can answer questions, address concerns, and provide support when needed. Transformational leaders ensure that team members feel valued and empowered, which can lead to a positive workplace culture.

3. Leading by Example

Transformational leaders set an example for their followers by modeling the behaviors that they expect from them. They demonstrate good work ethic, integrity, and respect for their team members. They also strive to be humble and show appreciation for the efforts of their followers. This helps to motivate employees and inspires them to do their best work. Additionally, transformational leaders are passionate about what they do, which can be infectious and help fuel team members' passion.

4. “Growing Together” Mindset

Transformational leaders focus on developing each employee so they can reach their full potential. This includes providing coaching and feedback on improving and helping them set and reach goals.  

5. Inspiring Others

Transformational leaders strive to ignite inspiration and motivation within their team members. They do this by setting a positive example and providing encouragement. They celebrate successes, recognize hard work, and focus on developing each individual's skill set. They also create an environment of openness where team members can openly communicate ideas, feelings, and suggestions without fear of judgment or criticism. 

By doing so, transformational leaders foster a team of motivated, inspired individuals driven toward success. This leadership style encourages employees to go above and beyond their expected duties, allowing the organization to reach its full potential.

Transformational leadership examples

Here are some real-world examples where transformational leadership has not just changed the game but has rewritten the rules.

  • Motivating others: A leader may motivate their team by recognizing successes, offering rewards for meeting goals or providing support and encouragement. 
  • Mentorship: A transformational leader may mentor their team, providing guidance and advice on how to reach their goals. 
  • Setting expectations: Transformational leaders may set expectations for the team regarding performance, quality, and timeline. This fosters alignment and ensures all individuals work together towards a shared objective. 
  • Encouraging creativity: Transformational leaders encourage their team to think creatively and develop new solutions to problems. This can help foster an environment of innovation and productivity. 
  • Communication: Transformational leaders focus on developing relationships with their team, which requires effective communication and listening skills to build trust and understanding.

What are some of the advantages and disadvantages of transformational leadership?

In this section, we explore the highs and lows of transformational leadership, where we weigh its potential to inspire against the challenges it may face.


  • Creates a culture of respect, collaboration, and creativity 
  • Inspires followers to reach their full potential
  • Builds relationships and trust between leaders and team members
  • Encourages employees to be innovative


  • Can lead to burnout if expectations are too high 
  • Not always be suitable for teams with rigid structures 
  • Not easy to implement in fast-paced environments
  • Ineffective in organizations that require more relaxed discipline and structure.

How to Use Transformational Leadership to Build a Rockin’ Work Culture

Transformational leadership is an effective way to create a positive work culture by inspiring employees and fostering collaboration. Leaders should provide guidance and support, set realistic expectations, and encourage creative thinking. This fosters an environment characterized by respect, trust, and productivity. 

Additionally, leaders should strive to provide recognition for successes and accomplishments to motivate employees. This can come as rewards such as bonuses or additional paid time off. However, ensuring employees feel valued and appreciated through regular feedback and constructive criticism is also important. 

Leaders should also strive to create a safe and inclusive environment where employees feel comfortable voicing their opinions and ideas without fear of judgment or ridicule. Promoting open communication and fostering collaboration among team members is crucial to align everyone towards a shared objective.

Transactional versus Transformational Leadership: Which is Better?

Determining which leadership style is better is difficult as both transactional and transformational approaches have advantages and disadvantages. Ultimately, the best approach depends on the organization's goals, culture, and team dynamics. 

In general, transactional leaders are good at setting clear expectations for employees and keeping them focused on the task at hand. They monitor progress effectively and provide rewards or penalties to motivate the team.

On the other hand, transformational leaders focus on inspiring followers through guidance, support, and relationship building. They promote creative thinking, collaboration, and innovation while maintaining a safe and inclusive environment for employees. 

Therefore, it is best to use a combination of transactional and transformational leadership styles to create an effective work environment. This approach allows leaders to provide structure and discipline while inspiring employees to reach their full potential. By understanding the strengths of each type of leadership style, managers can better determine which approaches are best suited for any situation. 

In addition, leaders need to recognize that different team members may respond differently to different types of leadership. As such, it is important to remain flexible and open-minded to ensure the team is comfortable and productive. Effective leaders should use the right combination of transactional and transformational approaches to get the best results from their team.

The Perfect Mix: How Transactional and Transformational Leadership Can Work Together

Discover how blending the structured approach of transactional leadership with the visionary nature of transformational leadership can create an unstoppable team dynamic.

Setting Clear Expectations and Goals

Leaders should communicate the organization's objectives and set realistic deadlines for completion. At the same time, they should also provide support and guidance to help employees reach their goals. 

Recognizing Accomplishments

Leaders should reward employees when they successfully achieve their goals, as this encourages motivation and productivity. However, providing constructive feedback is also important so employees can improve their performance.

Promoting Collaboration

Effective leaders actively cultivate a culture of transparent communication and seamless collaboration among team members, fostering a shared sense of purpose.

Developing Relationships

In addition, it is important for leaders to show a genuine interest in each employee's development and to provide them with the necessary resources to help them reach their full potential.

Key Takeaways

  • Transactional Leadership: Focuses on clear goals, direct feedback, and a system of rewards and corrections. It's about efficiency, effectiveness, and getting results.
  • Transformational Leadership: Inspires growth and innovation, fires up passion, and fosters a sense of purpose. It's about motivation, engagement, and building a strong team spirit.

In short, the best leaders know when to be transactional and when to be transformational. They understand that different situations and different team members may call for different approaches. By mastering the art of both styles, you can create a work environment that not only reaches its goals but does so with a team that's motivated, inspired, and constantly evolving.


We've journeyed through the worlds of transactional and transformational leadership, uncovering their unique flavors and how they shape the dynamics of any team or organization.

In conclusion, transactional and transformational leadership styles have advantages and disadvantages. Transactional leaders effectively monitor progress and provide rewards or penalties to keep the team motivated, while transformational leaders focus on inspiring followers through guidance, support, and relationship building. 

Transactional leadership, with its clear-cut goals and a strong focus on results, is like the reliable backbone, ensuring that everything runs like a well-oiled machine. Transformational leadership is the breath of fresh air that infuses teams with passion, creativity, and a drive to innovate. It's like having a visionary guide

Ultimately, it is best to combine these two approaches to create an effective work environment that encourages creative thinking, collaboration, and innovation. By understanding the strengths of each type of leadership style, managers can better determine which approaches are best suited for any situation. With the right combination of transactional and transformational leadership styles, organizations can foster a positive work culture that encourages employee development while meeting their goals.


What is transformational leadership style?

Transformational leadership is a powerful style that centers on inspiring followers and cultivating meaningful relationships. This type of leader seeks to motivate team members through guidance, support, and open communication to promote creative thinking, collaboration, and innovation. Transformational leaders also strive to create an inclusive environment where employees feel safe and supported. 

What types of leaders are transactional?

Transactional leaders effectively set clear expectations and goals, establish concrete deadlines for completion, provide appropriate rewards or penalties for goal achievement, diligently monitor progress toward the desired outcome, and foster employee focus on the task at hand. These leaders focus on setting up systems and structures to help them achieve their objectives. 

What is the difference between a transactional and a transformational conversation?

The primary difference between a transactional and a transformational conversation is the focus. A transactional conversation focuses on setting expectations, monitoring performance, and rewarding or punishing employees to keep them focused on their goals. 

On the other hand, a transformational conversation focuses on inspiring followers through guidance, support, and relationship-building to foster creative thinking and innovation. Both conversations are important for fostering a positive work environment, but the approach will depend on the organization's goals and culture. 

What is the role of a transactional leader?

The role of a transactional leader is to provide structure and discipline in the workplace. They are responsible for setting clear expectations, monitoring progress, providing rewards or penalties when necessary, and encouraging employees to stay focused. Transactional leaders strive to maintain order and efficiency by establishing systems to help them achieve their objectives. 

What is the transactional approach?

A transactional approach is a type of leadership that focuses on setting clear expectations, monitoring performance, and rewarding or punishing employees to keep them focused on their goals. This approach emphasizes discipline, structure, and the idea that rewards should be given for successful outcomes. Transactional leaders strive to set up systems to help them achieve their objectives. 

Is transformational leadership a skill?

Yes, transformational leadership is a skill. It requires inspiring and motivating followers through open communication, guidance, and relationship building. Transformational leaders must also understand their team's strengths and weaknesses to create an inclusive work environment that fosters creative thinking and innovation. 

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More Articles From Ali Khan

Ali is a co-founder of Wrenly known for his innovative thinking and exceptional drive to create value for every Wrenly customer. His dedication, mentorship, and leadership skills have not only shaped various careers but have also made him an invaluable asset to the Wrenly team.

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