Transactional leadership and transformational leadership are two different types of leadership. They both have their pros and cons. However, there are some fundamental aspects that both transactional leadership and transformational leadership are focused on: the completion of the task at hand, just treatment for the subordinates, and efficiency in the workplace.

It is important to understand the difference between transactional leadership and transformational leadership to choose the leadership style that is most appropriate for the situation. Both transactional and transformational leadership styles put weightage on different sets of ethics and principles. 

How to differentiate between transactional and transformational leadership?

To differentiate between transactional and transformational leadership, one has to pay attention to the character traits of leaders. Transactional leaders are reactive. They reward work that is well done and censure work that is incomplete or riddled with errors. 

On the other hand, transformational leaders are believers in proactive participation. It is not in their nature to sit back and relax while their subordinates do the heavy lifting. They lead by example and motivate their team members by actively engaging with the tasks at hand.  

Both transactional and transformational leadership styles have their strengths. However, if the task involves intellectual engagement, there is no alternative to transformational leadership. If the task demands hard work without intellectual responsibility, then the transaction style is appropriate, especially when the subordinates’ job is to follow orders to a tee. 

If a team is working on a problem that requires deep analytical thinking to identify subtle solutions, it will be better for it to be led by a transformational leader. Out of transactional and transformational leadership styles, it is the latter that provides room for creative liberties. 

Another difference between transactional and transformational leadership is that transactional leaders focus on goals while transformational leaders focus on the vision. Transactional leaders work optimally when there is a clearly-defined short-term goal or objective in sight.  They set up deadlines, processes and monitor the employees so they can finish on time.

Here is another difference between transactional leadership and transformational leadership. A transformational leader is more of a long-term thinker who is driven by upholding the overall vision of the organization. 

Both transactional and transformational leadership techniques and styles work best when the work is systematic and defined. However, there is a difference between transactional and transformational leadership when it comes to working styles and ethics. While transactional leaders believe in punishments and rewards to motivate employees, transformational leaders rely on charisma and enthusiasm. 

Hence, transactional leadership and transformational leadership differ in their outlook. A transactional leader is seen as a rule-following disciplinarian and a transformational leader is typically viewed as fun, charismatic and approachable.  

Both transactional and transformational leadership may be deployed, depending on the situation. If the task at hand requires the application of a mechanical process where there is hardly any room for change or improvement, transactional leadership may be more appropriate. 

On the other hand, the difference between transactional and transformational leadership shows us that transformational leaders bring the best out of employees in situations where creative solutions are encouraged and required.  Invention, innovation, and development are their strong suits. Since they are not married to rigid protocols, they give their employees the freedom to improvise. 

Once individuals understand the difference between transactional and transformational leadership, they can choose their style after reading the situation. One can always take the best parts from transactional and transformational leadership to create a unique leadership style. 

Harappa Education offers a course called Leading Self where you can learn about concepts like transactional and transformational leadership, the Ladder of Learning, and the Growth Mindset from some leading educators and trainers. 

With the integrated framework of the Ladder of Learning, any individual will be able to check which stage of the ladder they occupy in a certain field and how much work they need to put in to reach the top. 

Sign up for the course and begin your journey to lead yourself for success.


Explore topics such as What is LeadershipAuthentic LeadershipLeadership DevelopmentTypes of Leadership & Transactional Leadership from our Harappa Diaries section and lead on a path of self-development.

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