Sunday, January 13, 2008

Transformational and Transactional Leadership: What Leadership Style Proved to Work the Best?

*****WARNING*****
This is the longest research paper that I have ever wrote. It is approx. 2800 words on 10 pages at 12pt Time New Roman font. This was a blog worthy paper. It is quite boring.
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NOTE: DO RESET MIND AFTER READING





Transformational and Transactional Leadership: What Leadership Style Proved
to Work the Best?
Michael A. Miller
University of Maryland University College






Intro


Art Vandelay is a manger at the nations largest import/export company. He has always thought he was a good manager. He always rewarded his employees with bonuses when they gave him the numbers he wanted. Art was noticing that many of his employees were burning out and did not want to work. So to increase moral, he started to give out other rewards that should increase the moral of his employees. His plan failed and the employee’s moral fell even more. After going to a management class, Art found out that he was a transactional leader. He learned that a transformational leader tended to increase production and moral, so Art decided to change his style. Since Art changed his leadership style, the moral of his employees went up and also the company’s production numbers. Is transformational leadership style really better than a transactional leadership style? What is the history between the two different leadership styles? What does a transformational or a transactional leader look like? What do some of the studies say about the production of a transformational leader verse a transactional leader?

History and Defining Transactional and Transformational

History of Research

In history, we see that leaders are remembered and not the people that followed. To figure out what drive these ordinary people to become leaders, we study their character and personal traits. With the study, we find different leadership styles that help push these people into the history books. One of the theories found in these studies was the transformational theory. The theory has it roots in work done by Max Weber in 1963 on charismatic leadership and Downton’s study of rebel leadership in 1973 (Klinsontorn, 2007, p. 18). These studies came in a time that researchers were looking for different traits that a leader needed to be successful. The studies also looked into the effects leaders had on subordinates moral and performance (Klinsontorn, 2007, p. 23). What most of the studies found was a definition for a good leader. The definition for a good leader is “someone who integrated getting the job done with concern for those doing the work” (Klinsontorn, 2007, p. 26). As the global economy began to increase in the early 1980s, new leadership theories were discovered so companies could compete in the global economy (Klinsontorn, 2007, p. 26). In 1978, J. M. Burns identified transactional and transformational as leadership styles (Kuhnert & Lewis, 1987, p. 648) from researching political leaders (Klinsontorn, 2007, p. 24). B.M. Bass would go farther then the political arena and apply Burns theory to organizational management in his 1985 study (Kuhnert & Lewis, 1987, p. 648). From there, many would study the differences in the two theories to find which worked best for producing the numbers required to sustain a business.

Transactional Leadership

Definition

Burns researched that there are 2 different styles of leadership; the styles were transactional and transformational. According to Burns, a transactional leader was someone “who ‘ approaches followers with an eye to exchange one thing for another: jobs for votes, or subsidies to include for campaign contributions’” (Klinsontorn, 2007, p. 35). Kuhnert and Lewis (1978) would make a broader definition by defining transactional “when one person takes the initiative in making contact with others for the purpose of an exchange of something valued” (p. 648) In both cases, a transactional leader would exchanged an reward for something they want. An example using Burns definition, it would be a like presidential candidate telling people that if they vote for him, he will reduce taxes paid to the government. In the business world, it would be a manager giving a bonus to an employee for the most sells or redesign how to organize company’s files. Bass expanded on the definition by saying that a manger must also clearly define how the work is needed to be accomplish so an employee may receive his reward (Klinsontorn, 2007, p. 35). Bass explains that the reason behind clear explanation of work would increase moral as the employee see that is doing what the manger told him. Also employees would know how much work is required to achieve the goals (Klinsontorn, 2007, p. 35). An auto repair floor manager would be an example of using transactional leadership. The floor manager must make sure a certain number of cars are fixed and also make sure the cars are fixed by a certain time. Employees know that they are required to fix cars in a certain amount of time to get breaks. If an employee takes to much time, he may lose his break to catch up and deliver the goal for the day. On the floor manager side of the ball, he must give the breaks that are promised to his workers.

Rewards

Even if a leader gives the followers what they want, they still might not be happy. Studies have shown that the exchanges of rewards might not be of equal value. The studies showed that there are actually two different levels of exchanges. These two levels are high-quality and low-quality exchanges (Kuhnert & Lewis, 1987, p. 649). A low-quality exchange is “based on the exchange of goods or right” (Kuhnert & Lewis, 1987, p. 649). The goods and right would be pay, bonuses, work hours, and etc. So a high-quality exchange would be more about bonds between leaders and followers (Kuhnert & Lewis, 1987, p. 649). A study done by Graen, Liden, and Hoel on the two levels of exchanges show that followers with high-quality exchanges with leaders will more likely with a company longer where as a low-quality exchange followers (Kuhnert & Lewis, 1987, p.649). An example of high-quality exchange is trust. Trust is a “modal values that bond leaders to followers in an attempt to actualize the needs of both parties” according to Burns (Kuhnert & Lewis, 1987, p. 649). Archbold (2004) said in his dissertation, that trust “is essential to leaders credibility in fulfilling with the agreed upon reward once the task is completed within the present parameters” (p. 53). A follower must trust that is leaders is going to follow through with his part, if the follower does what he told to do. In the car repair example, if the floor manager does not allow his workers break that he promised, workers might not work as hard because the know that no matter what they do, they will not get a chance to take a break beside for lunch.

Factors

As trust is something to gain, a leader using the transactional will use different ideas to gain that trust. Sarros & Santora say that there are two factors in a transactional leadership, they are: contingent and management by exception. Contingent means to reward a follower that meets the expectation or punish for they fail to meet the expectation (Klinsontorn, 2007, p. 37). A problem that Klinsontorn (2007) would write about, is a follower might see a short-term goal and not see that the long term effects of the decision (p. 37). This could cause a problem in creating a trust bond between manager and employees.
Another factor within transactional leadership is management by exception. There are two different types of management by exception: passive and active (Klinsontorn, 2007, p. 38). In Washington’s (2007) dissertation, she describes active management by exception as a “leaders actively monitoring follower performance in order to anticipate deviations from standards prior to their becoming problems (Hater & Bass, 1988)” (p. 19). This could help followers to stay on track to receive the rewards. If a supervisor is always trying to help his/her employees will get the employees to trust them. The follower knows that the leader wants the rewards he promise to the follower. The follower would continue to reach the goal that was created by the leader. In a passive management by exception leadership factor, the leader only corrects when the performance is not meeting with goals (Klinsontorn, 2007, p. 38). Only intervening when there is a problem would also hinder the trust in the leader-follower relationship. The worker might be able to know if they are doing what is right to achieve their reward for working. A passive management by exception on come around when on had already missed a mark, they follower would not know where he/she went off track.

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Stop here and take a 5 min break. Grab a snack, hit the toilet, whatever you feel like doing for 5 mins.
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Transformational Leadership

Definition

A transactional leader uses rewards to motivate employees to get work done. Transformational leadership is when leaders and followers engage to increase motivation and morality (Klinsontorn, 2007, p. 20). Bass would compare the two using a John F Kennedy speech. Bass wrote, “’The transformational leader emphasized what you can do for your country – the transactional leader, what your country can do for you’ (Bass, 1999, p.9)” (Klinsontorn, 2007, p. 18). Kuhnert and Lewis (1987) would define transformational leadership as “more than the compliance of followers; it involves shifts in the beliefs, the needs, and the values of followers” (p. 648). Boerner, Eisenbeiss & Griesser (2007) states a transformational leader would align personal goals with organizational goals “and provide the follower with support, mentoring, and coaching” (p. 16). A transformational leader would need to be able to challenge the followers to send then to new heights and making go farther then expected (Boerner, Eisenbeiss, & Grieser, 2007, p. 16)
Just like a transactional leader needs to clearly speak so followers know what to do, transformational leaders must also be able to communicate well. The difference is a transformational leader must captivate followers, use “direct eye contact, show animated facial expressions, and have a powerful, confident, and dynamic interaction style” (Klinsontorn, 2007, p. 20). A transformation speaks to convince the followers to raise and beat the expectation. It is like a college football coach. The coach must be able to make a team believe that they can win that game. When to coach speaks, he must be able to connect with the players. Off the field, the coach must be able to mentor the players in to better people. The coach also uses the personal goals of player and other coaches to prefect a team that will be able to reach goals the coach has for the team. Sometimes a coach must convince his team that they can win a football game.

Rewards

In transactional leadership style, rewards were high- and low-quality exchanges between leader and followers; transformational also has high-quality exchanges. For the most part, these high-quality exchanges are not tangible like bonuses and paid vacation (Klinsontorn, 2007, p. 20). An exchange that happens is power to the leader given by the followers (Klinsontorn, 2007, p. 20). The leader gains the power because he has become a role model to his/her followers (Klinsontorn, 2007, p. 20). Both Klinsontorn (2007) and Archbold (2004) say that followers have trust in a transformational leader. This trust comes from the fact that the leader is trying to achieve both person and organizational goals. The follower must know that the leader is going to achieve the goals before the trust can be built.

Factors

Just like transactional, transformational also have factors. The components of transformational leadership are: idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration (Boerner, Eisenbeiss, & Griesser, 2007, p. 16-17). Idealized influence is influencing followers to be like the leader or charisma (Washington, 2007, p. 16). This is where the trust comes in to play. Leaders are to be role models to their followers. (Boerner, Eisenbeiss, & Griesser, 2007, p. 16). A leader will also consider follower’s goals before himself (Boerner, Eisenbeiss, & Griesser, 2007, p. 16). Klinsontorn (2007) writes that there are “two distinct factor of idealized influence are: idealized behaviors displayed by the leader and idealized attributes perceived by subordinates (Ball, 1988)” (p. 32). That is the leader must show behaviors and personalities that one would follow. Klinsontorn (2007) also says that idealized influence is the most important part of a transformational leader (p. 32).
Next factor is inspirational motivation, which is “providing meaning and challenge to follower’s work” (Boerner, Eisenbeiss, & Griesser, 2007, p. 16). To inspire the followers, a leader would demonstrate their goal commitment and shared vision with followers (Washington, 2007, p.17). With this quality, leader would show enthusiasm and optimism to motivate followers and raise individual and team spirit (Boerner, Eisenbeiss, & Griesser, 2007, p. 16). Some signs would be ready to start a new adventure or when a problem is finished. The leader might giver encouragement to people that might be down to raise their hopes.
The third factor is intellectual stimulation. Intellectual stimulation would allow followers to approach an old problem in a new way or question why things are done in a certain way (Boerner, Eisenbeiss, & Griesser, 2007, p. 16; Klinsontorn, 2007, p. 32). The leader will encourage followers to think outside of the box to develop the new ideas for solving problems. An example that uses the intellectual stimulation is the United States Air Force’s Air Force Smart Operation 21. The Air Force encourages its Airmen to think of new and better ways to do daily operations. This program is used to cut time and money to perform daily operations like aircraft mechanics learn about other systems to have the job done faster.
The fourth factor is individualized consideration or a leader notices an individual’s differences and also help the follower grow to do more work (Klinsontorn, 2007, p. 33). The leader is more of a mentor or coach (Klinsontorn, 2007, p. 33). The leader will ensure the follower is developing properly (Boerner, Eisenbeiss, & Griesser, 2007, p. 17). With this characteristic, the leader wants the followers to develop a plan to get ahead in the company by taking care of education to develop the skills and talents need to advance (Klinsontorn, 2007, p. 33). An example would be a high school teacher helping you get into your college of dreams. The teacher will mentor you to develop the skills need to get into college and also the skills need to be successful in college after you leave high school.

What Studies have Shown to Work the Best

Sarros and Santora (2001) did a study on 500 of Australia’s executives, only 181 responded to the survey (p. 384). Their study concluded that a middle ground was what the executives seem to land. They concluded that “the executives in this study feel most comfortable in a coaching their people to achieve results, but see the need for direction and some autocratic behavior when occasions demands” (Sarros & Santora, 2001, pg 390). In other words, there is a time for a transformation leadership style and a time to lead by using the transactional style. Sarros and Santora (2001) did found out that transformation was more about caring for employees where as transactional was more for “results through organizational processes such as reward structures and implementation of policies and procedures” (p. 391).
Another study was done with 186 leaders and 793 senior subordinates that worked for the United States Navy (Klinsontorn, 2007, p. 40). The study concluded, “the outcomes of extra effort, leadership effectiveness, and job satisfaction were highly positively related” (Klinsontorn, 2007 p.40). Transactional had positive but not much as transformational and laissez-faire had a negative outcome (Klinsontorn, 2007, p. 40). One outcome of the study was when a transformational was building on a transactional base, the results in higher performance (Klinsontorn, 2007, p. 41).
Bass and Avolio did a study on 150 males and 79 female leaders in 1994 (Klinsontorn, 2007, p. 42). The study showed that women tend to have more of the transformational leadership qualities. Males rated better then women in management by exception and laissez-faire (Klinsontorn, 2007, p. 42). In a study by Yammarino et al, showed that females tend to form a “unique one-to-one interpersonal relationship with their male and female subordinates” (Klinsontorn, 2007, p. 43).
Conclusion

Transformational leadership has more positive qualities that have shown that it increase production on employees that are under the leaders. These qualities make it seem to be a better fit for production. Some of the studies showed that transactional help increase production but production greatly increases when a transformational leadership is add to it. The negative seem to out weigh the positive effects that transactional leadership produces. With a transformational leadership, employees seem to feel wanted and them are pushed to produce what the leader wants. Trust seems to be a big factor in both transactional and transformational leadership styles.

References
Archbold, R. H. (2004). The Perception of Leadership Style: Effects on the Work Environment. Dissertation Abstracts International. (UMI No. 3132802)
Boerner, S., Eisenbeiss, S. A., & Griesser, D. (2007). Follower Behavior and Organizational Performance: The Impact of Transformational Leaders. Journal of Leadership and Organizational Studies, 13(3), 15-26. Retrieved January 10, 2008.
Klinsontorn, S. (2007). The Influence of Leadership Styles on Organizational Commintment and Employee Performances. Master's Abstracts International. (UMI No. 3255207)
Kuhnert, K. W., & Lewis, P. (1987). Transactional and Transformational Leadership: A Constructive/Developmental Analysis. The Academy of Management Review, 12, 648-656. Retrieved January 10, 2008.
Sarros, J. C., & Santora, J. C. (2001). The transformational-transactional leadership model in practice. Leadership & Organization Development Journal, 22, 383-393. Retrieved January 10, 2008, from ABI/INFORM Global database.

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