Skip to content
All posts

Transactional vs Transformational Leadership Styles

Is your leadership transactional or transformational? That’s the question behind the questions related to your leadership potential.

If you’re looking for a promotion into a senior management role, it’s the question you’ll have to answer so you can demonstrate your ability to attract followers and lead them toward an improved future state. If you’ve ever been told “we need to see more leadership from you,” you’ll want to understand these differences in transactional leadership vs. transformational leadership.

Businesses need both transactional and transformational leaders. They need you to manage the business and lead the people. But… if you want to move into senior management roles, you will need to stretch into the mode of transformational leadership to demonstrate your ability to bring others with you in a shared vision for the future.

Transactional Leadership Vs. Transformational Leadership & Differences between Managing and Leading



What Transactional Leaders Do


What Transformational Leaders Do

Focuses on: Short-term success; getting today’s work done today Long-term success, getting people and systems in place for future growth
Style is: Command & Control; authority-based to get immediate results Heart & Soul; influence-based to emotionally engage employees
Power source: Policies, performance management, extrinsic motivations (carrot & stick) Inclusion, interest in individuals and
their potential, intrinsic motivations
Spends time: In meetings, monitoring metrics and reports, checking on daily tasks Coaching, developing, listening, giving individual feedback & encouragement
Talks about: KPIs, measurable goals, recent job performance, policies, best practices A shared vision for the future that includes all team members
See success as: Output rate, savings, profit,
programs, goal attainment for month/quarter
Expanded competence & confidence
of employees; growth in team capacity
Results are: Stuck and unsure how to get ahead, not promotable due to poor following High levels of employee engagement, promotable due to impact/following


Transactional leadership is about managing work. It’s the day-to-day management of the work that needs to get done. Transformational leadership is about leading people. It’s the development of individual potential and the engagement of employees that drives emotional commitment to the work. People leaders transform organizations because they:

  1. Inspire with long-term vision and engage people in meaningful ways to bring a shared vision to life.

  2. Originate by seeking diverse points of view and being inclusive in decision-making.

  3. Challenge the status quo by continually asking “what’s new?” and “what’s next?”

  4. Build success through employee commitment and emotional engagement.

  5. Communicate openly and frequently to create clarity and to invite all voices in.

  6. Listen and learn from others, regardless of positional power or hierarchy.

  7. Set standards of excellence based on potential, not past performance.

  8. Take risks on people and ideas, trusting and allowing others to fail forward.

  9. Build people so people can build the business.

  10. Put people first, ahead of deliverables and deadlines and distractions.

For a list of 25 differences between managing and leading, check out this chart from PFPS.

To learn more about leadership development, check out these highly recommended resources:

What Makes a Leader Effective?

Leadership myths and misperceptions make leadership seem inaccessible. But leadership is for everyone, at every level, not just a few at the top of an organization. Leadership is not the result of some innate characteristics. And effective leaders aren’t effective because of their title, authority, personality, or luck. There are three critical elements to being effective as a leader.   

1. The Five Practices of Exemplary Leadership®

Leadership, it turns out, is a choice. Jim Kouzes and Barry Posner, researchers and authors, have identified The Five Practices (broken into 30 specific behaviors) that effective leaders demonstrate more frequently than less effective leaders. Their research, with over five million participants from around the world, has been independently validated and has held up for over 30 years.

Because these are behaviors, they can be chosen by anyone who wishes to lead. No special skills, traits or gifts are required. While some of these behaviors might come more naturally to one person than another, everyone can practice and form habits to exhibit these behaviors more frequently.

Best of all, these are behaviors that are not mysterious or theoretical. They are practical and accessible. For example, one of the behaviors exhibited by effective leaders, is “Paints ‘the big picture’ of what we aspire to accomplish.” Anyone can do this if they set out to. Everyone can do this more frequently, too, which is important to note because frequency is the barometer of success.

2. Being Forward-Looking

When asked, people consistently choose certain characteristics they would choose in their leaders. Behaviors make leaders effective. Characteristics make them attractive. Characteristics, of course, are demonstrated through actions (behaviors) so there’s still hope for those who may feel that certain characteristics don’t come as naturally or readily for them.

The characteristics that consistently appear most often are Honest, Competent, Inspiring, and Forward-Looking. Here’s where it gets interesting. Three of these four characteristics are also associated with source credibility. We are most likely to believe a source (witness, authority, claimant, resource) when they are trustworthy, have expertise, and are dynamic. In other words, there’s a direct correlation between three of the characteristics we admire in leaders and the three criteria we use to deem any source as credible. Trustworthy aligns with honesty, expertise translates into competence, and dynamism results in inspiring others.

What that means is that we’re left with one characteristic that makes the difference between credible people in any role or relationship and credible leaders. That difference is that leaders are admired when they are forward-looking.

No one ever got excited about following a leader who said “Let’s do things the way we always have” or “Let’s settle for things the way they are.” Nevertheless, managers who focus on getting today’s work done today tend to resist change and protect the status quo. Transformational leaders do just the opposite – they look for incremental improvements and plan ahead for change and growth.  

3. Being Deliberate and Purposeful in Your Leadership.

Effective leaders lead on purpose and with purpose.

Accidental leadership happens all the time. It happens because, like or not and know it or not, you already are a leader. People are watching what you do. They follow what you do and pay attention to what you say. This is especially true if you have a job title that implies authority or influence.

If you’re leading people but haven’t thought about where you want to take them, it’s accidental leadership. You may inadvertently be taking them in a direction you don’t intend to. What you’re modeling could be counter-productive to your objectives.

What this means is that you already make a difference. But are you making the difference you WANT to make?

Effective leaders have a clear philosophy of leadership. They know who they are, what they stand for, the values that guide their decision-making, and the difference they want to make. They don’t leave it up to chance.   

These three considerations will make you more effective as a leader. But what does it mean to be effective as a leader?

It means that people willingly choose to follow you. It means they will work hard to make things happen. Kouzes and Posner define leadership as “The art of mobilizing others to want to struggle for shared aspirations.”

Effective leaders get sustained action that moves forward toward the vision, even when there’s struggle or challenge involved. Managers and transactional leaders may get action, but only so long as they applying external incentives or pressures. People soon opt out if they aren’t personally invested in the vision and if they aren’t emotionally engaged by the leader.  

Why Do Transformational Leaders Care So Much about Employee Engagement?

Highly engaged employees outperform other employees in every measurable way. The number one driver, by far, of employee engagement is the behavior of the manager. Leadership behaviors results in double digit increases in engagement levels (the thirty behaviors associated with The Five Practices of Exemplary Leadership® researched by Kouzes and Posner). Here’s how it works to produce a cascade of benefits for employers and managers:   

  • Leadership behaviors cause people to be more engaged in their work.

  • Employee engagement levels rise. Employee engagement is defined as “a heightened emotional connection that an employee feels for his/her organization, that, in turn, influences him/her to apply additional discretionary effort to his/her work.”

  • Because of that “heightened emotional commitment,” high performers and high potentials stay in their organizations instead of leaving for greener pastures. Increased retention reduces recruiting, hiring and onboarding expenses. It also provides a stronger base of institutional knowledge, sets up internal succession management, and favorably brands an employer.

  • Because of the “additional discretionary effort,” productivity rates rise. People produce more output in less time. They try harder. They care about their work more and make fewer mistakes. Overtime costs come down. Errors and rework are reduced. Attendance improves. Injuries and compliance violations also decline. Efficiency abounds.

  • No surprise here, but improved employee satisfaction and retention plus faster and better productivity results in improved customer satisfaction. Happy customers come back. They make positive referrals. They spend more.

  • That’s why revenue increases when employees are engaged.

  • And with revenue increases and expense reductions, double digit profit growth is seen in companies with higher rates of employee engagement.

Go back to the top. This cascade of benefits is all triggered by transformational leaders who adopt and more frequently exhibit leadership behaviors.   

In the definition of employee engagement, the key word is “emotional.” While some might prefer to sidestep that messy business, it’s only through emotions that leaders reach, engage, mobilize and inspire others. DDI’s study, “Emotional Engagement: The Key to Realizing Competitive Advantage,” concluded that “Engagement is the primary enabler of successful execution of any business strategy.” Taken together with the CEB’s research that showed “Emotional commitment drives effort. Emotional commitment is four times as valuable as rational commitment in producing discretionary effort,” spotlights why leaders can’t overlook emotions.

What Do I Do to Improve Employee Engagement & Get Emotional Commitment?

To engage employees and trigger the cascade of benefits that only come from a highly engaged workforce, you’ll need to take these steps:

  • Master the basic supervisory skills that enable you to manage today’s work well. These skills include setting expectations, providing performance feedback, communicating with clarity, delegating, and stepping into management vs. front line contributor work.

  • Determine what difference you want to make as a transformational leader. What impact do you want to make? What is your vision for the future and how can you enlist others to share in this vision? Start by identifying your values and crafting your leadership philosophy. That way, you’ll be clear, consistent and credible as a leader.

  • Build leaders instead of trying to be the only one. Develop people so they stretch to their full potential. When you invest in them, they’ll invest in you.

  • Learn about the behaviors that make leaders more effective. They are simple, accessible, and just waiting for you to adopt them and unleash the leader inside you!

  • Start with this Employee Engagement Daily Checklist, a free tool from PFPS. You can start small and make little changes that will make a big difference.

You don’t have to wait to become a manager before you become a leader. Leadership at every level is real, important, and valuable to an organization. Being a leader lets people know you are ready for new challenges and able to bring others with you in change initiatives for business growth.

Bottom line: if you want to be a leader, you have to make a choice to lead. To really lead. Understanding leadership, learning the behaviors of effective leaders, and practicing those behaviors more frequently will make you a transformational leader.    

What Else Can I Do to Become a More Effective Leader?

Looking for more ways you can amp up your effectiveness as a leader? Here are three  proactive steps you can take if you’re ready to make things happen.

Learn About Yourself

Make sure you are solid in the “soft” or interpersonal skills that make emotional connections possible. Become a better listener. Find out what possible career roadblocks or blind spots will prevent you from engaging others. Participate in a 360-degree assessment that gives you feedback about the 30 leadership behaviors that are proven to increase leadership effectiveness.

Seek Coaching

And get it from an experienced, certified Executive Coach. A qualified coach can help you self-discover and self-correct to accelerate your leadership development. Coaching isn’t the same as mentoring or training. It’s a personalized approach to ensure you get exactly what you need to reach your goals.

Learn About Leadership

And how it’s different from management! This article is packed with links and resources, all based on evidence and research. Remember, leadership is a behavioral choice. It’s your choice. Make it an informed one!

CTA_IconDude_Download Eng Checklist, New Super, LP_030923-1