Leadership varies from person to person, from organization to organization. Authoritarian leaders are those who use their positions of power to force others to do as they please. Laissez-faire leaders let everyone do what they want, as long as everything gets done. Transformational leaders, however, focus on inspiring their subordinates to change and grow as people. The leader models good behaviors and inspires her team to be their best.

Transactional vs. Transformational Leadership: Which Is Best?

One of the biggest differences between transactional and transformational leadership is the level of influence each model has over the other. With transactional relationships, the leader has the power to reward and punish team members. The leader has no interest in the development of a bond with his team because he is simply exchanging work for pay. A transactional relationship lacks trust and respect, and therefore any kind of true leader-subordinate relationship.

While transformational relationships should lead to the development of a leader-subordinate bond, any transactional relationship may develop some form of shared trust and respect, but it is limited. A transformational team is one in which the leader has the ability to transform his team members. The leader inspires his team to be a team in the first place, to work together, and to achieve the same goals. By encouraging his team to grow as people, the leader leads by example.

Features of Transactional and Transformational Leadership

In most transactional leadership situations, leaders tend to focus on maximizing profits and increasing production, with little or no regard for the welfare of the employees. Transactional leaders are also more likely to use fear tactics to motivate their employees to work harder.

Transformational leaders, on the other hand, focus on inspiring and motivating their team members purely for the benefit of the team. Transformational leaders do not need to resort to fear tactics because the team members are working to fulfill their own needs to grow, learn and develop. Transformational leaders also hold a higher level of respect among their team members because they recognize and reward the team’s achievements.

Positive and Negative Effects

Both leadership styles have positive and negative effects. While transactional leaders are more likely to use fear tactics as a means of motivation and productivity, transformational leaders are more likely to lose their team members’ respect.

Negative Effects

The potential problem with a negative transformational leadership style is that the leader may lose a team member’s respect if the team member feels slighted. While transformational leaders should be rewarded and rewarded fairly, the leader should also be careful not to take advantage of his position to take the best projects for himself, for example. The leader should be sure to recognize the achievements of his entire team, not just his own accomplishments.

Positive Effects

The positive effects of both types of leadership styles include team members who feel they have a purpose and a leader who is able to work with the team to achieve common goals. The team may feel a greater sense of teamwork and respect for the leader, as well.


In the end, transactional and transformational leadership styles are essentially different ways of leading a team to achieve common goals. Both styles have their pros and cons and their own followers and detractors. A good leader can utilize the benefits of both styles and become a successful team leader.

If you need help establishing yourself as a business, come to Greg Deline. Greg DeLine is a businessman and entrepreneur — having started and owned more than a dozen successful companies, both small and large. Greg has a passion for relationships and helping others reach their full potential.



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