Ed Barton, LLM, CPA, CFA

Differences Between Transformational and Transactional Leadership

Differences Between Transformational and Transactional Leadership

 Examples and Roles of Transactional and Transformational Leadership in Application


Reading Burns (2010), one could conclude that transactional leadership is inferior to transformational leadership, and the leader should strive for the application of transformational leadership. In my opinion, this would be a short-sighted view of the role of transactional leadership in our day-to-day relationships and undervalues the ability to flex leadership styles to a given situation. Both methods have proven effective through history.

One example that Burns uses (2010, p.425), which I personally experienced, was the trading of votes for unrelated legislation. Taking a leadership role on a city commission, I often had to negotiate with various interest groups and other commissioners to get a variance, mitigation fee, preserve a natural habitat or permit additional development.  Often, to get one of the development parameters passed by the commission, we had to negotiate among ourselves for unrelated protections to be passed or mitigated on a separate project. This is classic transactional leadership. While I would have preferred to lead my fellow commissioners by transforming their views on planned development, environmental protection, water quality, time, environment, circumstances bringing us together, and business at hand, it made that challenging.  Instead, the situation dictated that to lead in these areas on that commission, a transactional leadership approach was necessary.

In the case of transactional leadership, there is an appropriate use when the situation demands it.  Characteristics of those situations ate: the relationships are not long-lasting, the scope of the situation is narrow, there are mutual benefits to be gained, and those benefits are obvious to all parties. In these cases, transformational leadership may take too long, maybe impossible to implement, and followership based on misaligned priorities to be effective.

Transformational leadership, the “joint effort for persons with common aims acting for the collective interests of followers” (Burns, 2010, p. 425), maybe more easily seen in major movements.  In most transformational leadership cases, leading includes transactions with the followers – a subset of transactional leadership. An example of transformational leadership, in the collective, was the American Revolution.

During the Revolution, both transformational and transactional leadership approaches needed to be applied.  According to Ferling (2010), the initial call to arms was driven by idealism and patriotism.  The motivations of the Continental Congress and the Founding Fathers were based on leadership and philosophy larger than themselves.  Over time, however, the movement bifurcated into those participating because of the impacts of the transforming leadership of the Founding Fathers, including the philosophical leadership of Locke, Paine, Jefferson, and Samuel Adams and those who were transactional in nature – trading service for pay, clothing or to avoid prison.

The impacts of the transformational leadership of the Revolution, impacting a relatively few persons personally, enflamed a passion for the principles of liberty, freedom, democracy, and equality that have endured for over 240 years.  As time elapsed between the actions and activities of the Revolution and transformed into a long-term movement, the leaders passed from life – yet their impacts continued. Their ability to transact was eliminated through their death, and yet their leadership lives on.  The recent Supreme Court confirmation hearings of Judge Brett Kavanaugh, where he routinely invoked the Federalist Papers as a guiding principle in deciding cases, is an example of the transformational leadership of Alexander Hamilton, John Jay, and James Madison – who authored them 230 years ago. These three men were initially followers in the early days of the Revolution, becoming leaders and eventually moral advocates. Interestingly, their authorship may be viewed as transactional leadership. The Federalist Papers were written largely to ensure the ratification of the new United States Constitution (“About the Federalist Papers – Congress.gov resources -” (n.d.)). Their leadership, a product of the transformational leadership of the American Revolution, transcends time and space. Only with the benefit of hindsight and time can it be seen that they truly acted with “common aims acting in the collective interests of their followers” (Burns, 2010, p425), given the impacts of 230 years later.

Transformational leadership is most appropriate when there is a fundamental need to impact long-term behavior or opinion. Because transformational leadership requires “a relationship of mutual stimulation and elevation that covers followers into leaders and may convert leaders into moral agents” (Burns, 2010, p. 4), there is a time of incubation for each of those transformative steps. To transform into a moral agent, the basis for leadership must have a moral foundation or at least a moral component against which to apply that agency.  Transformational leadership, then, results in a fundamental change in the follower. The appropriateness for its application is more limited than that of transactional leadership – though its impacts are usually more far-reaching and long-lasting.

Multifunctional Leadership Questionnaire Results

Of the seven elements tested in the questionnaire, the first four – Idealized Influence (II), Inspirational Motivation (IM), Intellectual Stimulation (IS), and Individualized Consideration (IC) are identified as components of transformational leadership by Watts (2018). In reflecting on my results, I rated 8 or higher in all four transformational leadership elements, with the highest score recorded across all seven elements in Intellectual Stimulation.  My lowest score was a low moderate in Contingent Reward. Understanding there’s always going to be a bias with self-assessment, I will ask one of my candid and trusted long-time co-workers to conduct the assessment and see what her perceptions are.

To assist with interpretation, I reviewed Vinger & Cilliers (2006). They note that the questionnaire evaluates three leadership styles – transformational, transactional, and laissez-faire. I rated an average of 2.91 for transformational leadership for the three elements, 2.5 for transactional leadership, and 2.67 for laissez-faire. In comparison to the results of the Vinger study (p.5), I rated lower for transformational and transactional leadership than their mean and higher than their mean in laissez-faire.

I believe this may show me to be a situational leader – as I have tended to lead teams ranging from very seasoned executives to entry-level employees.  My approach does tend to be “tell them what needs to be done, not how to do it,” and I believe these scores may reflect that self-perception. I believe the results show that I have all three tools in the toolbox (to the extent that laissez-faire can be considered a leadership tool) and have no strong allegiances to any one style. The high score in Intellectual Stimulation shows a high tolerance for constructive conflict, having others bring their views to bear on problem-solving, and questioning values and approaches in the organization.

While no style dominates, no style is that strong as well. In one sense, I could view this as a strength. Still, at least in relationship to the Vinger study, the relatively low averages may also note a lack of conviction or leadership engagement – which I would view as a weakness. The common theme is an apparent high value for individualism and ideas, essentially a leadership style that encourages people to be themselves and true to their approach and belief. At the same time, the willingness or ability to drive difficult change or transactional change through reward and explicit quid pro quo is limited.



“About the Federalist Papers – Congress.gov resources -” (n.d.). Retrieved September 15, 2018 from Congress.gov, United States Congress , www.congress.gov/resources/display/content/About the Federalist Papers.

Burns, J. M. (2010). Leadership. New York: Harper Perennial.

Ferling, J. (2010, Jan 1). “Myths of the American revolution.” Smithsonian.com, Smithsonian Institution, www.smithsonianmag.com/history/myths-of-the-american-revolution-10941835/.

Vinger, G. & Cilliers, F. (2006, November 6). Effective transformational leadership behaviours for managing change. South African Journal of Human resource Management, 4(2), 1–9. doi: https://doi.org/10.4102/sajhrm.v4i2.87.

Watts, L. (2018, September 10). Transformational leadership ppt 4.pptx [PowerPoint].

South Charleston, WV.

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