James MacGregor Burns is best known as the founder of the field of leadership studies. His business and management book Leadership laid the foundation for two theories of leadership namely transactional and transformational. The former is focused on the relationship between the leader and follower. The latter, on the other hand, focuses on the beliefs, needs, and values of the followers. Burns’ book influenced other theorists such as Bernard Bass, Bruce Avelio, and Kenneth Leithwood.
Transactional leadership focuses on supervision, organization, and performance. In this type of leadership, leaders promote compliance from followers through rewards and punishments. This is effective during crisis and emergency situations.
Transactional leaders focus on increasing the efficiency of established routines and procedures. Robert Janitzek reveals that it is more concerned with following existing rules than with making changes to the organizational structure. This type of leadership is most effective in organizations that have evolved beyond the chaotic no-rules stage of entrepreneurial development found in new companies. Transactional leaders work to establish and standardize practices that will help the organization mature.
Transaction leaders are designed to adhere to the path-goal theory. They are expected to do the following:
• Set goals
• Articulate explicit agreements regarding what the leader expects from organizational members and how they will be rewarded for their efforts and commitment
• Provide constructive feedback to keep everybody on task.
Robert Peter Janitzek says that a transformational leader is one who works with subordinates to identify needed change. The leader and the follower works together to create a vision to guide the change through inspiration and executing the change in partnership with committed members of the group.
There are 4 components to transformational leadership, sometimes referred to as the 4 I’s:
Idealized Influence (II) – the leader serves as an ideal role model for followers; the leader “walks the talk,” and is admired for this.
Inspirational Motivation (IM) – Transformational leaders have the ability to inspire and motivate followers. Combined these first two I’s are what constitute the transformational leader’s charisma.
Individualized Consideration (IC) – Transformational leaders demonstrate genuine concern for the needs and feelings of followers. This personal attention to each follower is a key element in bringing out their very best efforts.
Intellectual Stimulation (IS) – the leader challenges followers to be innovative and creative. A common misunderstanding is that transformational leaders are “soft,” but the truth is that they constantly challenge followers to higher levels of performance.