Effect of Transformational and Transactional Leadership on Employee Performance
Introduction
Leadership is a key factor acting in an organization because there is always a leader who holds the responsibility for organizational growth. It is rather an ability to gather people as a team to work together to achieve goals. A leader has a job to set a vision for its team and the team will work together to achieve that organizational vision. Leadership is further divided into two categories named as transformational and transactional leadership. A transformational leader motivates its workers and subordinates to achieve their organization’s vision without applying some pre-defined rules and regulations. In contrast to transformational, a transactional leader is the one who depends on self-motivated people who can work with all their potential under a structured environment where they have to follow the rules. The purpose of this essay is to critically analyze the effects of transformational leadership and transactional leadership on organizational performance.
Effect of Transformational Leadership on Performance
The effect of transformational leadership based on performance is a theory which is proposed by Butler in 1999. According to this theory, a transformational leader is the one who inspires his subordinates to set an organizational goal, vision, and mission by themselves and motivating the subordinates to gain maximum performance. Encouraging the subordinates to act rationally in a difficult situation and solve their problems in an organized way. In the outcome of this effort, the subordinates will show their maximum performance. A study purposed by Haryadi et.al in 2003 which is similar to this theory. According to the study, there is a more proficient relationship among transformational leadership on subordinate’s performance. The supervisors can also adopt this leadership approach as the leader provides a good example and motivation. In 2005 Suharto suggested that a transformational leader who cares about their subordinates will be able to guide them in setting their missions and visions by providing motivation support and developing new ways of working effectively. It creates more trust and high respect for the leader and also motivates the subordinates to do their work more than the organizational expectations. The effect of transformational leadership on performance is more positive and also in a positive direction. Self-motivated and professional leadership who knows their organization’s rules and interest can lead the team performance in a positive direction. Leaders will cooperate to resolve the issues and will help each individual to do their morale high and get their job done. But sometimes without having pre-defined rules an organization might not get the desired results from their workers because every individual is working according to their effort level and interest. Having proper rules and regulations might help them to know their direction of work and how they will achieve the targets within their defined circumstances.
Effect of Transactional Leadership on Performance
Transactional leadership affects the performance of workers in such a way that the subordinates have to work under pre-defined rules and regulations. This type of leader always tries to motivate subordinates in exchange for the benefits of working with an organization and they show that our organization will assist the subordinates in such a manner that all of their financial needs and coverages will be entertained. The transactional leadership helps the organization in maintaining a proper working environment and get the work from subordinates through a proper channel and within pre-defined circumstances. The worker sometimes gets frustrated and exhausted by following the rules and working in a pre-defined routine so that it’s the responsibility of the leader to motivate the workers and to get the work done under organization rules. In contrast with that Thomas in 2003 said that transactional leadership style does not affect the motivation of workers because the transactional leadership motivates the workers revitalizing their interest in the work. This type of leadership motivates the leaders to understand their subordinate’s expectations and adjusting the leader’s behavior accordingly. This type of leadership is mostly followed by armed forces where the rules are must to follow and work is being done according to the interest of the higher power. This type of leadership is highly motivated and thoroughly professional, they know how to manage things according to their requirements and they follow the organization’s defined rules. According to Burns in Bass 2005 transactional leadership is an exchange relationship in which the subordinates will show their performance according to the desire of the team lead.
Conclusion:
This essay aims to evaluate and to analyze the effects of Transformational and Transactional leadership on employee performance. This clearly shows that both approaches are helpful and can be used in different circumstances. Moreover, transactional leadership rather focuses on organizational rules and regulations while transformational leadership provides the facility of working in an environment where the subordinates can make their ways to do the same work. According to this study, both of them are crucial and can be applied to different organizations under different circumstances. Once John Quincy Adams said that “If your actions inspire others to dream more, learn more, do more and become more, you are a leader.”