Learning About Leadership

Transactional Leadership Theory Vs. Transformational Leadership Theory

There are multiple ways through which an organization can be led. However, most leadership approaches tend to be either transactional or transformative. In this paper, I will explore the similarities and differences between transactional and transformational leadership theories, as well as the skills associated with each leadership style, and discuss why the skills of one of the styles are more important than the other. Besides, I will discuss how the skills of the two major leadership theories may impact the effective leadership of health educators in any work setting, such as a community, school (K–12), business/industry, or healthcare facility. Transactional leadership theory is based on processes and control and thus demands a stringent management structure. On the other hand, transformational leadership theory focuses on inspiring the working team to follow work rules, thus demanding a high degree of communication, coordination, and cooperation. Both leadership approaches have a purpose, but their difference can be summed up as that transactional leadership looks at how well to get things done. In contrast, transformational leadership is focused on how to motivate others to get things done.

Similarities Between Transactional and Transformational Leadership Theories

Both leadership approaches share a number of commonalities, only that they anticipate achieving results in distinct ways. As previously mentioned, both transactional and transformational leadership approaches involve the leaders and their subjects to benefit from one another. In their approaches, both leadership styles are motivational; that is, they have integral goals to be realized. Besides, both leadership styles try to answer the question of how to effectively and efficiently manage subordinate groups and use psychological methods previously tried and tested (Cherry, 2023). The two leadership styles have been classified as the most preeminent in contemporary leadership and considered the most effective, but only if well executed. If the leadership approaches are effectively executed, they can positively impact the subordinate groups.

Differences Between Transactional and Transformational Leadership Theories

As per the above insights on transactional and transformational leadership, transactional leadership theory revolves around the exchange. Transactional leaders appreciate that their direct reports demand more than self-motivation in order to realize their goals. In this regard, in an employee meets performance standards in an organization, they are rewarded with incentives and perks, but if they fail shortly, they are penalized (STU Online, 2014). Another hallmark of transactional leadership theory is that it also focuses on creating a structured environment where nothing is left up to chance. Instead, transactional leaders believe that clear directions, defined procedures, and standardized processes are certain ways to achieve goals. The common characteristics of the leadership theory can be summed up as the use of incentives, rewards, and praise to motivate employees who work and perform best for the organization, a great focus on achieving short-term organizational goals, and process orientation (Florida Tech, 2019). Besides, transactional leadership is appreciated for its focus on timely feedback to enhance correction, clear communication of instructions, and deviation from processes or weary changes from time to time. Last but not least, transactional leadership strictly monitors employees’ performance and productivity.

Transformational leadership theory, on the other hand, focuses on creating or causing a change in individuals or social systems. Transformational leadership has stood out as the most significant leadership approach, given its unique approach to things (Cherry, 2023). This type of leadership encourages and motivates the employees to embrace and innovate a positive change to grow and shape the organization’s future success. Ultimately, it is through this those meaningful changes in employees, or social systems are brought. The common characteristics of transformational leadership include its focus on inspiring employees to follow and bring real change to the organization. Besides, transformational leadership takes care of the initiatives that will add value, enhance proactive leadership, win the employees’ hearts and minds, and inspire and motivate them accordingly (Florida Tech, 2019). In transformational leadership, attributes such as good judgment, communication, confidence, competence, and interpersonal skills are the definition of every leader. Transformational leadership, given the increasing changes in the social landscape, technological explosion, and integral need to embrace change, becomes the most outstanding leadership approach as compared to transactional leadership.

Transactional Leadership Transformational Leadership
It is reactive It is proactive
Focused on working within the organization. Constantly seeks to advance the organizational structure with emerging ideas.
Focused on goals Focused on vision
Keeps the status quo Promotes innovative ideas in problem-solving
Reward/punishment for motivation Charisma and enthusiasm, motivation and growth
Focuses on short-term goals Focuses on long-term goals
Insignificant impact on job satisfaction Positive impact on job satisfaction
Effective in creating knowledge at personal and group levels Effective in exploiting knowledge at an organizational level

Skills Associated with Transformational Leadership Theory

Transformational leadership is the most outstanding approach as compared to transactional leadership. This is because it results in a positive change in both the individual and the social system, thus creating positive and valuable change with the end goal to transform followers into real leaders. In its authentic arrangement, transformational leadership will enhance motivation, morale, and increased performance through multiple mechanisms, such as an increased sense of identity to the followers and self to the mission and, ultimately, the collective identity of the organization (Cherry, 2023). There are multiple skills associated with transformational leadership and what sets it apart from transactional leadership, as highlighted below:

  1. Personalized consideration – this involves the extent to which the leader will attend to the follower’s needs, act as a coach and mentor, and listen to the needs and concerns of followers. These skills will give empathy and support to the team, keep communication alive, and place challenges before anything else. Besides, it incorporates the need for respect, individual contributions, will, and aspirations to achieve better.
  2. Intellectual encouragement involves the extent to which assumptions are challenged, taking risks, and soliciting the follower’s ideas. Leaders emulating this approach are creative, nurture and develop independent thinkers, and focus on ideas on how to execute work always to achieve better.
  3. Inspirational motivation is the extent to which the leaders articulate the vision in an appealing and inspirational way. The skills generated here are high standards of operation, and optimistic communication about the organization’s future, hence providing meaning to the tasks ahead. It is essential to acknowledge that meaning and purpose drive a group forward.
  4. Ideal influence – skills promoting high ethical standards, respect, and trust. This is the aspect/transformational tool that has spread across various organizations and government entities.

How Transactional and Transformational Leadership Theories May Impact Effective Leadership in a Mental Health Facility 

Effective leadership is the desire of every organization in order to create a positive change, accept innovation, and motivate the followers to do better. As prior mentioned, both transactional and transformational leadership theories are all essential as they play a part in enacting change in an organization. In a healthcare setting, transformational leadership theory is essential in inspiring and motivating followers, while transactional leadership guarantees reinforcement and exchanges. Multiple studies, for instance, have revealed that mental health providers’ attitudes towards an evidence-based practice are significantly associated with the organizational context and provider differences (Aarons, 2016). In this regard, both the transactional and transformational leadership theories are significantly associated with mental health providers having a positive attitude toward adopting and implementing evidence-based practice. Therefore, mental health organizations benefit the most from these leadership theories, given their supervisory skills in adopting and implementing evidence-based practice.

Over the last decade, momentum and pressure have grown to incorporate evidence-based mental health interventions into a real-world practice setting. It is essential to acknowledge that most practice settings incorporate a relationship between case/clinical management supervisors and the practitioners involved in service provision. The case/clinical supervisors lead work activities, such as conducting performance appraisals and HR functions. Therefore, with the importance of these leadership theories appreciated in these activities, the healthcare facility will be successful in its operations. The increasing adoption and implementation of evidence-based practice in these organizations have been informed by transactional and transformational leadership theories, for instance, the structure and policies within the organizational context and education and experience within the context of the provider differences (Aarons, 2016). Given this leadership, theories influenced the adoption of innovations, including evidence-based practice, and the provision of mental health services has become seamless and more effective. It is essential to note that despite the effectiveness of transactional and transformational leadership theories in mental health institutions, their functions vary considerably by organization and discipline (Aarons, 2016).


Aarons, G. A. (2016). Transformational and Transactional Leadership: Association with Attitudes Toward Evidence-Based Practice. Psychiatric Services57(8), 1162–1169. https://doi.org/10.1176/appi.ps.57.8.1162

Cherry, K. (2023, February 24). Transformational leadership. Verywell Mind. https://www.verywellmind.com/what-is-transformational-leadership-2795313

Florida Tech. (2019, September 23). The difference between transactional and transformational leadership. Florida Tech Online. https://www.floridatechonline.com/blog/psychology/the-difference-between-transactional-and-transformational-leadership/

Jaiswal, S. (2022, July 20). What is Transformational Leadership and Why is it Effective? | Emeritus India. Emeritus – Online Certificate Courses | Diploma Programs. https://emeritus.org/in/learn/transformational-leadership/#:~:text=Transformational%20leadership%20is%20a%20type

STU Online. (2014, November 25). What is Transactional Leadership? Structure Leads to Results. STU. https://online.stu.edu/degrees/education/what-is-transactional-leadership/

Author: John Gromada
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