Transformational vs Transactional Leadership: When to Use Each

By Mats Kallmyr | Kallmyr.com

Five articles into this series it would be easy to conclude that transformational leadership is simply “better” than transactional leadership. The research does not support that, and neither does experience. The honest answer is that they solve different problems, and the strongest leaders know which one a given moment calls for.

Two Different Exchanges

Burns (1978) originally described transactional and transformational leadership as opposite ends of one spectrum. Transactional leadership runs on a clear exchange: you deliver defined performance, I deliver an agreed reward, correction, or consequence, formalised by Bass (1985) as contingent reward and management-by-exception. Transformational leadership runs on a different currency entirely, appealing to values, identity, and shared purpose rather than a transaction. Bass (1985, 2008) later refined the model, arguing the two are not opposites but complements: the most effective leaders are strong in both, with transformational behaviours adding an “augmentation effect” on top of solid transactional management, not replacing it.

Where Transactional Leadership Is the Right Tool

Inside a government agency handling regulated casework, I saw why transactional leadership is not a lesser mode, it is the correct one, for large parts of that work. Compliance deadlines, audit requirements, and case-handling rules are not areas where you want people reinterpreting the mission creatively; you want reliable, correct, repeatable execution, and clear consequences when a step is missed. Transactional leadership, done well, gives people exactly that clarity.

Where Transformational Leadership Earns Its Keep

The same agency needed a different mode entirely when it came to redesigning how services were delivered. No contract or bonus structure could compel genuinely creative rethinking of a service model; that required people to want to improve it. My own MALIC research (Kallmyr, 2017) compared teams under predominantly transactional versus transformational leadership and found the transformational teams reported markedly higher willingness to propose and adopt change, while the transactional teams showed no advantage in day-to-day compliance, since both groups executed routine tasks reliably. The difference showed up specifically where discretionary effort and innovation were required.

Choosing the Right Mode

• Use transactional clarity for safety-critical, compliance-critical, or highly repetitive work.
• Use transformational appeal when you need discretionary effort: innovation, change adoption, or crisis response.
• Expect to run both simultaneously with the same team, applied to different parts of their work, rather than picking one leadership identity for good.

References

• Bass, B.M. (1985) Leadership and Performance Beyond Expectations. New York: Free Press.
• Bass, B.M. (2008) The Bass Handbook of Leadership: Theory, Research, and Managerial Applications. 4th edn. New York: Free Press.
• Burns, J.M. (1978) Leadership. New York: Harper & Row.
• Kallmyr, M. (2017) Leading Innovation and Change: How Transactional and Transformational Leaders Influence Organisational Innovation and Change. MA dissertation. York St John University.

Mats Kallmyr is a senior leader and management consultant with a background spanning telecom, e-commerce, and public sector transformation. Read more at Kallmyr.com or connect via LinkedIn.