Transactional Leadership Style - Coursework Example

Running Header: Leadership Styles Student’s Name: Instructor’s Name: Course Name & Code: Date of Submission: Leadership Styles According to Bryant (2003), Leadership is the process of influencing other people in order to achieve a goal while guiding the organization in a way that makes it consistent and organized. It can also be defined as the process of guiding people towards the right direction to attain set objectives. Leadership is known as one of the main drivers of organization’s performance. A leader is an individual who exerts influence on people with his focus on collaboration, co-operation, and communication with others. Leaders are supposed to break barriers that hinder the success of various functions including sales, marketing, and accounting. Most organizations and businesses makes organizations become more competitive with increased productivity resulting to more sustainability and growth. Leadership can be categorized into transactional and transformational leadership. They are various writers who have developed characteristics of transformational and transactional leadership. Some of them include James McGregor Burns, Bernard Bass, and Max Weber. Transactional leadership depends on rewards and punishment system while transformational leadership takes advantage of the internal motivations. According to Bass, transactional leadership style was based on the hypothesis that followers are motivated by a system of rewards and punishment as illustrated by Rick (2010). The relationship between leader and follower is of quid pro quo meaning this for that. In this case, if a follower does something good he is rewarded and if he does something wrong, then he is punished for it. Bass argued that transformational leadership is based on higher order needs and it is closely aligned with internal motivational factors of their followers. The main characteristics of transformational leadership according to Bass include motivating, role modeling, developing, and encouraging creativity. This is through idealized influence, inspirational motivation, intellectual stimulation, and individual consideration. James McGregor Burns argued that they were varying characteristics of transactional and transformational leadership. According to Burns, transactional leadership approaches its followers with an eye to trading one thing for another. Other characteristic is that it recognizes what it is that we want to get from the work; it then tries to ensure that we get it only if our performance merits it according to Rick (2010). It is responsive to our instant personal interests if they can be fulfilled by work being done. Transformational leadership according to Burns gets followers transcends their own interest for the sake of the team or organization. According to Burn, this leadership alters the needs level and expands the range of needs and wants. It tries to raise the awareness and consciousness level about the value of selected results as well as the ways of reaching them. The transformational leadership motivates his followers to perform well. Max Weber (1948) was one of the writers who wrote about leadership styles and theories as illustrated by Rick (2010). He led to development of leadership, he believed there were two basic paradigms within which leaders worked and they included transactions and transformations. According to Weber, transactional leaders had one characteristic of working within the existing systems or environment to attain results. They used their legal authority and knowledge to attain results. Weber argued that transformational leaders were characterized with approaching things from an entirely different point of view. Transformational leader used personal charisma to assist him attain their objectives. Transformational leadership style is vital towards the success of organizations and businesses. Every one of them is important towards the success of an organization. Jay (2006) argues that transformational leadership assists in facilitating redefinition of the mission and vision of people as well as a renewal of their commitment with the restructuring of their systems for the accomplishment of goals or objectives. Transformational leadership promotes capacity development. It brings superior levels of personal commitment amongst followers to organizational goals. Transformational leadership widens and elevates employees’ interests when they generate awareness and acceptance of the mission and purposes of the team. This broadens when they stir employees to look far past their own self-interest for the good of the group. This increases commitment and performance capacity resulting to greater productivity among the employees. Transformational leadership elevates people from low levels of need to higher levels. Transformational leadership has idealized influence through charismatic vision and behavior; this inspires others to follow. Transformational leadership assists organization to increase levels of creativity among the followers due to intellectual stimulation that encourages innovation and creativity. These crucial aspects play a great role towards the success and overall performance beyond expectations of the organization. Transactional leadership style is crucial towards organizational success. Many companies use transactional leadership whereby people become motivated through rewards as argued by Jay (2006). Incentives play a great role in increasing the productivity by encouraging subordinates. This is a major step towards the success of an organization. It is through transactional leadership that short-term goals of an organization are able to be focused on and even achieved easily. Assigning of various tasks becomes easier through transactional leadership. This is an assuring way that those tasks can be completed in time failure to which punishment is given. However, the tasks are completed in time and perfectly hence a major success to the organizations. Subordinates performance and morale is always higher within the organizations due to the promising rewards. Transactional leadership increases the performance of an employee within an organization in case it is not satisfactory. This leadership is important is important to an organization because it sets clear goals of employees in an organization. This leadership emphasizes also on the establishment of performance targets for every individual as well as the teams. This is through identification of performance gaps by the leader. All this leads to gain of commitment to performance and goals through recognition and rewards. This leads to achievement of expected performance results leading to higher productivity of the organization. It is through transactional leadership that organizations gets financial gains through economic exchange to met current material and psychic needs. It assists the organizations in maximizing the labor force. An example of a successful transformational leader in an Australian organization is Mike Smith. He is the Chief Executive Officer of ANZ Bank. ANZ is an Australian and New Zealand Banking Group and it is the fourth largest bank in Australia in terms of market capitalization according to Richard, (2011). In 2010, Mike Smith through his transformational leadership styles led the bank to making a whelming profit. Australian Institute of Bankers & Australian Institute of Banking and Finance (2008) argues that the bank reported a profit of A$5 billion that was 33 percent rise from previous year. The statutory profit was 53 percent for the whole year at A$4.5 billion. Smith has made his organization successful in terms of financial gains due to his idealized influence, inspirational motivation of his employees as well as building clear vision and goals of ANZ bank. An example of a successful transformational leader in an Asian organization is Motoki Ozaki. He is the President and CEO of Kao Corporation at Tokyo, Japan from 2004 and as a director since 2002 as illustrated by Fibre2fashion, (2010). Motoki’s transformational leadership can be traced from 1971 when he was its president of Global Fabric and Home Care Operations. He has led Kao Corp. towards making good revenues and profits since he took control. In 2010, net sales rose to 601billion yen from 599billion yen with a gross profit of 352billion in 2010 from 347billion in 2009. He has led to the expansion of the operations to other countries like China and Vietnam. He is a dynamic and energetic leader who has commanding presence. He inspires his employees towards the need of improving their service delivery in order to satisfy the customer. Motoki Ozaki and Mike Smith have similar traits that have made their organizations to become successful in their operations, service, and products delivery. They usually identify themselves as the agents of change and they take responsibility for change. They believe and trust in people. They both share visions towards making their organizations successful. Both leaders have respect and loyalty, which they even inspire to their subordinates. However, Mike Smith motivates his employees through inspirational motivation. He also has idealized influence towards his employees hence success of his organization. He is confidence and he knows what decisions positively affect his organization. Motoki Ozaki on the other hand is dynamic and he inspires his subordinates and encourages them on the need to deliver quality services. He has a clear vision for his organization. He knows that his organization will deliver quality services and be able to expand quickly. Conclusively, most of the organizational success is greatly determined by the extent to which transformational and transactional leadership is utilized. Transformational leadership leads to inspirational motivation whereby there is high capacity to motivate others towards commitment to the vision. It is through transformational leadership that there is individualized consideration. This assists in coaching towards specific requirements of followers. A successful transformational leader should be able to communicate to various teams within an organization on his vision and the need for change. Transactional utilizes the aspect of rewarding and punishing as the two major factor of determining their organizations success. The performance of an organization in transactional leadership is determined by reward and punishment while motivation and inspirations determines the success of an organization. However, transformational leadership has been attributed to the success of various organizations. Such transformational leaders who have led towards the success of their organizations are Mike Smith of ANZ Bank and Motoki Ozaki the President and CEO of Kao Corporation. References Australian Institute of Bankers & Australian Institute of Banking and Finance 2008, ‘The Australian banker’, Journal of the Australian Institute of Bankers, Vol. 109, No. 4, pp. 45-78. Bryant, S 2003, ‘The role of Transformational and transactional leadership in creating, sharing and exploiting organizational knowledge’, Journal of Leadership & organizational Studies, Vol. 12, No. 5, pp.45. Fibre2fashion 2010, Kao Corporation News, viewed 18 January 2011, http://www.fibre2fashion.com/news/company-news/kao-corporation/ Jay, P 2006, International Directory of Company Histories, Volume 79, St. James Press, Tokyo. Richard, G 2011, ANZ bank is exploring expanding in north Asian, viewed 18 January 2011, http://www.theaustralian.com.au/business/anz-explores-north-asian- expansion/story-e6frg8zx-1225979659432 Rick, K 2010, Transformational and Transactional Leadership, Lambert Academic Publishing, Michigan. Read More