Introduction
Transactional and transformational leadership dominate in the contemporary business world whereby companies assimilate either of the two in their leadership approaches or mix both to achieve organizational goals. Transactional leadership centers on short-term planning, organizing and controlling. The strategy also follows the reward and punishment principle. Unlike transactional leadership, transformational leadership promotes enthusiasm, allows for a quick formulation of visions, and motivates followers through inspiration. Though perceived as humane, transformational leadership carries a potential for abuse; it can overlook truth and reality and may face serious detail challenges. This case analysis seeks to prove that: Both transactional and transformational leadership models can guarantee success depending on the type, context, and structure of a company.
Background
The problem of an unhappy workforce impacts the top and bottom line outcomes in most economies. For instance, such employees lead to an increased turnover rate, which ends up costing the U.S economy and companies above $550 billion annually (Efron, 2016). As such, a purposeful and skilled leadership guided by the understanding of factors that engage and motivate personnel is ideal to alleviate the problem.
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Alternatives
Bill Gates-Microsoft
Bill Gates, a computer tycoon, adopts transactional leadership as an essential façade of his leadership style. With the help of his leadership acumen, Microsoft became a trendsetter by revolutionizing the information technology industry. His strictness to both his subordinates and rivals helped him transform Microsoft into a firm monopoly (Mirror Business, 2015). Bill enables this through careful control of the company’s production process and creating barriers. Evident in Bill Gate’s attributes that renders his management influential are competitiveness, intelligence, and ambition. Bill Gates does not embrace adaptive or engaging communication since he is abrasive and easily dismisses others’ ideas. For instance, in one of his hiring exercises, he stated, “I don’t hire bozos (Mirror Business, 2015).” This statement further reveals that Microsoft employees must be highly dedicated and hard-working, as he drives the workforce as hard as he pushes himself.
David Ossip-Cerdian
Ceridian’s CEO, David Ossip is an example of a leader whose transformational leadership approach transformed the metrics and future trajectory of his workforce. Ossip’s leadership strategies rapidly increased the company’s customer base. In 2011, for example, the company forecasted 100 customer purchases, only to end up selling 483 items (Efron, 2016). His first approach in reviving the Ceridian was to reinvent the company’s culture. Ossip did this to properly drive employee engagement, which subsequently resulted in improved market share and customer engagement scores.
Ossip’s leadership emphasizes employee engagement in decision-making using a program dubbed, “Top Talent” to drive changes through the improvement of workforce and leadership interaction. Where there is an involvement of the workforce in making decisions, proper communication is a requirement. Before Ossip took over the company’s top management, the existing communication methods were a constraint (Efron, 2016). In contrast, his leadership advocated for an enabler form of communication. An enabling communication platform allows more comfortable sharing of ideas with leaders, and it requires the interest of administration to ideas from subordinates.
Analysis
Transactional leadership base on a system of penalties and rewards, but fails to motivate employees to perform beyond the basics. The basics in this regard mean agreements between the leaders and employees regarding the rewards in store for the worker after achieving a negotiated performance level. Concerning the Bass/Bruns model, workforce under transactional leadership tends to become complacent and focus mainly on attaining minimal expectations synonymous with those the management expects of them. Contingent reward leadership advocated by Bill Gates transactional leadership is detrimental in a diversified industry with competitive rivals (Bass, 1999). This statement is right because it is likely to impact on employees’ performance negatively. Poor workforce performance under such leadership arises from the fact that a leader passively awaits problems before deciding to take actions.
Transformational leadership practiced by David Ossip enhances the consciousness of personnel regarding essential things, whereby they learn to sacrifice their interests for the sake of the organization. Bass (1999) contends that numerous studies support the possible expectation that transformational leadership generates more commitment from followers. Such obligations, supported by a focal innovation role assumed by the leader, motivate innovation by promoting learning within an organization. Besides, transformational leadership facilitates the creation of transformational teams vital in the modern business world where companies abandon steep hierarchical structures to embrace a flatter model (Bass, 1999). This model creates lateral multifunctional networks that motivate the formation of teams. The teams, in this setup, identify concerns and propose solutions.
Recommendations
Both transformational and transactional leadership have their merits and disadvantages. In instances where an organization pursues a specific organizational goal, transactional leadership suffices. A company that needs to stand out among its competitors for an extended period without triggering high turnover should apply a mix of both transactional and transformational leadership models. Bill Gates of Microsoft can realize even more success by integrating transactional leadership with transformational leadership constructs such as workforce involvement in decision-making. On the other hand, David Ossip can improve the motivation of Ceridian employees by establishing rewards for achieving set organizational goals that need achievement in the short-term.
References
Bass, B. M. (1999). “Current developments in transformational leadership: Research and applications.” The Psychologist-Manager Journal, 3, 1, 5-21.
Efron, L. (2016). “How transformational leadership saved this company: Ceridian’s story.” Retrieved from https://www.forbes.com/sites/louisefron/2016/07/06/how-transformational-leadership-saved-this-company-ceridians-story/#7cb067162909
Mirror Business. (2015). “Bill Gate’s transactional leadership style .” Retrieved from http://www.dailymirror.lk/75949/bill-gate-s-transactional-leadership-style
