Introduction
Leadership plays an important role in the success of organizations or the society in general. Leaders influence others to work towards the attainment of a desired goal, and only leaders capable of bringing out the best in the followers succeed. Small startups with visionary leaders have grown to become global brands. Several theories have been put forward to explain the concept of effective leadership, one of them is transformational and transactional leadership proposed by James McGregor Burns. At the end of the 20th century, transformational leadership became a popular form of leadership. Transformational leadership often overshadows transactional leadership, and yet there are successful leaders who ascribe to transactional leadership. Bill Gates and John D. Rockefeller are extremely successful leaders from different periods, and they both used different leadership strategies.
Bill Gates
According to Forbes (2016), Bill Gates has been the richest person in the world for three years in a row, and has appeared on the top ten richest lists 17 times in the past 22 years. Gates founded Microsoft in 1975, and his ambition and intelligence saw the company rise to be the biggest supplier of softwares and other IT products. Gates started a software company at a time when personal computing did not exist much, however, he led the company towards his vision and massive profitability in the 21st century.
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The world knows Gates as a quirky and an extremely rich philanthropist, but his employees have a different perspective of Gates. Bill Gates has been described as a transactional leader in many occasions because of his focus on making Microsoft productive and successful (Krishnamurthy, 2008). Gates is known to be very demanding and ruthless, and he expected his employees to come up with creative and innovative ideas. Under the leadership of Gates, employees were supposed to present reports, ideas and findings to Gates regularly, and in such meetings Gates would interrupt and challenge the employees.
According to Odumeru & Ogbonna (2013) transactional leadership focuses on the role of supervision and group performance. As stated above, Gates would often evaluate the activities of his teams to ensure they were coming up with effective ideas that would transform the future of Microsoft. Transactional leadership is also largely based on punishments and rewards, Gates is known to be very ruthless to employees that are not productive. Gates developed his passion for technology at a young age, and yet at older age, he had a good command of programing skills and expected his employees to be like him.
Gates is a task oriented leader, and his relationships with the subordinates is often based on how they work towards attaining organizational goals. Burns (1978) notes that the concepts of contingent reward and management by exception are known to produce desired outcomes under transactional leadership. Management by exception is a concept in which managers do not change processes and products until something goes wrong. Gates believed in delivering functional and affordable products to the customers, instead of trying to redefine his business every now and then like most managers. Being a task-oriented manager, Gates did not believe in vacations or even weekend-offs for himself and his employees. Gates would “prowl” the parking lots on weekends to identify employees who did not come to work (McIlvaine, 2016).
Gate’s transactional leadership added value to Microsoft, Gates touch approach saw Microsoft become one of the most admired technology companies in the 21st century. Gates adopted a transactional form of leadership given his history with technology, Gates had a mastery of the organization’s products and when combined with his vision, the company was bound to succeed. Despite, his harshness and social ineptitude, Gates’ leadership style is achievement driven and it made his highly talented employees to be very productive. Gates challenged his employees to surpass their previous performance through effective use of rewards and punishments. Though financial rewards were used, Gates approval was probably the best reward a Microsoft employee could dream of during Bill Gates’ era as the CEO.
It is worth noting that transactional leadership does not work for all leaders and organizations. Transactional leadership worked for Bill Gates because of his extensive knowledge in programming. Gates knew what to expect from his employees given his track record. Gates was also a powerful motivator, his approval meant a lot to employees, and hence employees did as they were told.
John D Rockefeller
John D. Rockefeller was the richest man in his time and he is regarded as one of the best leaders (Loborec & Weber, 2015). At a young age, Rockefeller started a small business which paid off, and he eventually started the Standard Oil Company in 1870. His massive was directly related to his style of leadership. Now, Rockefeller is described as the epitome of transformational leadership.
According to Bernard Bass (1985), transformational leadership has the following components: intellectual stimulation, individualized consideration, inspirational motivation and idealized influence (1985). Rockefeller’s vision saw him transform his company from a small oil company to the largest company in the world. Rockefeller was an extremely hardworking and visionary individual, and he was able to intellectually stimulate his employees by challenging them to do better. A famous Rockefeller quote that rhymes with transformational leadership is, “Good leadership consists of showing average people how to do the work of superior people” (Loborec & Weber, 2015). Rockefeller shared the vision with his employees in a way that it became the responsibility of every employee to work towards achieving the vision.
Rockefeller became a source of motivation and idealized influence of his employees. Rockefeller came from an extremely poor background, and yet through his hard work and entrepreneurial skills, he became the richest man in the world. Nonetheless, Rockefeller did not let his wealth define him. His vision and values defined him, his employees idolized him and wanted to internalize his values. His personal element was felt in his activities as Rockefeller did not engage in business for the sake of making money only. He insisted that leaders must have bigger plans apart from the profitability. He wanted the values that he treasured to be reflected in his company.
Rockefeller’s idealized influence on his employees did not come easily. Rockefeller was probably the most dedicated businessperson ever, and he believed in doing whatever it takes to achieve his vision. He had the ability to inspire his employees to work hard because he himself worked very hard to a point of emotional breakdown.
Rockefeller’s leadership style had value to his organization. Rockefeller inspired his employees by sharing his vision and values in a way that inspired his employees to perform “beyond expectations” (Bass, 1985). Bass asserts that transformational leaders add more value to organizations by incorporating values. Rockefeller was not just a successful business person, but he was a noteworthy role model in the society. He lived a life of high moral standards, communicated hope, shared vision and values to his employees. His leadership style created a pool of employees who did not just work for the financial rewards, they worked harder because they enjoyed working.
From Rockefeller’s experiences, it is evident that transformational leadership only thrives in an environment where the leader is charismatic enough to inspire the followers. Rockefeller was an inspirational leader willing to forego the traditional autocratic leadership in order to inspire his employees by sharing his vision and values. Additionally, transformational leadership thrives when the leader is proactive and is interested in changing the organizational culture. Rockefeller was a proactive leader, he did not expect his employees to fail so that he could correct them, and instead he worked alongside his employees to achieve his vision.
Conclusion
Nonetheless, both Bill Gates and Rockefeller steered their organizations to success despite their different leadership styles. Hence, it is hard to evaluate whether transformational leadership is better than transactional leadership or vice versa. While transformational leadership is founded on leading by example, transactional leadership is about developing a relationship with employees geared towards attainment of goals (Burns, 1978). Leaders have to examine their environments first before adopting any leadership style, as there are cases where transformational leadership might not apply. Transactional leadership worked for Microsoft because of the technical nature of work at Microsoft, Gates expected good designs that would lead to profits and he did not compromise on that. While Gates lacked charisma like Rockefeller, his choice of leadership has made him the richest man today. Alternatively, transformational leadership was the most effective choice given Rockefeller’ environment. The petroleum industry in the late 19th and 20th century was characterized by high inefficiencies, and Rockefeller’s leadership strategy motivated his employees to be better. Despite their different leadership styles, both Gates and Rockefeller were guided by values, they are the most philanthropic business leaders. In conclusion, though a strong vision and a charismatic leader can transform an organization. The discipline and reactive nature of a transactional leader ensures that organizational goals are met.
References
Bass, B. M. (1985). Leadership and performance beyond expectations . Free Press; Collier Macmillan.
Burns, J.M. (1978). Leadership . New York, NY: Harper Perennial Political Classics.
Krishnamurthy, B. (2008). Bill Gates: Entrepreneur, Manager, and Leader. Harvard Business Review. Retrieved from: https://hbr.org/2008/06/bill-gates-entrepreneur-manage
Loborec, S. M., & Weber, R. J. (2015). Patterning Your Department after Great Leaders: John D. Rockefeller. Hospital pharmacy , 50 (3), 243.
Odumeru, J. A., & Ogbonna, I. G. (2013). Transformational vs. transactional leadership theories: Evidence in literature. International Review of Management and Business Research , 2 (2), 355.
McIlvaine, A. (2016). Bill Gates’ Ruthless Management Style of Yore. HRE Daily. Retrieved from: http://blog.hreonline.com/2016/02/04/bill-gates-ruthless-management-style-of- yore/
