Transactional leadership, Transformational leadership

To study on how transformational leadership motivates employees, it is a good method to compare it with transactional leadership.

Transactional leadership is based on exchange: The leader offers incentives or punishments for the expected behaviors and results of certain tasks assigned to the employees (Cherry, 2011).

Different from transactional leadership, transformational leadership lies in the leader’s capability to inspire trust, loyalty and admiration in employees who will combine their own interests to the interests of the organization.

With the global digital transformation process, the superiority of transformational leadership has been revealed. Leaders need to keep up with the pace of the times through continuous learning. Especially in AI automation, big data analysis, data sharing, new media, etc., leaders need to have a sufficiently broad industry to formulate corporate strategies and lay out the future.

With the global digital transformation process, the superiority of transformational leadership has been revealed. Leaders need to keep up with the pace of the times through continuous learning. Especially in AI automation, big data analysis, data sharing, new media, etc.(The digital transformation of business. Towards the datafication of the relationship with customers, 2021), leaders need to have a sufficiently broad industry to formulate corporate strategies and lay out the future. And this can also meet the needs of contemporary talents for their own development. This also helps to gain employee recognition and loyalty (Six Leadership Practices To Be More Agile In 2021 – Transformational Leadership, n.d.). 

In my own opinion, Transformational leadership has higher requirements for corporate leaders. Leaders need to lead the formation of corporate culture, unify leadership style from top to bottom, and strengthen the importance of mutual benefit, so that employees will not only provide unilaterally with the development of the company. Value, and can achieve self-actualization.

Among the world’s top 500 companies, Koch Industry is the most typical example.

Koch Charles – Head of Koch industries.

In the following, I will demonstrate the superiority of Transformational leadership by how its head, Koch Charles, uses his MBM-Market-Based Management (MBM®) with transformational leadership to motivate the employees.

Koch Charles promotes his management philosophy and corporate vision by publishing books, posters, videos, emails, providing MBM courses, and regular meetings. From Koch official website homepage – https://www.kochind.com/

Cherles attaches emphasized the great importance to Self-actualization. He and Society for Human Resource Management President and CEO Johnny Taylor explained and promoted the importance of tapping talent potential and its solutions.

Link to the video: https://www.kochind.com/potential



Source: Maximizing Employee Potential in the Workplace. SHRM Omnibus Research, June 2020

The data shows that only 32% of employees believe that they maximize their potential. It can be seen that the role of Transformational leadership has great potential for the value creation of enterprise development.

Under the influence of Cherles’ transformational leadership, employees realize their self-worth, feel the sense of identity and the security of being needed (www.kochind.com, n.d.).

There are very important two guiding principles of MBM which are transformation and self-actualization.

Transformation principles requires individuals of the organization to transform themselves, their teams and the whole organization to seek and develop, and utilize the vision, strategies, and methods that will demonstrate a better way to help people improve their personal lives and encourage rapid adoption across society (Charles Koch Institute, 2017).

Self-actualization principle requires every individual to be a lifelong learner.

In contrast to Transactional leadership, MBM focuses on the needs of personal development, rather than just letting employees complete tasks. Employees can learn and get motivation spontaneously through the cooperation and learning platform – Everlearn System (auth.kochid.com, n.d.) established by Charles. When employees gain knowledge from it, apply it to corporate development and achieve results, they will also be rewarded in the form of spot bonuses.

Cherles enhances the overall productivity of the company by providing employees with corporate and personal visions to maximize employee potential. This also answers how we use transformational leadership to achieve corporate goals (Koch, n.d.).

From the result point of view, Charles’ use of Transformational leadership is also one of the important reasons for Koch Industries to become the world’s largest private company.

Add-on: Charismatic leadership

Charismatic leadership style is another popular leader style which share some key characteristics (Lee, 2020):

  • Strong communicator
  • Empathetic and relatable
  • Confident
  • Motivational 
  • Engaging and charming
  • Optimistic 

Actually charismatic leaders share many characteristics with transformational leaders. Although similar, there is an important difference: charismatic leaders rely on their own personality and skills to motivate followers take action, while transformational leaders rely on a shared vision to create change. Therefore, although most transformational leaders tend to be charismatic, not all charismatic leaders are not necessarily transformative (Lee, 2020).

To apply charismatic leadership, the most necessary skill is communication and listening skills. A deep and thoughtful conversation will motivate employees a lot and build up trust and loyalty at lowest cost (Nurture an Engaged and Satisfied Workforce | Vantage Circle HR Blog, 2020). 

Reference

auth.kochid.com. (n.d.). Sign On. [online] Available at: https://kocheverlearn.com/ [Accessed 24 Apr. 2021].

Charles Koch Institute. (2017). Market-Based Management® | Charles Koch Institute. [online] Available at: https://www.charleskochinstitute.org/about-us/market-based-management/ [Accessed 17 Nov. 2019].

Cherry, K. (2011). Transactional Leadership. [online] Verywell Mind. Available at: https://www.verywellmind.com/what-is-transactional-leadership-2795317.

Glassdoor. (n.d.). Koch Industries Reviews. [online] Available at: https://www.glassdoor.sg/Reviews/Koch-Industries-Reviews-E2864.htm [Accessed 24 Apr. 2021].

Koch, C. (n.d.). A change like no other. [online] https://news.kochind.com/CMSPages/GetFile.aspx?guid=4f9c35c1-8acf-42b6-a600-90642c3a822e. Available at: https://news.kochind.com/CMSPages/GetFile.aspx?guid=4f9c35c1-8acf-42b6-a600-90642c3a822e.

Lee, S. (2020). What Is Charismatic Leadership? [online] Torch. Available at: https://torch.io/blog/what-is-charismatic-leadership/.

Nurture an Engaged and Satisfied Workforce | Vantage Circle HR Blog. (2020). What is Charismatic Leadership and Its Benefits? [online] Available at: https://blog.vantagecircle.com/charismatic-leadership/.

Six Leadership Practices To Be More Agile In 2021 – Transformational Leadership. (n.d.). Six Leadership Practices To Be More Agile In 2021 – Transformational Leadership. [online] Available at: https://transformleaders.tv/six-leadership-practices-to-be-more-agile-in-2021/ [Accessed 25 Apr. 2021].

The digital transformation of business. Towards the datafication of the relationship with customers. (2021). Technological Forecasting and Social Change, [online] 162, p.120339. Available at: https://www.sciencedirect.com/science/article/pii/S0040162520311653?casa_token=r_qP3dOoY_MAAAAA:H3QXTKg4Yap7mOnk1Rhxp-Di9r41gw_0uH00RIAQW-FkgxaGR3peG8dZI4_hNp0pxu53tA8E [Accessed 15 Dec. 2020].

http://www.kochind.com. (n.d.). Maximizing Human Potential. [online] Available at: https://www.kochind.com/potential [Accessed 24 Apr. 2021].‌

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