Sample Paper on Transactional leaders and Organizational Performance

Transactional leaders and Organizational Performance


Contemporary literature on organizational leadership classifies leadership into two categories: Transactional and transformational. Transactional leaders use tangible rewards to enhance performance of their followers (Givens 2008) while transformational leaders use inspirational and motivational empowerment to promote high performance in their subordinates. They do so by creating a shared vision and motivating their subordinates to achieve it as a way of fulfilling their individualized life aspirations (Krishnan 2002). According to Givens (2008), transformational leaders inspire their subordinates to see higher meaning in their work and stimulate them to achieve more for the benefit of the organization. In a transformational leadership organization, employees are motivated to achieve more than they could in ordinary circumstances (Krishnan 2005). This is made possible by connecting employees aspirations to the vision and mission of the organization (Bass 1985). According to Givens (2008), employee satisfaction is the driving factor for higher performance in an organization. His position serves to explain the importance of leadership to personal and organizational outcome. This paper provides a critical analysis of the effectiveness of transformational leadership in enhancing high performance. The first section of the paper is a theoretical framework of transformational leadership and its implications for organizational performance. The second section is the critical analysis of  transformational leadership attributes and their influence on organizational performance. Practical examples of transformational leadership are provided in the third section. Lastly, the paper presents the author’s critique of transformational leadership.

Theoretical Framework of Transformational Leadership

Transformational leadership was born out of the quest to use Human resource management as a competitive strategy in competitive environments. Bass (1995) observes that employees form a seperate entity in an organization with its own aspirations and interests.  Therefore, employees will commit themselves to the achievement of an organization’s vision when such a commitment leads to fulfilment of their interests in life. This argument underscores the importance of empowering employees and casting a shared vision to motivate them to a higher performance. According to Bass (1985, p.20), the role of a leader is to motivate the subordinates to do more than they could ordinarily. Bass (1985,p.20) goes on to argue that such motivation can be achieved through connecting the vision of the organization with the interests and aspirations of organizational members. Bass also contends that an effective leader encourages and motivates the subordinates to go beyond their narrow personal constraints for the common good of the team and overall organization. According to Givens (2008), transformational leaders endeavor to create a shared vision, goal, and organization culture that stimulate group and individual’s abilities that enhance higher organizational performance.

Attributes and traits of transformational leadership

According to Bass (1985), there are five attributes of transformational leadership that makes it effective in promoting high performance in a workforce. That is, charismatic leadership, inspirational motivation, individualized consideration and intellectual stimulation. Therefore, the effectiveness of a transformational leader is based on his/her ability to use the afore-listed leadership attributes to stimulate his/her subordinates to higher commitment and organizational performance.

Charismatic leadership

Charisma as used in organizational leadership refers to a leader’s profound and extra-ordinary impacts on his/her suboedinates (Bass 1985). Emotional intelligence and effective communication of a vision are key attributes of charismatic leaders. They use their emotional intelligence to create vision that stimulates their subordonates to follow them. According to Bass (1985), transformational leaders use charisma to stimulate blind faith and emotional reverence in their followers. Charismatic leadership trait is essential during crisis time in which transformational leasders use it to inspire trust and blind following required to lead a way out of the crisis (Bass 1985).

 Idealized influence

Idealized influence is about building and inspiring trust and confidence and provision of a positive role model for subordinates to follow. Transformational leaders use charisma and positive relational skills to inspire trust and confidence and establish themselves as role models for their followers (Bono & Judge 2004). According to Gellis (2001, p.18), the ability of a leader to create and cast a shared vision to the subordinates determines the level of trust and confidence accorded to him. In this case, idealized influence creates required follower-leader trust for leading organizational change and high performance. Crisis time is the best crucible of testing the validity of idealized influence as an intricate factor for the effectiveness of transformational leadership.

Inspirational motivation

Inspirational motivation is closely related to charismatic leadership. However, whereas charisma is tailored to achieve individuals’s motivation, inspirational motivation is about motivating the entire organization towards a future state (Givens 2008). Transformational leaders create a shared vision and an appealing impression of the future state to their surbodinates. They make their followers see a higher meaning in the vision that promotes optimism, committment and hardwork. According to Kelly (2003), inspirational motivation stimulates optimism and required enthusiasm for the achievement of a shared vision.

Intellectual stimulation

Intellectual stimulation entails raising the subordinates’ awareness level about an incumbent problem and promoting confidence in them to provide a solution (Kelly 2003). Transformational leaders use intellectual stimmulation to challenge their followers to confront the status quo without fear of its consequences. They create a tranformational capacity in their followers that promotes creativity and innovation.

Individualized consideration

Individual consideration measures a leader’s ability to give personal attention to each of the subordinate members. Transformational leaders use individualized consideration to accord each of their subordinates a different treatment based on their capabilities (Bass 1985).It is about a leader’s recognition and use of diversity in differences as a strength for higher achievement. Individualized consideration as a factor of transformational leadership requires leaders to have high emotional and social intelligence to understand the dynamics of their workforce. Transformational leaders venture to understand and fullfil the individualized needs and life aspirations of their followers. Individualized consideration takes different forms such as recognition of employees’ productivity through praise, career counselling and professional development and fair distribution of workload (Simic 1998, p. 52). Carrier mentoring and development promote subordinates’ commitment to their leaders. The latter attribute is essential in enhancing high performance in organizations. According to Shin and Zhou (2003, p.704), individualized consideration promotes job satisfaction and employees’ commitment to the organization. Employees who are satisfied with their jobs are motivated to achieve their employers’ vision.

Transformational leadership and organizational outcomes

While the five attributes of transformational leaders have been discussed seperately, it is worth noting their inter-dependence. Thus, the effectiveness of a transformational leader is determined by his/her integral fit of the afore-described attributes. A transformational leader who posses all the five attributes in equal measures is more effective in influncing his/her surbodinates to towards high achievement. Literature on organizational leadership shows a positive relationship between transformational leadership and high performance (Bass, et al. 2003; Barksdale & Werner  2001; Chaturvedi, 2013; Givens 2008). The work of Barling and his colleagues (1996) shows that transformational leadership promotes employees’ commitment to the organization. Transformational leadership has also been linked with employee-leader satisfaction and job satisfaction (Lowe 1996; Koh et al. 1995; Bryman 1992).Trice and Beyer (1993) contend that leadership that value organizational members promotes workplace trust, positive behavior and job satisfaction. According to Gellis (2001) and Kelly (2003), transformational leaders are value driven, risk taking, emotionally mature, visionary, strong role models, able to attract and inspire others, are change agents, effective communicators and considerate of the personal needs of their surbordinates.

A visionary leader changes the frame of reference of the subordinates and inspire them to take note of new opportunities and how to reach their ultimate life fulfilment in the context of the organization (Zaccaro & Banks 2001). The connection between opportunities for personal growth and organization’s vision promotes commitment and high productivity in a workforce (Givens 2008).  Contemporary literature also shows a strong link between organizational culture and behavior/ performance (Ackfelft & Leonard 2005; Barksdale & Werner 2001). According to Bolino, Turnley and Bloodgood (2002), a leadership style determines organizational behavior that influences its performance. Givens (2008) considers the effectiveness of a given leadership style in terms of its positive benefits to the organization and positive effects on employee performance. He goes on to argue that an effective leadership that values the importnance of employees to an organization promotes job satisfaction, team work and commitment required for high performance. The positive characteristics of organizational culture as a factor of leadership is measured by employees committment, personal and group behavior, performance and productivity (Denilson 1984). The work of Givens (2008), Ackfelft and Coote (2005) and Bolino et al. (2002) validate a fundamental premise of transformational leadership: Influencing people’s behavior to realize high organizational performance (Bass 1985).

There are many organizational leadership personalities who have exemplified the effectiveness of transformational leadership in achieving organizational visions and set goals. Lou Gerstner revamped IBM from a loss of $8.1 billion in 1993 while serving as the company’s Chief Executive Officer (CEO). Gerstner identified ‘success syndrome’ as the main cause of IBM’s failure. As the global market leader of the 1950s-1980s,IBM had become a rigid and insular organization (Chaturvedi, 2013). Gerstner transformed IBM’s culture by modelling perfomance enhancing behavior and abolished the company’s dress code to align it to its customers’ attires (Sheppard 2002). As a visionary and change agent, Gerstner re-instituted research and innovation as the engines of IBM business and his leadership has seen IBM remain the market leader in innovation and profitability even beyond his tenure.

Lee Iacocca, a former president and CEO of Chrysler Corporation, is another exceptional transformational leader. By ascending to presidency of Chrysler Corporation in 1978, Lee Iacocca inherited an organization with poor information insemination, dwindling spirit of camaraderie and lack of teamwork (Kelly 2003). Chrysler Corporation did not have financial controls and its products were of poor quality. Through idealized influence, Lee Iacocca inspired organizational transformation that saw the ailing Chrysler declare a record profit of $ 2.4 billion in 1984 (Johnson 1993).

Martin Luther King and the United States president J.F Kennedy are other exceptional transformational leaders who used inspirational motivation and intellectual stimulation to stimulate their followers to a higher committment of their course. Through his speech, ‘I have a dream’, Martin Luther King was able to stimulate and rally the Americans of African origin to civil rights movement. Martin Luther King’s inspirational motivation created a massive civil rights’ movement that culminated into freedom and equal rights for the black minority in the United States. He also used intellectual stimulation to sustain the black people’s committment to the civil rights’ movement.Mr. King called upon the Americans of African origin to defy the law by engaging in demonstrations, boycotts and protest against the racist system. He used inspirational speeches such as ‘We shall overcome’ and ‘I have a dream’ to paint a future of equality for all people in the United States irrespective of their race and skin color. His inspiration created optimism among his followers that would out-live him.  J.F Kennedy also used inspiration motivation to commit the Americans on the vision of putting a man on the moon before 1970 (Bass et al. 2003, p.208).

General Colin Powell is another exceptional transformational leaders in the American modern history. Powell overcame entrenched racial prejudice in the US military. He rose to become the first American of African origin to occupy the chair of the United States Joint Chiefs of Staff in 1989. Powell also went on to become the first American of African origin to occupy the position of the United States Secretary of State in 1991. According to Chekwa (2001), Powell’s leadership rise was based on his transformational trait to challenge the status quo and believe in possibilities. President Barrack Obama can also be thought as a transformational leader if charisma is used an a yard-stick of transformational leadership. He used his excellent oratorial skills to lead change from a long-standing American history which reserved presidency for the white majority race.

Critique of transformational leadership

From the above analysis, it is evident that transformational leadership is linked with good employees’ behavior that can promote organizational performance. However, cricitisms about about about its morality and generalizability. Since transformational leaders motivate and inspire their subordinates by appealing to their emotions, there is a highly likelihood of moral abuse. Griffin (2003) observes that there is a potential for power abuse by transformational leaders where blind following is stimulated. Transformational leadership is a potential ground for selfish exploitation by leaders with narcissistic tendencies who thrive on manipulation of their subordinates(Stone et al. 2003, p.4). Stone and his colleagues (2003, p. 4) observe that lack of leadership checks and balances for countervailing interests and power of transformational leaders is a recipe for dictatorship and exploitation of the vulnerable followers. Iacocca is a perfect example of a transformational leader who used the absence of moral rectitude to advance his self iterests.  He got ‘drunk’ with the glory of high organizational performance and engaged in hurting practices to sutaing Chrysler’s performance. He laid off thousands of employees, moved some production functions to overseas and closed some of the plant outlets leading to massive loss of jobs (Risen 1988). He did all this in a bid to sustain the company’ high performance (Risen 1988). Stone and his colleagues (2003) also argues that transformational leadership is a recipe of exploitation where followers develop depedent characters leading to the formation of strong unfortunate bonds with their leaders.The morality of Martin Luther King was questioned for using his followers to achieve personal interests coined in civil rights movement. While his personal motives could not be ascertained, the loss of lives and violence experienced by his followers makes the morality of the whole affair questionable. Bass (1985) observes that the absence of moral rectitude in tranformational leadership creates a breeding ground for leaders with selfish social interests.

Bass et al. (2003) contends that transformational leadership provides opportunity for amoral self promotion because it makes use of manipulation and impression management. This makes transformational leadership anti-thetical to organizatioal development and learning involving shared leadership and participative decision making. Also, by encouraging and stimulating employees to go beyond their self interests, transformational leadership may be used to drive evil ends. Forcing employees to go beyond their personal interests may be considered immoral since it promotes indirect exploitation without necessarily paying regard to employees’ needs and aspirations. Also, the use of individualised consideration may not necessarily amount to increased productivity. The cost of according employees comfort may outweigh their net productivity rendering the approach infeasible. Another weakness of transformational leadership is its dependence on followers. According to Bass et al. (2003) the success of transformational leadership is dependent not only on the leaders but also the followers’ willingness to follow their leaders. Transformational leaders fail where followers are defiant of leadership.


Transformational leadership has positive linkages with high organizational performance. Charisma, intellectual stimulation, inidividualised consideration, and inspirational motivation are transformational leadership traits that are commonly used in creating positive organizational culture and behavior that promote high performance. Literature presents transformational leadership as effective approach in mitigating performance crisis. This is evident in Lee Iacocca,Lou Gerstner, and Martin Luther King among others hailed as exceptional transformational leaders who turned around the situations of their leadership. Despite being hailed as an effective leadership, transformational leadership is also criticized for its potential to exploit followers for evil and immoral ends because of lack of moral rectitude. Leaders with nacissistic tendencies  may also use transformational leadership for power abuse to achieve their selfish ends.



Reference List

Ackfeldt, A. & Coote, L. V 2005, ‘A study of organizational citizenship behaviors in a retail setting’, Journal of Business Research, vol.58, no.2, pp. 151-159.

Barksdale, K. & Werner, J. M 2001, ‘Managerial ratings of in-role behaviors, organizational citizenship, and overall performance: Testing different models of their relationship’, Journal of Business Research, vol.51, no.2, pp. 145-155.

Barling, J., Weber, T. & Kelloway, K. E 1996, ‘Effects of transformational leadership training on attitudinal and financial outcomes: A field experiment’, Journal of Applied Psychology, vol. 81, no.6, pp. 827-832.

Bass, B. M 1985. Leadership and performance beyond expectations. New York: The Free Press.

Bass, B. M., Avolio, B. J., Jung, D. I. & Berson, Y  2003, ‘Predicting unit performance by assessing transformational and transactional leadership’, Journal of Applied Psychology, vol. 88, no.2, pp. 207-218.

Bolino, M. C., Turnley, W. H. & Bloodgood, J. M 2002, ‘Citizenship behavior and the creation of social capital in organizations’, Academy of Management Review, vol. 27, no.4, pp. 505-523.

Bono, J. E. & Judge, T. A  2003, ‘Self-concordance at work: Toward understanding the motivational effects of transformational leadership’, Academy of Management Journal, vol.46, np.5, pp. 554-571.

Bryman, A. E 1992. Charisma and leadership in organizations. London: SAGE.

Chaturvedi, V  2013, ‘Transformational Leadership-An Indispensable Tool for Developing Unrelenting and Unparalleled Success for Organisation’, International Journal On Leadership, vol.1,no.2, pp. 1-10.

Chekwa, E 2001. Searching for African American transformational leaders:Academy of Business and Administrative Sciences 4th International Conference. Quebec City, Canada.

Denison, D.R 1984, ‘Bringing corporate culture to the bottom line’, Organizational Dynamics, vol.13, no.2, pp. 5-12.

Gellis, Z. D 2001, ‘Social work perceptions of transformational and transactional leadership in health care’, Social Work Research, vol. 25, no. 1, pp. 17-25.

Givens, R. J 2008, ‘Transformational Leadership: The Impact on Organizational and Personal Outcomes’, Emerging Leadership Journeys, vol.1, no.1, pp. 4-24.

Johnson, R. S 1993, ‘TQM: Leadership for the Quality Transformation, Part 5’, Quality Press, vol.25, no.5, pp. 83-85.

Kelly, M. L., 2003. Academic Advisers as Transformational Leaders. [Online] Available at: <>
[Accessed 12 April 2015].

Koh, W. L., Steers, R. M. & Terborg, J. R 1995, ‘The effects of transformational leadership on teacher attitudes and student performance in Singapore’, Journal of Organizational Behavior, vol. 16, no.4, pp. 319-333.

Krishnan, V. R 2002, ‘Transformational leadership and value system congruence’, International Journal Of Value-Based Management, vol.15, no.1, pp. 19-33.

Krishnan, V. R 2005, ‘Transformational leadership and outcomes: Role of relationship’, Leadership & Organization Journal, vol.26, no.6, pp. 442 – 457.

Lowe, K. B 1996, ‘Effectiveness correlates of transformational and transactional leadership: A meta-analytic review of the MLQ literature’, The Leadership Quarterly, vol.7, no.3, pp. 385-425.

Risen, J 1988. ‘I’ve Taken a Beating’ : Lee Iacocca Falls From Public Grace. [Online] Available at: <>
[Accessed 12 April 2015].

Shin, S. J. & Zhou, J 2003, ‘Transformational leadership, conservation, and creativity: evidence from Korea’, The Academy Of Management Journal, vol.46, no.6, pp. 703-714.

Simić, I., 1998, ‘Transformational leadership – the key to successful management of transformational organizational changes’, Economics and Organization, vol. 1,no.6, pp. 49-55.

Stone, A.G, Patterson, K. & Redmer, T. A. 2003. Servant Leadership Roundtable – October 2003. Transformational versus servant leadership – a difference in leader focus. [Online] Available at: <>
[Accessed 12 April 2015].


Trice, H. M. & Beyer, J. M 1984, ‘Studying Organizational Cultures through Rites and Ceremonials’, The Academy of Management Review, vol.,9, no.4, pp. 653-669.

Zaccaro, S. J. & Banks, D. J  2001, ‘Leadership, Vision, and Organizational Effectiveness’ In: S. J. Zaccaro & R. J. Klimoski, eds. The Nature of Organizational Leadership: Understanding the Performance. San Francisco: Jossey-Bass, pp. 181-218.