Transformational Vs. Transactional Leadership : A new paradigm shift of management to get success

        Leaders are the individuals in the organization who set the tone and culture.  Leadership theory developed by Avolio and Bass, 1991 uses three typologies of leadership behavior: transformational, transactional and the passive-avoidant/ laissez-faire leadership style.

         Transformational leadership style is characterized by a leader who motivates and appeals to the ideal and moral values of subordinates by creating and inspiring a vision for the future (Bass and Avolio, 1997). Transformational leaders are relationally focused and use idealized influence, inspirational motivation, intellectual stimulation and individualized consideration to achieve superior results (Avolio et al., 1999). Transformational leaders are involved with internalization of the organization’s goals for followers, thereby influencing their attitudes and beliefs. This style creates and fosters an environment which builds trust and confidence and encourages individual development along with a shared vision for the organization (Bass, 1985, 1990).

      Transactional leadership style focuses on a process of exchange to motivate subordinates by appealing to their personal drivers for work. They usually use position, policy, power and authority to maintain control and get work done through constructive and corrective transactions of reward and punishment. The first, contingent reward, describes the extent to which effective transaction and exchange is set-up between leader and followers. The second dimension, management-by-exception, describes whether leaders act to either prevent (active management) or resolve (passive management) problems as they arise.