Transformational Leadership in Organizations: Leading by Example

by Daniel Hannig

Role model, motivator, confidant, companion. Doesn’t every manager want to be more to his employees than just a boss? It’s called transformational leadership and has led to the success of many companies through its very human approach to management. Are you a transformational leader or are you interested in finding out what it takes to be one? Find out what transformational leadership is all about and how you can leverage this style to better lead your team.

Transformational leaders inspire their employees, promote their professional and personal growth. They are able to instill an intrinsic motivation that drives performance. Like any of the leadership styles we discussed in leadership series, also transformational leadership has its advantages and disadvantages.

The Origins of Transformational Leadership

”One of the most widespread longings of our time is the desire for convincing and creative leadership.”– James McGregor Burns

Trust, loyalty, intrinsic motivation, team spirit – all factors that we know are important for an organization to thrive. With traditional incentive schemes, however, it has proven to be extremely difficult to cultivate these factors. This is where transformational management comes in. The political scientist, James MacGregor Burns, first introduced transforming leadership, describing it as a process where “leaders and followers help each other to advance to a higher level of morale and motivation”.

What is unique about transformative leaders is that they can actually bring about a change in organizational culture. This distinguishes transformative leaders from transactional leaders, a leadership style we will discuss in more detail in the next article in our leadership series.

How did this theory turn into management practice? With his book “Leadership and Performance Beyond Expectations”, Bernard Bass was able to introduce this leadership style to management practice. And to date, experts still consider transformational leadership to be much more effective than its counterparts (transactional and laissez-faire leadership styles).

But what exactly is transformational leadership and why is it so popular?

What is transformational Leadership?

The leadership style is called transformational because it is intended to bring about a change in the behavior of employees. Transformational refers to the idea that leaders can bring about change in employee behavior. According to Bernard Bass, a transformational leader understands and lives his or her function as a role model in the organization.

This builds trust, respect, and loyalty, and in turn motivates employees to learn and perform. In this sense, Bernard Bass defines transformational leadership as the ability of managers to convincingly perceive their role model function and thereby acquire trust, respect, appreciation and loyalty. According to Bass, these factors intrinsically motivate employees and inspire them to change their behaviour and their willingness to learn and perform.

Transformational Leadership in Organizations

Transformational leadership is fluid and dynamic by nature. While elements such as inspiration, intellectual stimulation and responding to personal strengths of employees are taken into account by most companies, the overall picture of transformational leadership, depending on the location and culture of the respective company, changes constantly.

As a general rule, one can say that transformational leadership in a company is largely present if the employees can end the phrase “My manager …” with following statements:

  • “Promotes skills and talents”
  • “Helps to develop personal competencies and perspectives
  • “Formulates clear goals and expectations”
  • “Strengthens self-confidence in the achievement of goals”
  • “Promotes the motivation of all employees”
  • “Creates a climate of responsibility”
  • “Makes it clear how everyone can contribute to the success of a company”

For more information, have a look at this study.

Transformational Leadership and its Advantages

You have certainly already been able to derive the obvious advantage: Employees follow transformational leaders because of their qualities and are therefore willing to work harder than originally expected. These outcomes occur because the transformational leader offers the followers something more than just working for self gain; they provide followers with an inspiring mission and vision and give them an identity.

The leader transforms and motivates followers through his or her idealized influence, intellectual stimulation and individual consideration. In addition, this leader encourages followers to come up with new and unique ways to challenge the status quo and to alter the environment to support being successful. Pelz’s abovementioned study also shows that the transformational leadership style has a positive impact on the managers themselves. They are less susceptible to stress-related problems, have more personal energy and earn higher incomes. All of this makes them much more efficient than managers who work predominantly with negative incentives. Another way to engage employees with intrinsic motivation is by setting or developing a great corporate purpose, which we also have a separate blog article on.

Transformational Leadership and its Drawbacks

Like every form of leadership, this style of leadership also has its pitfalls. Many experts in management theory criticize transformational leadership as being ambiguous in its characteristics. In addition, supporters of transformational leadership tend to add too much value to traits like “charisma” or “vision”. Instead of attributing so much value to these heroic aspects, one should rather be concerned that the managers embody and exemplify the specific values of the company.

These values must be simple, clear, understandable, credible and convincing to achieve the greatest impact. Read more about this topic in our Blog. It is also often criticized that the implementation of a pure form of transformational leadership cannot be achieved in practice. The reason for this is the above-mentioned ambiguity.

There is a lot of truth to these arguments. As a matter of fact, many companies use a mixture of transactional and transformational leadership in practice. However, this does not mean that they cannot be extremely successful. An example of such a company is the American logistics company FedEx, which already implemented highly transformational methods of leadership with its unique concept in the 1970s.

Are You a Transformational Leader?

“The reason for my success is customer satisfaction – and that always starts with employee satisfaction” – Frederick Smith

The nice thing about transformational leadership in organisations is that you can measure how well management is implementing it. Frederick Smith, founder of FedEx, assesses the performance of his executives not primarily by budget management and the quality of employee supervision, but by how well they perform their leadership tasks from the perspective of their employees . The results are collected through employee surveys and are included in a “Leadership Index”, which is used as a basis for this assessment. It is not easy to change the behaviour of managers, but it is possible if you have the right survey too.

If you feel like your company could profit from a more transformational approach, but don’t know where to start, the abovementioned study suggests following starting points:

  1. Formulate clear behavioral expectations for the executives
  2. Ensure that these behavioural expectations are clear by conducting employee surveys, 360-degree feedback, or assessment centers.
  3. Develop improvement mechanisms with the employees and superiors.
  4. These defined suggestions for improvement are then incorporated into a personal development plan that contains short-term and long-term goals and extend over a longer period of time.

Employee surveys are highly relevant to a transformatively managed company and generally a great method to enhance employee engagement. If you have further interest in this topic, simply write us an email or a comment. We look forward to hearing from you.

Having covered most of the different leadership styles in our current series, we are looking forward to writing about transactional leadership next week.


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