This is a guest post by Alice Morey. She is a professor majoring in finance field. She teaches finance and economics courses at University of East London, UK. She also writes, blogs and is a regular contributor to youth and leadership programs. In addition to her teaching and writing, she is a seasonal writer at “Courseworkhome” to assist students in their academic coursework.
Leadership can be reflected as a method whereby one influences the others. In the course of business, leaders show multiple leadership styles depending on the situation they are experiencing.
It is argued that leaders have both authority (the right to influence) and power (the ability to work). One without the other is never suitable.
Authority develops from an individual’s position in an organizational structure, authority limits and the operation of the law. While, power can arise from the following sources;
- Rational-legal: the manager may exercise his/her power because of the title “senior manager” and individuals below him are supposed to carry out his instructions.
- Charismatic: where the person has great charm and force or personality.
- Reward power: where the promise of pay increases or promotions are used.
- Knowledge: where withholding and releasing knowledge selectively utilizes power.
- Coercion: through physical power, this is seldom to be seen in modern organizations.
Early theories of leaderships were recognized as ‘trait theories’ and thus argued that most of all good leaders were born with certain distinguishable traits which were the ‘golden rules’ of good leadership. Hence, this was a bad sign for individuals who genetic endowments lacked those traits. However, modern theories also acknowledge with the idea that good leaders are born with certain traits, but they added that all these styles can be taught. For instance, studies tend to suggest that successful leaders exhibit: honesty, the ability to inspire, competence, intelligence and the ability to look forward. These all traits could be taught to an individual. Style theories hence, open up the opportunity that training, learning and development can create good leaders or at least better managers.
Yet, few would debate that the styles listed above are not necessary in a leader, there are still many questions which are unanswered, as how the leader should be:
- Is he/she autocratic or participative?
- Is he/she empathetic or distant?
- Is he/she strict or relaxed?
- Is he/she reliant on the sanction or reward?
Additionally, some modern philosophies of leadership also suggested that there are no golden rules which would fit every scenario, as how to lead and manage depends upon on particular situation. This approach was later referred as a contingent approach and one of the most profound approaches related to this theory was Handy’s Best Fit Theory.
Transactional &Transformational Leaders
On the contrary, there are two types of leaders identified by leadership theorist;
- Transactional Leaders,
- Transformational Leaders.
Transactional leaders focus, controlling, maintaining and improving the current situation, planning, organizing, and defending the existing culture. They certainly depend upon the rational/legal power, from which junior level staff obey because their manager is called ‘manager’. It is also argued that such leaders concentrate on ‘doing things right’. Transactional leaders are responsive and its basic preference is dealing with present issues. Furthermore, these leaders rely on standard forms of inducement, reward and punishment, therefore, motivate followers by setting goals and promising rewards for desired performance.
On the other hand, transformational leaders are very different. Unlike transactional who concentrate on short term, their focus is on a long term vision and on re-engineering to change the organization fundamentally. Transformational leaders motivate their staff through a climate of trust, empowerment, change culture, and charisma. These people concentrate on ‘doing the right things’. These types of leaders arouse emotions in their followers, which motivates them to act beyond the framework of what may be described as exchange relations.
If an organization faces serious challenges or opportunities which call for radical changes, then it needs a visionary transformational leader at its head. Transactional leaders (managers) are unlikely to have the vision and, even if they do, will find it difficult to persuade others to follow them enthusiastically.