Transformational vs Transactional Styles of Leadership - Essay Example

This style is based on the notion of ‘I will give you this if you give me that’, thus acquiring a ‘transactional’ nature. This style is often referred to as ‘management by exception’, implying that transactional leaders are not interested in altering or transforming the work environment or employees, unless some problem occurs. Joseph McCarthy, a Wisconsin state senator is a famous example of transactional leadership due to his style of rewarding his followers for bringing him intelligence regarding communist spies and punishing those who failed to follow his orders. Transformational style of leadership, on the other hand, is aimed to inspire and motivate employees, rather than expecting a set performance from them. Leaders following this style of leadership employ motivation and team-building tactics with employees. “The dynamics of transformational leadership involve strong personal identification with the leader, joining in a shared vision of the future, or going beyond the self-interest exchange of rewards for compliance” (Hater & Bass, 1988). Jack Welsh, CEO of General Electric between 1981 and 2001, changed the bureaucratic organization into one in which employees stretched their potential to achieve long-term goals.

Both styles of leadership are important, depending on different situations. However, transformational leadership holds greater merit in most scenarios, as it makes use of motivational tactics which go a long way to fulfil the esteem needs of employees, helping them to achieve self-actualization.

In an ethical style of leadership, leaders respect the rights and dignity of employees during their leadership. Ethical leaders should treat, encourage, and ethically direct their employees. For instance, Lola Gonzales, founder and CEO of Accurate Background Check fired herself when she found out that redundancy was the only option left to keep her company afloat. Instead, she acquired a part-time job herself to meet costs, because terminating her employees would have affected the “quality of our research and customer service” (Skolnick, 2011).

Ethical leadership has several characteristics, too, which set it apart from other styles of leadership. Ethical leaders should be capable of putting aside their egos and personal interests for the betterment of their subordinates and the organization. They should encourage feedback from their superiors as well as employees, and use it to improve themselves. Furthermore, leaders should not take advantage of their position nor should they deem it as their right. Instead, they should encourage leadership in others, and be willing to share their power with other employees. Another characteristic of ethical leadership is that leaders should instil ethics in the working environment and culture. Furthermore, leaders should accept responsibility for their work as well as their subordinates (Rabinowitz).

Ethical leadership is important for several reasons. Firstly, it results in a better, more motivated workforce as it encourages teamwork and recognition. Workers feel secure and appreciated, as their contributions are recognized and valued, thus resulting in better performances. The idea is that “if people don’t honour each others’ worth and recognize their interdependence, so sub-optimal performance or even breakdown results” (Berghofer & Schwartz). Ethical leadership fosters trust between employer and employees, a relationship which has formerly been fraught with misgiving and suspicion. Consequently, it results in a positive working environment within an organization. Lastly, it builds a good reputation for the organization and gains its credibility. The importance of this leadership, therefore, lies in the benefits that it provides to the employers, employees, and the organization as a whole.