Leadership theories in management, have evolved over time into various types, with their own lines of thought. Each theory provides a model of effectively steering an organization. This article discusses pros and cons of various leadership theories and makes a comparison between the ones applied in managing businesses. This includes the three basic theories of business leadership. There exist many more specialized theories that have evolved from the basic principles of these three, which blend leadership and management in to a coherent whole.
The transactional leadership theory is one, which is most widespread and commonly used in most organizations. It is based on transactions or deals made between an employee and an organization or between followers and leaders. A transactional leadership is based on a military like clear chain of command with a 'Carrot and Stick' philosophy. In short, it is a proven method of running an organization wherein, through reward and punishment, things get done. If one is familiar with Maslov's hierarchy of needs, then one will understand that this theory will work with people, whose needs in the bottom half of the pyramid (food, shelter, security), are not satisfied.
The basic assumptions of transactional leadership are the following:
- Rewards and punishment are the things that motivate people.
- A clear chain of command works best in running an organization.
- Once employees agree to do a job, they are entirely in the hands of a manager. That is, they cede complete authority to the manager.
- Once they cede authority, employees must do as told. An employee must comply to the work demands of the management, in return for which he is adequately rewarded monetarily.
- For followers of this model, toeing the line is more important, than expressing their original thoughts.
Pros: This method works in most of the cases, where it's applied, provided the employees are motivated by rewards. It is a proven compliance strategy, which works best if the top most leader in the hierarchy is capable of making most of the important decisions and has a strong personality.
Cons: A powerful and assertive leader will find the transactional model conducive to his way of running things. However, though he will create great followers, he will stunt their growth as leaders. When people get used to doing just what they are told and only as much they are told, they stop thinking 'out of the box'. Original thinking is not really promoted in this system, because of which, an obedient workforce will be created with a lack of imagination. New leaders will be tough to find from the lower strata of power hierarchy. This leadership model will create a stressful work environment. Productivity will be maintained but innovations and breakthroughs will be tough to find. For businesses focused on channelizing the creative potential of their employees, this isn't a recommended model for adoption. It stifles the creative instinct, creating compliant 'workers', but not innovators. Overbearing leaders who exemplify this model, rarely leave behind any proteges or followers, who have it in them, what it takes to inspire and lead people.
Transformational leadership is a more humane theory, as compared to the militaristic transactional theory. It believes in inspiring employees to do great work through example and the force of a leader's personality. This theory believes that people rise higher through positive, than negative motivation. It is a theory which appeals to the higher need of an individual in the Maslov's hierarchy of needs, which is self-actualization.
The basic assumptions of this theory are the following:
- The prime assumption is, that people will willingly follow a leader who inspires them.
- The vision and passion of one man can transform his followers and together they can achieve great things.
- Energy and enthusiasm are the tonics that get things done.
- Nurturing original thought and expression is important.
- Challenges bring out the best out of people.
- The forces of great ideas, creativity and inspiration are more potent than any other material lure.
Pros: This effective leadership model will create an enthusiastic work atmosphere and it will drive the organization with innovations. The fact that people are working through self motivation, will certainly guarantee higher output and efficiency. It will naturally develop future leaders from the lot of followers. People will work for the leader, even if the monetary and other benefits offered are lesser, as they will be inspired by his vision. Legacy of transformational leaders creates a line of mentor-proteges, that lead innovative waves in businesses.
Cons: This theory is totally based on the ability of the leader, to inspire the work force to put their best in. Leaders of organizations may not have the force of character to achieve that.
This is a leadership theory which says that neither a transactional leadership model, nor a transformational model of leadership will work in all situations and all the time. The philosophy of a leader should be flexible enough to adapt to situations and changing times. We need a mixture of transactional and transformational leadership techniques to get the job done. The basic idea behind this theory is that one must adapt strategy with changing conditions.
Pros: The situational leadership model adopts the best from the transactional and transformational models and so, is better suited for a world which constantly puts new leadership challenges. There may be some followers on whom the transactional theory will work and some who could be motivated by transformational theory methods. A mixture of both techniques will work better. Every individual has a unique psyche, with a blend of talents, gifts, inhibition and insecurities. Some may be introverts or extroverts, while some may be in between these two polarizations. To bring out the best out of everyone, a leader must handle every one of them, according to their level of motivation and avoid using the same strategy towards everyone. Some need a nudge, some need rough treatment, some need constant encouragement and some need their egos to be deflated. A transformational leader is a good people person and instinctively senses the degree of motivation every team member needs.
Cons: With constantly changing strategies with time, a leader will find it difficult to implement new strategies on the go. A long term vision may elude him due to constant changes.
These leadership styles must be studied by every individual, who dreams of building an organization and leading people. The greatest resource of any organization is its people. Where people are respected and nurtured, great things happen.