The basis of leadership can be charted in a model that illustrates the two competing sides. On one side is leadership that creates change by being process-oriented and the other side is a relationship-oriented approach. While transactional leadership involves determining the tasks, rewarding goal achievement and punishing failure in attaining goals, transformational leadership focuses on the critical human assets such as commitment and thus helps followers to effectively implement organizational changes with both efficiency and effectiveness. Just as leaders need to be both autocratic and democratic at times, they also need to be both transactional and transformational at times also.
A transformational leader can turn a weak business plan into a success, but a poor leader can ruin even the best plan. One example of this is retired CEO Rich Teerlink, who dramatically transformed Harley-Davidson and fundamentally built a different organization that still prospers today. The success of leadership at Harley-Davidson has stood the test of time. At Harley-Davidson, every employee can participate in leadership decision-making. Harley-Davidson’s leadership created a more effective organization built upon three primary principles:
- focusing on people,
- challenging norms and
- continuing to fundamentally change.
Another example of transformational leaders in a highly competitive environment is Steve Jobs, former CEO of Apple, who built a highly effective organization through taking a change-oriented leadership approach, which manifested itself in talent, product development, organizational structure and intense marketing.
The evidence from these examples suggests that transformational leadership is needed at the corporate level. For organizations to achieve sustained change and eventually a higher degree of efficiency and effectiveness, selecting a CEO that acts as a transformational leader is the key to success.
In the absence of transformational leadership, organizations lose their required direction to achieve a high degree of competitiveness and cannot implement successful change in order to adapt with today’s global business environment.
Leaders can become better at what they do by using four aspects of transformational leadership. These four aspects are idealized influence, individualized consideration, intellectual stimulation and inspirational motivation.
Transformational leaders develop a shared vision and improve relationships with employees. To use idealized influence, executives need to take the following actions:
- Instill pride in organizational members for being associated with the organization.
- Display a sense of power and confidence.
- Go beyond self-interest for the good of the organization.
- Talk about their most important values and beliefs.
- Consider the moral and ethical consequences of decisions.
- Emphasize the importance of having a collective sense of mission.
Transformational leaders concentrate on identifying employee’s individual needs and empower followers in order to build a learning climate and mobilize support toward the goals and objectives at the senior level. For individualized consideration, executives need to take the following actions:
- Spend time coaching others.
- Consider employees as having different needs, abilities and aspirations from others.
- Help employees develop their strengths and provide various formal training programs to improve the performance of duties.
Transformational leaders propel knowledge sharing in the company to generate more innovative ideas and solutions for new and demanding issues that come up constantly in the hypercompetitive economic environment. For intellectual stimulation, executives need to take the following actions:
- Emphasize the effective coordination among different functional areas and seek differing perspectives when solving problems.
- Suggest new ways of completing assignments.
- Undertake a comprehensive analysis when confronted with an important decision.
Transformational leaders focus on inspiring people and do not just treat them as human assets. This sets a higher level of desired expectations for them. For inspirational motivation, executives need to take the following actions:
- Talk optimistically about the future.
- Talk enthusiastically about what needs to be accomplished.
- Express confidence that the goals will be achieved.
The key lesson for executives across the globe is that transformational leadership is more realistic than some other leadership models. This is why transformational leadership has increasingly become one of the most dominant paradigms today and is used by many companies around the globe.