The Pros and Cons of Transformational Leadership

What Is Transformational Leadership?

Before we delve into the pros and cons of transformational leadership, it’s helpful to set a definition. What is transformational leadership in the first place?

Old-school, transactional leadership is what many people think of when they hear the phrase “leadership.” This kind of leadership, which is really just management plus, is about maintaining the status quote while making incremental improvements in products or services. It’s about motivating people via what we see as an antiquated “carrot and stick” method. It means using “hard” power to move things forward.

Transformational leadership is different. Instead of hard power, it’s all about “soft” power. It’s about leading change and transformation through trust, hope, inspiration, reciprocity, influence, engagement, and the power of storytelling. It’s about getting people excited because they’re part of something bigger—a company or organization that wants to make real, tangible changes in the world—and they can see where they can add value and contribute.

This kind of leadership provides employees with a sense of meaning, membership, and mastery in return for their energy, effort, and time (as well as money, of course).

Another way of looking at transformational leadership is the ability to metabolize constant change in the world into value through the products, services, business models, processes, and organizational systems we create. This can only happen if we can transform how we sense, feel, think, and act first; otherwise, we will just repeat what has always been done.

Transformational leadership is about changing our organizations and the systems they are part of from the inside out, through changing our own habits of thought and action first.

With that definition, we can now proceed with the discussion about the pros and cons of transformational leadership.

The Pros of Transformational Leadership

1. It improves productivity, long-term: One of the key differentiators between transactional leadership and transformational leadership is the focus on motivation, engagement, and inspiration. Where transactional managers usually use extrinsic motivation—i.e. the reward and punishment method to motivate employees, do this and get a raise/don’t do this and be censured—transformational leaders focus on intrinsic motivation. They get to know their team members as individuals, instill excitement about being part of the team, and help them connect to the bigger picture. The research shows the benefits of inspiration on productivity: engaged employees are 44% more productive than satisfied ones, but inspired employees are 125% more productive than satisfied ones!
2. It improves coherence and collaboration: Transformational leaders focus on establishing an overarching vision and then supporting team members to deliver on their part of the vision. This helps team members understand the value of the mission while also realizing how their efforts dovetail with those of other employees to move the organization closer to its goals.
3. It improves employee engagement and retention: Today’s employees demand more of their employers than ever before. Transformational leaders understand this and give employees what they deserve: a better work/life balance, respect in their roles, and a feeling of being valued for what they bring to the table in terms of education, experience, vision, and passion. This then reduces employee turnover, boosts loyalty, and builds stronger teams.

However, while it offers plenty of advantages, you must understand a few transformational leadership disadvantages.

High Impact, Interactive Management & Leadership Training Courses Live, interactive, online training courses on critical topics ensure people managers and leaders take charge of change, cope with complexity and uncertainty, and manage with emotional intelligence, self-awareness, empathy, creativity, empowerment, and influence. Designed for virtual/hybrid working. Low time burden and cost yet high impact. Quick to start and easy to implement. Infinitely scaleable. DISCOVER MORE

 

The Cons of Transformational Leadership

1. Transformational leadership tends to be more focused on medium- and long-term goal achievement at the expense of short-term cost-cutting and profit-making. Transformational leadership is all about seeing the big picture and moving towards a clear vision. Sometimes, that can lead to a focus on long-term goals at the cost of short-term ones. Leaders need to find a balance between the two and create a vision that achieves long-term goals through short-term steps and the occasional use of transactional methods to get stuff done, on time, at the quality levels expected, and to budget.
2. It’s time- and communication-heavy: Another potential drawback to transformational leadership is that it requires an ironclad commitment to ongoing communication and so the requirement to spend time thinking about others (empathy, engagement, inspiration) and developing relationships. Without transformative communications (see our toolkit to help with this that anyone can purchase) and high-trust relationships, little sustained change, innovation, or transformation is possible.
3. Decision-making is slower: Finally, transformational leadership can slow down decision-making. This happens because contributions and inputs are preferred from across a team rather than having leaders make unilateral decisions. Transformational leaders prioritize emotional resonance and mental coherence between themselves and others. This can take time to develop, but once it has been forged, decision-making gets quicker and is more effective than unilateral command and control. The flip side of a slowdown is that decisions are usually more accurate and result in more benefits for the organization and the people within it.

In Conclusion

As you can see, transformational leadership has both pros and cons. However, when you take a closer look, most of the so-called “cons” are actually benefits that take a while to get a return on the investment in transformational leadership. You can read more about the incredible but slow ROI on transformational leadership here, with an Ultimate Business Case For Leadership Development.

In addition, most employees, especially younger generations, respond very poorly to transactional leadership, making it increasingly obsolete.

Successfully implementing transformational leadership within an organization requires adjusting outdated mindsets, changing attitudes, and altering how we see the world around us and the processes that help organizations thrive.

Rather than focusing on fast returns through orders and cost-cutting, it’s about sustained growth in both leadership capacity and organizational productivity. It’s about well-balanced organizations that have the power to stand the test of time while improving the lives of those who work within them and the world itself.

Shifting from transactional leadership to transformational leadership is challenging. It requires intentionality, sustained investment, and a shift in attitude from using power over people to leveraging power to inspire others.

If you are keen to try some tools and practices for transformational leaders, you can grab a copy of our Transformational Leadership Starter Kit.

Transformational Leadership Development Programs We co-design and deliver highly experiential and exquisitely customized transformational leadership development programs that do not just educate and train but seek to upgrade and transform the mindsets and behaviors of your leaders. We strive to provide the most effective transformational leadership development programs on the planet—tailored to your unique culture, industry, strategy, and ambitions. DISCOVER MORE

OUR PRODUCTS