What is the difference between transactional vs. transformational leadership?
By: Deidre Pannazzo, Edited by: Rebecca Munday
Published: May 7, 2025
Are you looking to expand your leadership skills and learn about new methods? Explore the differences between transactional vs. transformational leadership styles in our guide.
What is transactional leadership?
Transactional leadership is a style in which leaders motivate others using incentives. Transactional leaders set clear expectations and offer various rewards for meeting them, such as bonuses or promotions. This type of leadership can be particularly effective for achieving short-term goals and may be valuable for jobs that require order and structure to ensure efficiency. You can often find transactional leadership in military operations and sales roles.
What is transformational leadership?
Transformational leadership is a style that prioritizes personal growth, innovation, and collaboration. Transformational leaders inspire employees through shared visions that connect them to a common goal. These leaders encourage new ways of thinking and serve as role models within their organizations. Human resources managers and chief executive officers often leverage transformational leadership to guide their companies toward success.
What are the similarities and differences between transactional and transformational leadership?
Both transactional and transformational leadership can help you achieve organizational objectives, but they take two different approaches.
Transactional leaders focus on short-term goals, maintain order through rewards, and set clear expectations while enforcing rules. Transformational leaders take a long-term approach that encourages employees to exceed expectations and grow through their work in pursuit of a shared vision.