Transactional vs. Transformational Leadership: Which Drives Success?

Plenty of research tells us that leadership isn’t, and shouldn’t be, one-size-fits-all. Some leaders focus on structure, processes, and clear rewards for performance. Others inspire, challenge, and encourage innovation. Of course, the ideal scenario is a leader who does both! But we know from our leadership experiences at VB&A that most do tend to sit in one camp or the other, often driven by the environment, culture, sector of their business.

These two approaches—Transactional and Transformational Leadership—each have their strengths, but we often are asked by Leaders, ‘which one is right for my career / my business?’

Let’s break it down.

Transactional Leadership: The Structured Approach

This leadership style is all about structure, efficiency, and achieving specific targets. Transactional leaders:

• Set clear expectations and reward employees for meeting them so everyone’s on the same page and knows what they’re accountable for.
• Focus on maintaining order and following established processes. Less risk means more output.
• Prioritise short-term goals and performance metrics. Getting the work done!

Think of a project manager in a corporate environment—deadlines, deliverables, and KPIs rule the day. This approach works well in structured settings where consistency and efficiency are key. However, it can sometimes limit creativity and innovation.

Transformational Leadership: The Inspirational Approach

Transformational leaders take a different approach. Instead of focusing solely on performance metrics, they:

• Inspire and motivate their team with a shared vision and purpose. A clear ‘why’.
• Encourage innovation and continuous learning. Risk-taking is ok!
• Build strong relationships and invest in personal and professional growth.

A great example? Entrepreneurs and visionary CEOs who challenge the status quo, like Satya Nadella from Microsoft or Howard Schultz of Starbucks. Their leadership styles foster engagement and long-term success but require strong emotional intelligence and adaptability.

So, Which One is Better?

Neither is inherently better—it depends on the situation. In highly regulated industries, transactional leadership ensures compliance and efficiency. In creative or fast-moving industries, transformational leadership drives innovation and adaptability. The key is to work out in which environment are you most likely to succeed and be able to make your best contribution, whilst feeling fulfilled.

Insights from a Career Coach: Finding Your Leadership Style

A Career Coach would advise you to reflect on your personality, strengths, and goals. Here are some key takeaways:

1. Know your strengths. Are you more process-driven or vision-focused?
2. Adapt when needed. A balance of both styles can be the secret to success.
3. Develop leadership skills. If you’re naturally transactional, work on inspiring and motivating your team. If you’re transformational, ensure you have systems in place for execution.
4. Understand your team. The best leaders adapt their approach based on their team’s needs and company goals.

Summary: The best leaders don’t box themselves into one style—they blend both approaches for maximum impact.

So, what’s your leadership style? Are you more transactional, transformational, or a mix of both? Feel free to drop us a line here at VB&A to discuss.