Truly Transformational or Totally Transactional?

In the lesson on transformational leadership, an interesting question was posed that I thought deserved some analysis. The question read, “Is transformational leadership just a special case of transactional leadership? If one were to consider trading intangible rewards such as job satisfaction and pride in the organization instead of trading tangible rewards such as pay and other benefits, the case could be made that transformational leadership simply is transactional leadership that focuses on a different type of reward.” This is a compelling argument, as intangibles can be found alongside tangibles as central aspects of theories. For example, communication is said to be mostly nonverbal, and this includes intangible elements such as the situation, mood or posture that can convey information beyond just the words. While one can analyze both the verbal and nonverbal components, they work together to create an overarching theory. Similarly, this question asks whether the same can be done to transactional leadership, with transformational leadership being an aspect that is contained within the overarching concept.

In my opinion, this is a very viable solution to this question, and integrating the two ideas into a single concept would simplify the theory without affecting the positives of both on their own. To explain why this works so well, we have to take a quick detour to mention Maslow’s hierarchy of needs (show in the figure on the left), which I think is integral to understanding the similarities and differences between transformational and transactional leadership. Simply put, Maslow theorized that human needs could be placed into tiers. The lowest tier consists of basic needs for survival, the second tier addresses safety needs, and so on until the higher tiers or self-esteem and self-actualization. The theory posits that a person cannot satisfy the higher tier needs until the lower tier needs are satisfied first, so things like love, esteem, and fulfillment can’t be satisfied if the lower tiered needs are not met. This seems to follow, as can be seen in the coronavirus pandemic: fear of infection weakens our safety, most obviously our safety from illness (and death) but also job and economic safety as shutdowns impact businesses. This in turn puts stress on the higher tiers of needs that we have worked so hard towards, as relationships, esteem, and achievement potential all can suffer as a result. While individual and situational differences influence the rate at which people move through these tiers, and arguments can be made that higher tiers can sometimes be worked towards/completed even when lower tiers are not, I think in general this theory provides a very good framework for how humans address needs.

Building on the connection between these theories, Northouse (2019) mentions that Burns took inspiration from writers such as Maslow. To see why Maslow’s hierarchy is so important to this question, simply map some of the possible job rewards onto Maslow’s hierarchy according to what needs they satisfy. Transactional rewards (money being the most obvious and ubiquitous example) satisfy the basic needs, whereas transformational/intangible rewards address the higher tiered needs (such as achieving one’s full potential). Putting these theories side by side, the argument for transformational leadership being a separate concept seems to lose a lot of its steam. One of the problems with transformational leadership is that it doesn’t work all the time. Sometimes, people would rather just clock in, earn their paycheck, and clock out. So why would they not want to be transformed, to reach their peak potential? A possible explanation for this is that their basic needs aren’t getting met, or are getting met just barely. In this scenario, all of their effort is going towards meeting those needs, and thus they do not have spare time or energy to use towards achievement or relationships. They’re simply looking to survive.

So how do these ideas all work to answer the question? In essence, the follower is somewhere on Maslow’s hierarchy, and the leader’s job is to recognize where the follower is and give them what they need to satisfy/maintain their tiers. Whether moving up the tiers is accomplished by money or acceptance or transformation of any kind, it is still a reward to the follower because they fulfill some of their needs. Therefore, everything that the leader does is transactional, because they are giving the follower access to move up the tiers, and the follower is giving them their time and effort in return. The needs might change, but the exchange is still there, which to me is a clear sign that these are not separate concepts at all, but instead two parts of one broader concept of transaction, where transformation is a reward just like money or acceptance.