MGT3LWM Case Study On Comparing And Contrasting Two Leadership Theories

Introduction

Leadership is what motivates a team to achieve organizational goals. What style of leadership leads to better motivation and effectively higher levels of productivity? According to Burns there are two theories of leadership the transformational leadership and the transactional leadership (leader-member exchange theory). Leader-member exchange theory focuses on rewards and punishments contingent to the performance of the worker while Transformational leadership focuses to influence workers in order to reach higher level of motivation and empowers them to work beyond self-interest to accomplish organizational goals (Fairholm, 2001). There are advantages and disadvantages attached to both the leadership styles that have been researched by many scholars, the main variable being the outcome or productivity of the team. Comparing the two theories we seek to understand how effective both leadership styles are in motivating employees. To generate new ideas and to be creative employees need to use the best of their knowledge and ability, transformational leadership has been credited to building such environment to empower the worker (Cheung, 2011). On the other hand transactional leadership styles strives on efficiency of the leader and employee exchange which is that the employee receives rewards for good work and punishment for bad work, here the only motivation for the worker is the salary or the incentive linked to good performance (Muhammad Mustafa Raziq, 2018). There are different factors that dictate the effectiveness of a leader, while it is very hard to name all factors some general concepts are the situation, the followers/employees (motivation and performance) and the nature of work  (Marques, 2007).

Employee Motivation and Performance

Both the leadership styles provide motivation to the employees to get results but the methods of creating motivation and the levels of motivation are very different (Muhammad Mustafa Raziq, 2018). The top five worker motivating factors are job security, interesting work, full appreciation, good wages and promotion and growth in an organization these are based on more than 40 years of research (wiley, 1997). It’s the manager’s job to create these factors to enhance performance, now let us consider how the two types of leadership styles create such motivation.

Transformational leadership

Transformational leaders are people-oriented which means that they work on motivating their employees to reach their goals instead of focusing on task completion as result the employee feels empowered and is inspired to work which results in better performance (Schreiner, n.d.). Transformational leadership transforms the values of the workers and inspires them to reach higher level of aspirations and in turn the expectation of their level of performance increases (Cheung, 2011). For example Mark Zuckerberg (CEO and founder of Facebook) empowers his employees to create a culture that incites creativity and breaks down the traditional hierarchy system and appreciates the work of the individual not based on experience rather on competency, he’s also said “Understanding people is not a waste of time” (Vargas, 2010).

Transactional leadership

Leader-member exchange theory, as the name suggests, is based on the motivation through salary and incentives. The employees are rewarded for good performance which is their positive motivation and they are punished for bad performance which is negative motivation (achieving a task to avoid an outcome). The leader assigns tasks to the employees/workers and then they are judged on their performance (Avolio, 2013). This is a task oriented leadership style which can be very useful in executing routine tasks and the incentives for good performance means that performance is appreciated creating a chance to earn more in turn motivating employees to achieve organizational goals. Steve Jobs the founder of Apple was a very dictatorial and arrogant leader but what he achieved as leader is great and is contradictory to the beliefs that leaders need to be nice to empower employees (Henson, 2011).