MS 25 IGNOU MBA Solved Assignment -Differentiate between Transactional and Transformational leadership. Describe the competencies and skills required for a leader in order to bring change in organisations.

Differentiate between Transactional and Transformational leadership. Describe the competencies and skills required for a leader in order to bring change in organisations.

Ans :

Transactional and transformational leadership are two distinct managerial styles that either seek to maintain or change the organization. Transactional leadership is largely characterized by a desire to maintain the company's existing culture, policies, and procedures. It uses a reward-and-punishment based system to compel employees to perform certain behaviors. In contrast, the transformational leadership style seeks to provoke change in the way the company operates. Leaders who exhibit transformational leadership are often characterized as charismatic, inspiring, and motivating.

Goals of Transactional Leadership
Transactional Leadership Characteristics
Goals of Transformational Leadership
Transformational Leadership Characteristics

The primary goal of transactional leadership is to promote stability in the organization by creating a give-and-take type of exchange between managers and employees. Specific performance objectives are determined and communicated to employees. They are then responsible for meeting those performance objectives, but either receive a reward or punishment depending upon the outcome. Rewards are based upon meeting certain criteria, such as achieving a sales quota. Mistakes are either actively or passively observed by managers and dealt with accordingly. In active management by exception, leaders take swift corrective action against performance deviations and actively look for mistakes.

The relationships between transactional leaders and their employees tends to be focused on the successful completion of short-term tasks. Relations between the two groups are somewhat impersonal and temporary. Quantitative results are emphasized and employees are expected to follow the goals and directions of the leaders. The relationship is largely based on exchanges that satisfy two separate sets of objectives. For example, an employee shows up to work to receive a paycheck in order to maintain a certain standard of living. The manager wants the employee to show up to work to perform job tasks that he does not want to do himself.

The main goal of transformational leadership is to inspire change in an organization by exceeding prior standards and expectations. It does not rely on accomplishing objectives through certain types of exchanges or a reward-and-punishment system. Transformational leadership motivates employees to work towards a common objective, rather than seek out the fulfillment of individual goals. It tends to take a more individualized perspective towards employees, capitalizing on individual strengths and talents. Transformational leadership fosters an environment of thinking, teamwork, and mutual admiration.

Transformational leaders seek to gain the trust of their employees. The relationship is built upon the idea of establishing a long-term bond that encompasses more than just the company's performance objectives. Leaders who exhibit a transformational style of leadership tend to empower their employees to make decisions and contribute to the company's strategies. Values, personal meaning, personal power, and ethics are emphasized. A long-term perspective is one of the primary characteristics of the transformational leadership style. It fosters creativity, challenge, and individual employee development.

Introduction

Leadership competencies are leadership skills and behaviors that contribute to superior performance.  By using a competency-based approach to leadership, organizations can better identify and develop their next generation of leaders.2  Essential leadership competencies and global competencies have been defined by researchers.  However, future business trends and strategy should drive the development of new leadership competencies.  While some leadership competencies are essential to all firms, an organization should also define what leadership attributes are distinctive to the particular organization to create competitive advantage.  

Essential Leadership Competencies

A focus on leadership competencies and skill development promotes better leadership.3   However, skills needed for a particular position may change depending on the specific leadership level in the organization.  By using a competency approach, organizations can determine what positions at which levels require specific competencies.4 Researchers at the Center for Creative Leadership have identified some essential leadership competencies that are consistent among organizations.  They divide the overall structure into competencies for leading the organization, leading the self and leading others in the organization (see Figure 1).

When selecting and developing leaders, HR professionals should consider the competencies that the individual possesses and compare those to the ones that need further development for success in a leadership role.  By looking at his/her current competencies and comparing those to the skills necessary to fill a leadership position, organizations can make better informed decisions in hiring, developing and promoting leaders.5

Leadership Competencies

Leading the organization:

-          managing change

-          solving problems and making decisions

-          managing politics and influencing others

-          taking risks and innovating

-          setting vision and strategy

-          managing the work

-          enhancing business skills and knowledge

-          understanding and navigating the organization

Leading the self:

-          demonstrating ethics and integrity

-          displaying drive and purpose

-          exhibiting leadership stature

-          increasing your capacity to learn

-          managing yourself

-          increasing self-awareness

-          developing adaptability

 Leading others:

-          communicating effectively

-          developing others

-          valuing diversity and difference

-          building and maintaining relationships

-         managing effective teams and work groups

Global Leadership Competencies

Developing successful global leaders is a competitive advantage for multinational organizations.6  In addition to essential leadership competencies, global leaders face special challenges that require additional competencies. To clarify, a global leader is commonly defined as someone that cultivates business in a foreign market, sets business strategy at a global level and manages globally diverse and diffused teams.7  According to a Conference Board research report, 73% of managers agree that domestic business leadership and global leadership differ in the skills required.  Some of the challenges that global leaders may face are managing a diverse group of employees and business processes; adaptively approaching problems and challenges; adjusting to new values and cultures; and adapting to different types of business and personal stressors.8

To address the unique challenges of global leaders, researchers have identified global leadership competencies that can contribute to success.  Among these global competencies, developing a global mindset, cross-cultural communication skills and respecting cultural diversity are paramount to succeeding in the global workplace.9  Morgan McCall and George Hollenback studied successful global leaders and developed a list of common competencies specific to the global leader   HR practitioners can use global leadership competencies to support the development of leaders and thus the overall global business strategy.