What Is Transformational Leadership?

Transformational leadership is a management style that promotes development and innovation from employees to improve the company or institution they are working for. The style focuses on achieving future success by giving employees the confidence to make their own decisions and do things the way they think is best.

This article aims to explain what transformational leadership is and outline the reasons why it is important. The intention is to give real life examples of how transformational leaders have impacted hugely successful organisations. The examples range from politics to tech, showing that this leadership style can be beneficial across industries.

Although transformational leadership can be applied across all industries, there are times when transactional leadership styles may be more suitable. As such, this article also examines the some of the limitation of transformational leadership.

What Is Transformational Leadership?

In their classic text, Transformational Leadership, authors Bass and Riggio (2008) explained:

“Transformational leaders…are those who stimulate and inspire followers to both achieve extraordinary outcomes and, in the process, develop their own leadership capacity. Transformational leaders help followers grow and develop into leaders by responding to individual followers’ needs by empowering them and by aligning the objectives and goals of the individual followers, the leader, the group, and the larger organization.”

Transformational leaders are often unselfish and don’t often crave attention or praise for tea, achievements. Their decisions are often based on long term success of a company rather than short term tactical outcomes

Transformational leaders ensure that they stay away from becoming fixated on Corporate Strategy and rather keep their focus on the company vision and values, ensuring they maximise their leadership impactt.

In our Hoffmann Reed Lessons In Leadership interview Jamie Mead, Chief Executive Officer of Talaria Asset Management said;

“My conviction is vision, strategy, tactics. Leadership can become incredibly myopic on strategy. The amount of resource and time allocated to strategy is overrated. I think there’s an awful lot more that can go on at the tactics level.”

Why Is Transformational Leadership Important?

Whilst some leadership styles such as transactional leadership (link to transactional leadership article when published) produce tactics to increase and improve company performance rapidly, transformational leadership seeks to set the company on an innovative path towards long term success.

Transformational leaders do this through making a conscious effort to understand their employees and by learning what makes them tick. Through discovering what stimulates an employee, the leader can use this to motivate them to focus on the long-term goals of the company.

Rather than ‘Me, Me, Me’, these types of leaders are happy to take risks by delegating decisions to others and in turn reap the benefits. When one delegate decisions to front line employees there are a number of beenifts:

  • The delegated may have a better knowledge or understanding of the subject therefore improving the outcome of the decision.
  • It decreases the workload of the leader, giving them more time to focus on higher-level tasks.
  • Gives others the chance to learn and develop new skills, ironically moulding them into a leader.

This is particularly beneficial for companies that have implemented a long-term succession plan. As well as moulding employees into leaders, delegating also improves trust between the leader and the employee. Individuals led by this type of leader therefore tend to be both successful and loyal. As well as working harder to achieve the long-term goals of the company, they also care more deeply about the outcome of their decisions. With this deeper care comes less employee turnover and the opportunity to build a strong internal succession plan to fill senior leadership positions in the medium to long-term future.

According to a recent study (Jacobs et al., 2013), transformational leadership can also have a positive influence on employee well-being.

The study published in the Journal of Occupational and Environmental Medicine involved studying employees at several different German information and communication technology companies. Researchers asked participants to answer questions about their employer’s leadership style.

A score for transformational leadership was then determined based on qualities such as providing intellectual stimulation, giving positive feedback for good performance, leading by example, and helping employees feel like they were contributing toward the goals of the group.

The researchers discovered that employees who identified a higher level of transformational leadership in their employers also had higher reported levels of well-being. The effect stayed significant even after researchers controlled for factors that are linked to well-being such as job strain, education, and age.

“The results of this study suggest that a transformational leadership style, which both conveys a sense of trust and meaningfulness and individually challenges and develops employees, also has a positive effect on employee well-being,”

This is something we have spoken about on our Lessons In Leadership podcast and we often get similar answers from senior leaders. Phil Jones, Managing Director of Brother talked to us about changing his leadership style away from being numbers orientated to transformational and how this became a catalyst for Phil to progress his leadership career.

Speaking about the downfalls of being focussed purely on results, Phil said:

‘Naturally achievement orientation becomes a by-product [of being in sales]”

He quickly learned that becoming less obsessed with numbers and more concerned about the team around him, the numbers would improve even more. Speaking on how he now treats his current team he said:

“I aim to give them a wider education of what true effectiveness [of being a transformational leader] can be when bringing people with you on your journey”.

This is a perfect example of how transformational leadership can be effective. Whilst keeping things such as a sales quota or positive customer feedback in the bigger picture, Phil has a focus on employee wellbeing, employee motivation and aiming for long-term goals that are harder to quantify.

Whereas other leaders, such as a transactional leader, may react to negative results by penalising their employees with low commission or project reassignment, transformational leaders look at fixing the problem at source. They may schedule a one to one to speak to the employee and understand why they are under performing and put things in place to resolve issues. This not only makes the employee feel better but will tackle issues early so they don’t repeat themselves in the future.

Andy Grove, CEO of Intel once said:

’90 minutes of your time can enhance the quality of your subordinate’s work for 2 weeks, or some 80+ hours’

The Downfalls of Transformational Leadership

The transformational leadership style can be very effective when used in the right circumstances. However, not every organisation may need a transformational leader. Depending on the situation, say a business has fallen on hard times, a transactional leader may be a better fit. This could ensure the business can achieve short term goals fast and facilitate the business returning to profitability. Having a transformational leader in these circumstances could be costly as they often need more time for their leadership style to produce rewards.

Transformational leaders are susceptible to making a lot of changes and this can be a barrier to success. Sometimes transformational leaders can change too much within a business and become disruptive.  If their vision for the company is too aggressive, they can become obsessive and make change for the sake of change. You often hear the term ‘If it isn’t broke, don’t fix it’ and this is something that transformational leaders need to consider during the decision-making process.

Transformational leaders are often very enthusiastic, and this style doesn’t always work with everyone. If the leader is very passionate about a particular vision that employees don’t agree with then this can be counterproductive, and employees could quickly lose interest in achieving the vision.

Real Life Examples of Transformational Leaders

Reed Hastings (Netflix)

Netflix is now a multi-billion-dollar subscription-based entertainment service. It’s a globally available platform aside from a handful of countries and plays a prominent role in independent film distribution.

Hastings adapted a Transformational leadership style at Netflix and has reaped the rewards. Employees at Netflix are given unlimited vacation time on the basis that they are trusted to deliver the results. Hastings shies away from micromanagement and gives his staff total independence. Not only does this attract top talent, but it also encourages creativity and innovation, something that is working well for Netflix.

Barack Obama (Former U.S. President)

President Obama was well known for not being afraid to make change. One example of Obama advocating big change is the push he made for a US healthcare reform during his first few months as President. During the White House Forum on Health Reform, he stated, “A clear consensus that the need for health care reform is now” A clear example of a leader being confident in making big changes.

He often encouraged his staff to be open about their ideas and made sure he was socially approachable with everyone who worked in the White House.

Steve Jobs (Apple)

“1,000 songs in your pocket.” – Steve Job’s Iconic slogan that he revealed when first introducing the iPod. The concept was revolutionary and changed the industry forever. Since then, Apple has become one of the world’s biggest companies and Steve Jobs leadership played a huge role in doing so.

One of the downfalls of transformational leadership I mentioned earlier was having such a strong passion for their vision and this cost Jobs. In 1985 he clashed with the board and was later forced out of Apple, before returning in 1997 and reviving the company that was on the verge of bankruptcy. Jobs made huge changes, terminating projects, such as NewtonCyberdog, and OpenDoc.

Richard Branson (Virgin)

Sir Richard Branson is a British Billionaire known for creating the Virgin empire. He has a leadership philosophy that believes all leaders must motivate employees correctly for the organisation to be successful. He can set large workloads but believes if the team over comes tough times, they will bond and be more comfortable together, sparking creative collaboration. He takes risks in his leadership but is known for treating all his employees with respect.

Susan Wojcicki (YouTube)

Susan Wojcicki is the CEO of YouTube and is often quoted as the most powerful woman in tech. She is famously known for advocating the $1.65 billion acquisition of YouTube, which is now valued at over $90 billion. However, her transformational leadership is famous for having an impact to the culture of Google.

Wojcicki increased the paid maternity leave at Google from 12 to 18 weeks which changed the rate of mothers leaving Google by 50%. She created a culture of intelligence sharing across the team to promote innovation. Wojcicki encouraged communication so much that it emerged the concept of language translation in Google Talk as the Translate and Talk teams spoke so frequently. Such cross-operational communications also led to the concept of AdSense, which is now a multibillion-pound business.

Conclusion

Although transformational leaders offer many benefits, they aren’t always necessarily the best fit for every business; It often depends on the situation the company finds themselves in. If a company is in a stable position and wants to execute a long-term vision, then employing a transformational leader could pay considerable dividends. By giving employees the confidence to make their own decisions, accomplishing long term success can become much more achievable. It can also increase the likelihood that these individuals develop new skills and in turn, mould them into future leaders.

However, you’re not always going to be in a position where you need a transformational leader. If the company needs a quick turnaround, then leaders with a more traditional command and control leadership approach may meet the needs of the business much more quickly. If you can hire a transformational leadership then the benefits can be excellent. These leaders can have a positive impact on the business from the top down, from employee well-being to increased motivation and leadership development.

Finally, the examples given prove that transformational leaders can have immense impacts to organisations, they can set the organisation on an innovative path towards long term success, but it’s important to remember that these leaders aren’t inevitable.