Transformational leadership is generally considered a positive leadership approach. Groups that are led by transformational leaders show higher productivity, job satisfaction, positive attitude, and lower turnover rate compared to other leadership styles.
Take the IT industry, for example. You’ll find that successful IT companies, such as Amazon, are led by transformational leaders.
These companies constantly need innovation to satisfy market demand and thrive in a competitive business environment, which transformational leadership facilitates.
However, some studies suggest that transformational leadership can adversely affect employees’ productivity. They attribute the decrease in productivity to what’s known as the “Too-Much-of-a-Good-Thing (TMGT)” effect.
The TMGT effect is when something seems to produce only positive outcomes until it reaches a tipping point and begins to produce negative outcomes. The negative outcomes are often puzzling and can’t be explained.
Still, transformational leadership typically shows positive outcomes. What’s more, the best leaders are those who can implement different leading approaches according to the situation.
Transformational vs. Transactional Leadership
Transactional leadership differs from transformational leadership, as transactional leadership uses rewards and penalties systems to evaluate its employees.
Transactional leadership follows the “give and take” principle, in which the employee does something, and the leader rewards/punishes the employee for it.
This leadership style doesn’t allow room for creativity and focuses on getting things done. In contrast, transformational leadership motivates members to work toward a vision, which allows for creativity.
Transformational vs. Autocratic Leadership
Autocratic leadership is the complete opposite of transformational leadership. This leadership style gives control to only the leader for decision-making. Such leaders rarely allow group members to share views or participate in the decision-making process.
Autocratic leadership is generally associated with negative work outcomes. However, some studies suggest it can be effective under certain conditions.