In organizational settings, profits are often seen as one of the best indicators of a CEO's success in leading a company. Sometimes, this quest for profits is achieved in partnership with the employees. In other cases, the employees are seen as necessary instruments to help a company generate growth. The way a CEO, a director, a manager, or any other individual in a position of leadership approaches the relationship between an organization's needs and the workforce is based on their leadership style. The style of leadership is the leader's way of implementing their plans, achieving their goals, and completing tasks, while providing various degrees of direction and motivation to the workforce. In the past few decades, researchers have identified several distinct leadership styles which are commonly seen in political and business leaders. The three most well-known styles are: transformational leadership, transactional leadership, and passive leadership.
The pessimist complains about the wind. The optimist expects it to change. The leader adjusts the sails. - John Maxwell
Transformational leadership focuses on the leader's charisma, on motivation through inspiration, and on handling followers with individualized consideration. Transformational leaders seek to inspire others by sharing their visions and encourage followers to actively engage in the leadership process. They are particularly active in their approach to leadership, as well as in their idea of the organization. Indeed, these leaders will seek innovation, and will encourage others in attempting to innovate and develop new procedures to achieve the organization's objectives. Transformational leaders will often delegate many of their responsibilities with the purpose of empowering the followers.
In sum, transformational leaders:
Transactional leadership focuses on the organizational hierarchy, the distance between the management and the workforce, as well as a reward/punishment system to motivate employees. Transactional leaders promote good work behaviors, such as productivity, through rewards, and will use punishment as a deterrent for undesired actions performed by the employees. This motivation method allows leaders to keep their followers motivated in the short term. Transactional leaders are also fans of stability and routines. Many of them see innovation as an unnecessary risk. They also provide clear goals and objectives, as well as detailed methods on how to achieve the desired outcome.
To sum up, transactional leaders:
Passive leadership is the process of avoiding leading in general, or leading only when a crisis appears. Passive leaders will prefer to let their followers establish their own structure to complete an objective. Some of these leaders are classified as crisis managers. A crisis manager generally lets followers do as they please, as long as objectives are met, but will intervene once a crisis has begun. As opposed to transformational or transactional leaders, passive leaders will not proactively attempt to solve a problem, but will rather wait until it develops into a crisis. Many experts consider this style to be the least effective leadership style, as followers tend to develop negative feelings towards passive leaders. While transformational and transactional leadership both have their pros and cons, passive leadership does not have any significant benefit and can have enormous consequences for the productivity of an organization.
Every leader has their own leadership style. While transformational leadership is generally favored in most organizations, a transactional approach can also sometimes also provide adequate results. One of the world's most famous example is Apple. Steve Jobs, the late ex-CEO, was a known transformational leader who brought the value of the company from $4 to $400 billion. Subsequently, the following CEO, Tim Cook, a renowned transactional leader, further raised the company's value by 50% in only 4 years. In all cases, it is important for every organization to clearly determine their own needs and objectives. By doing so, they will ensure that their leaders are using the optimal leadership style to successfully and efficiently complete the organization's goals and objectives.