Reasons Why Transformational Leadership is Important for Organizations

The sure shot method of positively influencing an organization is to adopt and focus on transformational leadership. An organization is only limited by the mind that controls it.

With the right approach and skilled workforce, the potential of an organization is practically limitless. It is these organizations that takes mere workers and transforms them into leaders with continuous development.

If you are interested to read about leadership skills first then here is a detailed article explaining what are leadership skills.

Transformational Leadership Definition

Transformational leadership is defined as a leadership approach that causes change in individuals, social and industrial systems.

Transformational leadership is a leadership style where the leader is charged with identifying the needed change, creating a vision to guide the change through inspiration and executing the change in tandem with committed members of the group.

This leadership approach causes change in individuals and social systems.

Transformational leadership creates valuable and positive change in the followers with the goal of developing followers into leaders. It enhances the motivation, confidence and performance of followers in different ways.

Learn about effective leadership skills here.

What is Transformational leadership comprised of

It is essentially one of the many leadership styles that focus on change. Individuals and organizations that adopt this leadership style are change oriented.

For these action oriented men and women; nothing is ever good enough, and a process that works right now can be improved upon even further. Being conservative in the face of progress and innovation in the name of tradition; routine and order is not only backwards, but self-destructive as well.

We also have a comprehensive list of leadership skills list here.

How Transformational Leadership works

Transformational leadership revolves around the assumption that people tend to follow those who inspire them.

An individual with passion, vision and fortitude can achieve great heights, along with getting things done optimally by injecting energy and enthusiasm.

From the perspective of the employees or the workers, working for a transformational leader can be a positive and uplifting experience due to the goals being passion driven.

Not only do they want to succeed themselves but they want the individuals in their employment to succeed as well.

Here is a detailed article about development of leadership skills.

History of Transformational leadership

Over forty years ago, a psychologist named Luchen of German origin became interested in how human beings learn.

He conducted an experiment in which he demonstrated a six-step method of transferring water from one container to another.

Despite the simplicity of the improved method, only about half of the group used it. He realized that humans are quick to form habits, however once a habit forms it is difficult to alter even when the new method is obviously better than the old one.

Similarly, organizations also form habits or develop a process that is considered a norm.

When we go through the history of transformational leadership, leadership expert, James MacGregor Burns introduced the concept of transformational leadership in a different way.

He introduced this concept in his descriptive research on political leaders but this term is now used in organizational psychology as well.

Burns defines transformational leadership as it creates significant change in the life of people and organizations. It changes expectations and ambitions of employees.

He defines transactional leadership as it is on the leader’s personality, traits and ability to make a change through example, expression of a stimulating vision and challenging goals.

Burns defines transformational leadership as it is a process in which leaders and followers help each other to high level of motivation.

To achieve desired goals, transformational leaders are able to inspire followers to change expectations, perceptions and motivations working with the strength of their vision.

He established two concepts related to leadership: “transformational leadership” and “transactional leadership”. He theorized that transformational and transactional leadership were mutually exclusive leadership styles.

transformational leadership

Transformational leaders are moral exemplars of working towards the benefit of their teams and organizations.
Transactional leaders usually do not strive for cultural change in an organization but they work in the existing culture while transformational leaders try to change organizational culture.

Later, researcher Bernard M. Bass expanded Burns original ideas. Today this idea is known as Bass Transformational Leadership Theory.

Bass defined transformational leadership in terms of how the leader affects followers, who are intended to trust, admire and respect the transformational leader.

Bass Described Three Ways

Bass described three ways in which leaders transform followers:

  • By increasing the awareness of followers related to importance of a task.
  • Motivating the employees to achieve higher-order needs.
  • Make them to focus first on organizational goals rather than their own interests.

Characteristics of Transformational Leaders

Transformational Leadership

Significant Source of Change

Transformational leaders can create significant change in both followers and the organization. They direct towards changes in mission, strategy, structure and culture. Transformational leaders also find common ground that allows them to enrol followers in processes of change.

Focus of Transformational Leaders

Transformational Leaders focus on vision, shared values and ideas and relationship building. Transformational leader challenges followers to be innovative and creative.

In order to resolve a conflict transformational leaders can successfully adapt collaborating style of conflict management as they have deep knowledge and better understanding about building relationships and sharing of ideas and knowledge.


They are able to give significance to various activities.

Openness to Experience

They welcome new experiences and challenging tasks. A transformational leader has the trait to keep his/her mind open to experience different challenges to bring a positive change in the organization.

This trait relates to transformational leadership as it is the ability to give big-picture visionary leadership for an organization.

Attentive Leaders

Transformational leaders have a strong sense of direction and the ability to put large amounts of productive work into tasks. They have ability to analyze the existing situation and bring a change where it is necessary.

Four Components of Transformational Leadership

There are four components of transformational leadership, sometimes referred to as the 4 I’s:

Transformational Leadership

Idealized Influence (II)

Idealized influence is about building confidence and trust and the leader serves as an ideal role model for followers. The leader “walks the talk” and is admired and respected for this.

Inspirational Motivation (IM)

Inspirational motivation is related to idealized influence. Transformational leaders have the ability to inspire and motivate followers.

Inspirational leadership is about motivating the entire organization. Transformational leaders make clear the attractive view of future and motivate the followers to accept the new challenge.

Individualized Consideration (IC)

Transformational leaders demonstrate authentic concern of the specific needs of followers to ensure they are included in the transformation process of an organization.

The leader attends to each follower’s needs, acts as a mentor or coach to the follower and listens to the follower’s concerns and needs.

He/she treat people individually and differently on the basis of their talents and knowledge with the intention of enabling them to reach higher levels of achievement.

This personal attention to each follower is a key element in bringing out their very best talent.

Intellectual Stimulation (IS)

This fourth component of transformational leadership involves arousing and changing followers’ awareness of problems and their capacity to solve them.

Leaders with this style stimulate and encourage their followers to be innovative and creative, and approach old problems in new ways.

Two Main Aspects of Transformational Leaders

Here are two main aspects of transformational leaders. Transformational leaders are “soft” but on the other side they constantly challenge followers to higher levels of performance.

Transformational leadership occurs when engagement in a group results in leaders and followers raising one another to increased levels of motivation and morality.

The Process of Transformational Leadership

Transformational Leadership

Developing Vision

This particular leadership style starts with development of a vision with a solid base; a broad view of future that not only converts but excites your potential followers as well.

Selling the Vision

This step is one that is always in play along with the main vision. Not only does it require constant reinforcement but commitment as well and consumes a lot of energy.

Some people may buy into your idea instantaneously but others will require more convincing so you have to adapt to your target audience accordingly.

Paving a Path Forward and Taking Charge

While you are selling your vision to motivate, where exactly will this motivation be funnelled? A transformational leader has to motivate his followers and pave a path with his actions and decisions for others to follow.

Aiming to be a transformational leader has its appeal. While many try to become one only a select few succeed.

This ideal leader in this leadership style is known as the “Great Founder”. It requires a certain set of skills and personality traits that aren’t taught in any university.

These qualities stem from the individual’s walk of life, the experiences they’ve been exposed to and the tough decisions they’ve made in their life.

Examples of Transformational Leadership

The steel industry of United States is the perfect example of a company that refuses to adopt new and improved methodologies that are only meant to promote efficiency and effectiveness.

This decline of 1986 initiated many years before that, when the Japanese steel industry began producing high-quality steel at a price that beat the one offered by most manufacturers based in the US, despite the substantial transportation cost one would have to incur.

As soon as the productivity and the quality advantages were lost, the profit margin soon followed along with jobs that employed thousands.

The organizational dry rot can take numerous forms. An insidious form is the state of complacency and love of status quo. This is particularly dangerous in industries where the rate of technical change is rapid.

In order to survive, the organization must adapt to the emerging changes proactively in order to stay ahead of the curve. This is why Transformational leadership is an absolute must.

Here are few examples of transformational leaders.

Transformational Leadership

Nelson Mandela

If we go through the life of Nelson Mandela, we can find rich examples of transformational leadership in his life.
Nelson Mandela was a South African anti-apartheid revolutionary, politician and philanthropist.

He served as President of South Africa from 1994 to 1999. When Mandela became President in 1994 he already knew many high profile business leaders and companies personally.

He was so successful at giving people a reason to follow him. He appreciated the power of symbols and the moral strength of authentic acts of fairness. He set an example of understanding and vision for his countrymen.

One of Mandela’s greatest legacies is starting the national healing process from the moment he was released.
Nelson Mandela used transformational leadership principles while working to abolish apartheid and enforce change in South Africa. In 1995, he visited Betsie Verwoerd, the widow of the architect of apartheid Hendrik Verwoerd at her home in Orania.

Orania was an Afrikaner homeland and a striking anachronistic symbol of racial separation.

Mandela’s recurring emphasis on mutual forgiveness was truly remarkable. In 1993, after his recent released from 27 years in prison, he said: “I am working now with the same people who threw me into jail, persecuted my wife and hounded my children from one school to the other.”

In 2000, Mandela repeated the same message in an interview with the Christian Science Monitor: “For all people who have found themselves in the position of being in jail and trying to transform society, forgiveness is natural because you have no time to be retaliating.”

Alexander the Great: King of Macedonia, Greece, Egypt, Turkey, Israel, Lebanon, Persia and Afghanistan

Alexander the Great was a person who accomplished so much at a very young age. By the time Alexander died in 323 BC, he had not yet reached his 33rd birthday.

In that short time, he had created an empire from Greece to India.

In an age where cruel leaders ruled, he resisted the conventional political wisdom of the time rather than cleaning out the capital of a conquered nation and then taxing them to the max.

He built new cities (called Alexandria’s), libraries and established mechanisms for communication and commerce.
He is known for his strategies and planning in the military ground. He is also famous for his wise statesmanship in political area.

He had built new roads and had scientists capture new knowledge. Alexander was the student of Aristotle who went on to become even greater than his teacher.

Great Transformational Founder: Bill Gates, Former CEO of Microsoft

The most successful entrepreneur ever, Bill Gates, decided to drop out of Harvard and start a business called Microsoft.

Bill Gates said to his mom “Mom, I want to drop out of school so that I can work on an entrepreneurial venture for 80 hours a week, for no pay and that has a high probability of failure.”

Unlike most entrepreneurs, Bill Gates never failed and Microsoft was never unprofitable.

Transformational Leadership in Business

In business, transformational leadership can create extra ordinary changes. The characteristics of transformational leaders include vision, confidence, courage and a willingness to make sacrifices.

Transformational leadership can also come from organizations. For example, companies that were at the forefront of the computer revolution changed the course of business history.


Transformational Leadership

Undoubtedly there have been many transformational changes in technology and there will be many more.
Computing technology is progressing rapidly.

In late 1970s and early 1980s the development of computing technology by Apple, IBM, Intel, Microsoft and other companies was a transformational event.

Many companies including Apple transformed business processes through software applications.

In the early 1990s Internet marked another technological transformation. Yahoo and Google have built Internet road maps through search engines.

Another development can be seen in e-commerce websites including Amazon and eBay, who are pioneered e-commerce websites.

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