Day 10: Transformational vs. Transactional Leadership: How Leaders Drive Organizational Success - CivicNote

📘The Evolution and Essence of Leadership in Public Organizations

Organizations are not mere aggregates of people performing tasks. They are structured, purposive systems wherein individuals interact to achieve collective goals. Within such systems, leadership serves not only as an instrumental mechanism for coordination but also as a core dynamic force that defines organizational identity, culture, and direction. Leadership is not a peripheral function - it is a fundamental determinant of organizational vitality and sustainability.

Among the various domains of public administration and organizational behavior, leadership is a central, enduring topic. Especially in the context of public organizations, leadership is not confined to improving operational efficiency; it plays a pivotal role in realizing public values, navigating conflicting interests, and responding to increasing demands for transparency, participation, and accountability. Unlike leadership in private organizations, which tends to prioritize profit maximization and market competitiveness, leadership in the public sector is deeply intertwined with democratic values and institutional legitimacy.

Historically, leadership theories have evolved through several major paradigms: from trait-based theories that emphasize inherent personal qualities, to behavioral theories that focus on observable actions, and contingency theories that highlight the importance of contextual variables. In recent decades, leadership studies have shifted toward more dynamic and integrated models. Among them, Transformational Leadership and Transactional Leadership, first distinguished by James MacGregor Burns and later refined by Bernard Bass, have emerged as two of the most influential modern theories.

Transformational Leadership aims to inspire and elevate followers by articulating a compelling vision, fostering intellectual stimulation, and nurturing individual growth. The transformational leader acts not merely as a supervisor, but as a catalyst for change, empowering employees to transcend self-interest for the sake of collective goals. Transactional Leadership, on the other hand, emphasizes clear structures, performance expectations, and contingent rewards, providing organizational stability and predictability through well-defined roles and incentives.

In the context of public administration, leaders must strike a balance between these two leadership approaches. While transformational leadership promotes citizen-centered innovation and participatory governance, transactional leadership ensures procedural integrity and legal compliance. Contemporary public sector leaders must respond to rapid technological change, growing social complexity, and evolving civic expectations with a leadership model that is both visionary and pragmatic.

This article explores the conceptual foundations, structural elements, comparative dimensions, and public sector applications of transformational and transactional leadership. By examining how these leadership styles operate and interact within complex administrative systems, we aim to identify a more holistic model of leadership that is suitable for the demands of modern governance. Ultimately, this study invites readers to consider what it means to be an effective leader in the public realm—and how leadership can drive not only performance, but also public trust and social change.

2.1 Overview of Leadership Theories – How Leaders Are Formed and Understood

Leadership is the process through which individuals influence others within an organization to achieve shared goals. In the fields of public administration and organizational behavior, leadership is regarded as a pivotal factor that determines organizational performance, cultural formation, and employee satisfaction. Particularly in public sector organizations, leadership transcends the boundaries of efficiency; it is inextricably linked with normative administrative values such as justice, equity, and democratic accountability.

The academic study of leadership has developed over time, shaped by evolving historical and societal contexts. Its theoretical progression is typically categorized into four major schools of thought: trait theories, behavioral theories, contingency theories, and contemporary leadership theories.

Trait Theories

The earliest approaches to leadership focused on the innate personal characteristics of leaders. The Great Man Theory, for example, posited that exceptional leaders are born with distinct traits such as intelligence, courage, charisma, and decisiveness. This perspective dominated early 20th-century thinking and shaped leadership selection practices in both private and public sectors. However, as empirical research advanced, it became evident that no single set of traits could universally explain effective leadership. Consequently, trait theories began to lose explanatory power in favor of more situational or behavioral approaches.

Behavioral Theories

Emerging in the 1940s, behavioral theories shifted the focus from who leaders are to what leaders do. Groundbreaking studies from Ohio State University and the University of Michigan identified key behavioral dimensions: the former emphasized “consideration” and “initiating structure,” while the latter distinguished between “employee-oriented” and “task-oriented” leadership styles. These theories proposed that effective leadership could be learned and developed through specific behaviors and training—marking a significant departure from the trait-based assumption of inherent leadership ability.

Contingency Theories

In the 1960s, contingency theories challenged the notion of universal leadership behaviors. These theories posited that the effectiveness of leadership is contingent upon situational variables such as the nature of the task, the organizational environment, and the characteristics of followers. Fiedler’s Contingency Model, for instance, highlighted the interaction between a leader’s style and three contextual factors: leader-member relations, task structure, and positional power. Similarly, Hersey and Blanchard’s Situational Leadership Theory suggested that leaders should adapt their style—ranging from directive to delegative—based on the maturity and readiness of their subordinates. These approaches underscored the need for flexible leadership that responds to specific organizational conditions.

Contemporary Leadership Theories: Transformational and Transactional Approaches

Since the 1980s, leadership studies have increasingly emphasized values-based, participatory, and change-oriented approaches. Central to this shift are the concepts of Transformational Leadership and Transactional Leadership, introduced by James MacGregor Burns and later expanded by Bernard M. Bass.

These theories move beyond command-and-control models to explore how leaders inspire, motivate, and engage followers at both emotional and cognitive levels. Transformational leadership emphasizes vision, innovation, and individualized support, encouraging employees to exceed expectations and grow alongside the organization. Transactional leadership, by contrast, focuses on structured exchanges, performance monitoring, and reward-based motivation—tools essential for maintaining order and compliance.

Together, these theories suggest that leadership is neither fixed nor unidimensional. Instead, it is a dynamic process shaped by cultural, organizational, and interpersonal factors. In today’s public sector, where leaders must navigate complex legal frameworks and citizen demands simultaneously, the ability to fluidly combine different leadership strategies has become increasingly vital.

2.2 Transformational Leadership – The Power of Leaders Who Inspire Change

Modern organizational environments are no longer static; their rate of change is unprecedented. Technological innovation, generational value shifts, multicultural workforces, and increasing civic engagement are just a few of the complex challenges faced by public organizations today. In this context, traditional, maintenance-centered leadership approaches are often insufficient to guide organizations through periods of reform or innovation. What is increasingly needed is a leadership style that energizes members, redefines institutional identity, and inspires proactive change.

Transformational Leadership is a representative model that meets these evolving needs.

Conceptual Foundation of Transformational Leadership

Transformational leadership was first conceptualized by James MacGregor Burns in 1978 in his analysis of political leadership. According to Burns, transactional leadership is based on exchanges—leaders offer rewards or punishments in return for performance. In contrast, transformational leadership involves mutual elevation: leaders stimulate profound internal change in followers by activating their values, motivations, and aspirations, fostering a shared commitment to higher goals.

Bernard M. Bass further developed Burns’s ideas by creating a more structured and empirical framework. According to Bass, transformational leadership goes beyond maintaining performance standards—it elevates followers’ expectations, strengthens their commitment, and drives both personal and organizational growth. His model comprises four core components, often referred to as the “Four I’s,” which define the essence of transformational leadership.

The Four Components of Transformational Leadership

1. Idealized Influence
   This refers to the degree to which leaders are admired, respected, and trusted by followers. Leaders serve as ethical role models, demonstrate consistency between words and actions, and act with moral conviction. In the public sector—where integrity, impartiality, and ethical governance are critical—idealized influence is fundamental to establishing leadership legitimacy.

2. Inspirational Motivation
   Transformational leaders articulate a clear, compelling vision that inspires commitment and enthusiasm. They use emotionally resonant language and symbolic actions to connect everyday tasks with higher purposes. In public administration, this often involves invoking values like justice, service, and the public good to mobilize staff around civic-oriented missions.

3. Intellectual Stimulation
   Leaders encourage creativity, innovation, and critical thinking by challenging assumptions and promoting new perspectives. They create an environment where questioning norms and exploring alternatives are not only accepted but encouraged. In bureaucratic settings where standard procedures dominate, intellectual stimulation fosters adaptive capacity and institutional learning.

4. Individualized Consideration
   This component reflects a leader’s attentiveness to each follower’s unique needs, skills, and potential. Transformational leaders act as mentors or coaches, tailoring guidance and support to individual development. In diverse public organizations—where employees vary by age, background, and professional role—individualized consideration plays a crucial role in boosting motivation and cohesion.

Impact and Applicability of Transformational Leadership

Transformational leadership has been empirically linked to a range of positive organizational outcomes, including job satisfaction, organizational commitment, creativity, and trust in leadership. In public sector contexts, where rigid hierarchies and procedural constraints often limit innovation, transformational leadership serves as a catalyst for cultural change and administrative modernization.

In South Korea, for instance, local government leaders have implemented transformational leadership by emphasizing participatory governance and citizen co-creation. Examples include mayors promoting community-based urban regeneration, or school principals fostering collaborative professional learning cultures. These leaders use vision and values to align bureaucratic functions with broader civic missions, thus energizing their organizations from within.

As public service expectations grow and governance becomes more complex, civil servants are no longer expected to be mere implementers of policy. They are now required to act as agents of change—individuals capable of inspiring, mobilizing, and empowering others in the service of collective goals. In this regard, transformational leadership is not a luxury, but a necessity for public sector resilience and legitimacy.

2.3 Transactional Leadership – Leading Through Rules, Rewards, and Control

Organizations are goal-oriented systems that require alignment between individual performance and collective objectives. Leaders play a critical role in guiding members by clarifying expectations, evaluating performance, and administering rewards or sanctions accordingly. Transactional Leadership, as the name suggests, is based on an exchange relationship in which compliance is secured through contingent rewards and corrective feedback. This leadership model emphasizes clarity, consistency, and procedural order—elements that are especially crucial in the context of public administration.

Although often contrasted with transformational leadership, transactional leadership performs indispensable functions for maintaining organizational stability and predictability. In public sector organizations governed by laws, regulations, and strict accountability mechanisms, transactional leadership ensures conformity and systematic operation.

Definition and Core Structure of Transactional Leadership

Transactional leadership focuses on achieving specific goals through established rules and performance-based exchanges. Leaders set expectations, monitor progress, and deliver rewards or penalties based on outcomes. This form of leadership builds trust through transparency and predictable interactions.

Two primary components define the structure of transactional leadership:

1. Contingent Reward
   This is the most recognizable form of transactional leadership. Leaders communicate clear expectations and provide tangible or intangible rewards based on performance outcomes. In public organizations, examples include performance-based bonuses, formal commendations, promotions, or access to development opportunities. The clarity of the reward structure creates a reliable motivational framework, aligning individual incentives with organizational objectives.

2. Management by Exception (MBE)
   MBE involves leader intervention based on deviations from expected standards. It comes in two forms:

   • Active MBE: The leader closely monitors performance and proactively corrects errors or rule violations.

   • Passive MBE: The leader only intervenes when problems become serious or unavoidable.
     While public administration tends to favor active oversight, limited personnel or resources may necessitate passive MBE in certain bureaucratic settings.

Characteristics and Strengths of Transactional Leadership

The principal strength of transactional leadership lies in its ability to foster order and predictability. By clearly defining rules and consequences, this leadership style reduces ambiguity and establishes a stable framework for decision-making. In legalistic institutions such as government agencies, this approach reinforces accountability and procedural fairness.

Transactional leadership is also particularly effective in achieving short-term, task-specific objectives. When organizational goals are straightforward and require consistent adherence to procedures—such as budget execution, regulatory compliance, or performance auditing—transactional leadership ensures operational efficiency and discipline.

Limitations and Considerations in Public Organizations

Despite its merits, transactional leadership also presents several limitations:

• Lack of intrinsic motivation: Because it relies heavily on external rewards, this leadership style often fails to stimulate deeper engagement or purpose among employees. Staff may focus narrowly on meeting minimum requirements rather than embracing innovation or public service ideals.

• Resistance to change: Transactional leadership is designed to preserve the status quo. In times of policy reform, crisis management, or digital transformation, it lacks the visionary impetus necessary to mobilize widespread organizational change.

• Overemphasis on rules: In highly complex and dynamic environments, rigid rule-based management can hinder flexibility and responsiveness—two qualities increasingly needed in modern public governance.

In public administration, transactional leadership plays a vital role in upholding legal norms and administrative order. However, it is insufficient on its own to meet the rising expectations of citizens and adapt to changing societal conditions. Therefore, it should not be viewed as a complete leadership model, but rather as the foundation upon which transformational elements must be built.

2.4 Transformational vs. Transactional Leadership – Comparison and the Case for Integration

Leadership within organizations is not a one-size-fits-all solution. Its effectiveness depends heavily on organizational context, objectives, and the characteristics of followers. In public administration—where law, accountability, and citizen expectations intersect—no single leadership style can function optimally in isolation. Therefore, transformational and transactional leadership should be viewed not as mutually exclusive but as mutually reinforcing approaches. This section explores their differences, complementarities, and the emerging imperative for integrated leadership strategies.

Comparative Analysis of the Two Leadership Styles

Category	Transformational Leadership	Transactional Leadership
Focus	Vision and shared values	Rules and performance
Motivation	Intrinsic, value-driven	Extrinsic, reward-driven
Organizational Culture	Innovation and change	Stability and control
Leader–Follower Relationship	Emotional connection, individualized concern	Contractual, task-oriented
Environmental Response	Proactive and adaptive	Reactive and rule-bound
Goal Orientation	Long-term development	Short-term efficiency
Leader’s Role	Visionary change agent	Operational manager

Transformational leadership excels in situations where change is necessary, where new goals must be imagined, and where deeper commitment from followers is required. It builds a sense of ownership and mission. Conversely, transactional leadership is indispensable in settings where procedural fidelity, compliance, and accountability are paramount. It ensures that daily operations remain orderly and aligned with institutional mandates.

Complementary Nature and Integration Potential

Contemporary governance environments demand a hybrid approach. The increasing complexity of public service—characterized by digital innovation, multi-stakeholder governance, and citizen co-production—requires leaders to navigate between managerial precision and visionary adaptation.

An effective integration of the two leadership styles might proceed as follows:

• Use transactional leadership to establish rules, monitor compliance, and administer fair rewards. This forms the structural and normative baseline for organizational functionality.

• Layer transformational leadership on top to guide cultural change, stimulate innovation, and foster civic engagement. This builds emotional commitment and a forward-looking mindset.

Such integration is not about choosing one style over the other, but about developing situational awareness and leadership agility. For instance, when facing a policy crisis, leaders may initially apply transactional principles to restore order, but gradually transition to transformational behaviors to reshape organizational learning and resilience.

Practical Strategies for Leadership Integration

1. Public Value + Performance Accountability
   Leaders must define a compelling public value vision (transformational), while simultaneously ensuring transparent processes and measurable outcomes (transactional).

2. Emotional Support + Rule Consistency
   Leaders should balance empathy, trust-building, and recognition with consistent enforcement of rules and standards to maintain organizational fairness and morale.

3. Adaptive Use Across Organizational Phases
   During innovation or reform phases, transformational leadership should dominate. During audit cycles or legal reviews, transactional leadership may take precedence. The leader’s ability to pivot between styles is critical.

2.5 Leadership Application in Public Organizations – Cases and Strategic Lessons

Public organizations are fundamentally different from their private sector counterparts in terms of purpose, structure, and accountability. While businesses prioritize profitability and competitiveness, public agencies are tasked with upholding justice, equity, transparency, and service to the public good. As a result, leadership in the public sector is inherently more complex—it must balance operational efficiency with ethical responsibility and democratic responsiveness.

In this context, transformational and transactional leadership must be applied in tandem. Transactional leadership ensures procedural consistency and institutional control, while transformational leadership drives innovation, cultivates shared values, and mobilizes commitment to public service ideals.

Characteristics of Public Organizations and Leadership Demands

Public organizations typically exhibit the following characteristics:

• Legal and institutional constraints: Operations are governed by law, limiting discretion and prioritizing procedural legitimacy.

• Diverse stakeholders: Leaders must engage with citizens, legislators, interest groups, auditors, and the media.

• Ambiguous performance metrics: Outcomes are often qualitative and multidimensional, not easily captured through numeric KPIs.

• Structural rigidity: Hierarchical authority, tenure systems, and bureaucratic inertia often resist rapid organizational change.

Given these features, public leaders must simultaneously apply transactional tools to preserve order and transformational approaches to achieve purpose-driven change.

Case Studies of Public Sector Leadership

1. Social Innovation Leadership in Seoul City Government

Former Mayor Park Won-soon exemplified transformational leadership by promoting participatory governance and social innovation. His administration adopted the slogan “Citizens are the Mayor” and implemented initiatives such as community budgeting, cooperative housing, and shared governance platforms. These practices reflected strong idealized influence and inspirational motivation.

At the same time, his administration maintained transactional systems—fiscal rules, audit controls, personnel regulations—to ensure legal compliance and administrative integrity. The combination enabled both innovation and institutional legitimacy.

2. Transformational Leadership in Korean Education Reform

In South Korea, the “Innovative School” policy empowered school leaders to design customized curricula and build collaborative learning cultures. These efforts involved high levels of intellectual stimulation and individualized consideration. However, educational administrators were still bound by transactional frameworks, such as budget audits, personnel rotations, and standardized assessments. This balance facilitated change without sacrificing stability.

3. Digital Transformation in Central Ministries

Initiatives led by the Ministry of the Interior and Safety and the Ministry of Science and ICT—such as cloud-based administrative systems and citizen-facing mobile platforms—required transformational leadership to break conventional thinking and drive digital innovation.

Simultaneously, these projects relied on transactional leadership mechanisms—budget controls, legislative backing, and clearly assigned responsibilities—to ensure successful implementation and accountability.

Strategic Guidelines for Public Sector Leadership

1. Develop Integrated Leadership Training
   Civil servant training programs should incorporate both transformational and transactional leadership theories, preparing leaders for the dual demands of innovation and compliance.

2. Design Context-Specific Leadership Models
   Leadership strategies must be tailored to each organization’s mission, structure, and stakeholder environment. For example, a regulatory agency may emphasize transactional practices, while a community outreach agency may require more transformational behaviors.

3. Foster Agility and Responsiveness
   Public leaders must be capable of shifting leadership modes depending on organizational phases: from maintenance to reform, from crisis to innovation. Leadership agility is a core competency in today’s governance landscape.

2.6 Integrated Leadership and Future Governance Challenges

Today’s public organizations operate in an environment marked by volatility, complexity, and transformation. Technological disruption, evolving citizen demands, intergenerational tensions, global crises such as pandemics and climate change, and the rise of artificial intelligence and algorithmic governance have all radically reshaped the landscape of modern public administration. In this environment, traditional, singular leadership models are insufficient. What is increasingly required is an integrated leadership model—a dynamic, context-sensitive framework that combines both transactional and transformational capabilities.

Concept and Structure of Integrated Leadership

Integrated leadership refers to the strategic combination of leadership styles, tailored to organizational context and conditions. Drawing on contingency theory, it emphasizes the ability to shift leadership behaviors in response to variables such as organizational development stage, task complexity, follower maturity, and external turbulence.

An effective integrated leadership model in the public sector can be conceptualized in three interrelated layers:

1. Transactional Leadership as a Strategic Foundation
   Stability, rule compliance, and accountability form the baseline for public sector operations. These are best secured through transactional leadership, which ensures adherence to laws, policies, and performance metrics.

2. Transformational Leadership as a Cultural and Emotional Engine
   Innovation, mission-driven motivation, and adaptive organizational culture are fostered through transformational leadership. Leaders articulate public value, inspire change, and elevate both individual and collective purpose.

3. Situational Leadership for Adaptive Execution
   Leaders must adjust their style based on situational cues—responding differently in crises, reform efforts, or routine management. Leadership fluidity, rather than consistency, becomes a mark of effectiveness.

This model calls for not merely a hybrid of traits, but a strategic sequencing and integration of leadership functions aligned with shifting governance demands.

Future Leadership Competencies in Public Administration

1. Digital Governance and Data-Driven Decision Making
   As governments adopt cloud platforms, AI, and smart services, leaders must develop digital literacy, interpret analytics for public value, and oversee tech-enabled workflows. At the same time, they must use transformational leadership to guide their teams through digital adaptation.

2. Diversity and Inclusion (D&I) Leadership
   Public organizations increasingly consist of diverse employees in terms of gender, age, ethnicity, and background. Leaders must reconcile these differences through empathetic, inclusive leadership, using individualized consideration while maintaining fairness and consistency through transactional norms.

3. Crisis Management and Organizational Resilience
   In situations such as public health emergencies or natural disasters, transactional leadership is critical to enforce emergency protocols, while transformational leadership becomes essential during recovery—rebuilding trust, re-engaging teams, and learning from failure.

Institutional Implications and Leadership Development

1. Redesigning Public Sector Leadership Evaluation
   Current systems emphasize quantifiable performance, but integrated leadership requires assessing qualitative aspects such as vision, emotional intelligence, and team development. Multi-dimensional evaluation frameworks are needed.

2. Fostering Organizational Culture that Supports Leadership Development
   Leadership is not only a matter of personal traits but also a function of organizational structure and culture. Governments should move beyond top-down appointments and cultivate leaders through mentoring, team-based projects, and bottom-up selection.

3. Balancing Innovation and Public Accountability
   Any leadership development strategy must integrate the imperative for innovation with the necessity of public trust. This balance is what distinguishes public leadership from corporate management.

Rethinking Leadership in the Public Sector – Beyond Style, Toward Public Value

In the dynamic and often unpredictable environment of public administration, leadership is not a matter of style preference, but a question of purpose, adaptability, and public trust. Transactional and transformational leadership theories, though originally developed in organizational psychology and private-sector management, provide critical insights into the operation and evolution of public institutions.

Transactional leadership reminds us of the necessity of rules, consistency, and accountability in government. Without it, fairness erodes and institutional integrity collapses. But transactional leadership alone cannot solve complex, value-laden public problems. It cannot inspire reform, nor can it engage a disengaged public.

Transformational leadership offers a compelling alternative. By tapping into vision, emotion, and meaning, it motivates civil servants not only to comply but to contribute, to innovate, and to care. It helps turn government work from a procedural routine into a mission of service. Yet it, too, has limitations. Without the backbone of rules and operational discipline, transformation becomes chaos, and vision becomes rhetoric.

Thus, the future of public leadership lies not in choosing between the two, but in weaving them together—transactional structure with transformational spirit. This integrated leadership is not a compromise, but a higher-order strategy. It demands leaders who can enforce the law and inspire change, who can navigate constraints and cultivate hope, and who can balance risk with accountability.

In practice, this means:

• Building leadership capacity not only at the top, but throughout all levels of government;

• Redesigning civil service education to include both managerial skill and ethical vision;

• Encouraging organizational environments where compliance and creativity coexist.

The 21st-century public leader is no longer merely a bureaucratic operator or a charismatic reformer. They are architects of trust, enablers of participation, and guardians of public value.

Public leadership, at its best, is the art of making others see what they had not imagined, and helping them become what they did not think possible. In this sense, transformational and transactional leadership are not ends in themselves, but tools—tools for building governments that are both accountable and aspirational.