In my previous article, I described how understanding Maslow’s Hierarchy of Needs helps leaders deliver better organizational performance. If you recall, there are five levels to this Hierarchy: Physiological, Safety, Belonging, Esteem and Self-Actualization. In this article, we’ll consider what that means in practical terms for leaders.

Broadly speaking, there are two types of leaders: transactional and transformational and the clue about how each works is in the name.

A fair day’s work for a fair day’s pay

Let’s look at transactional leadership first. As the name suggests, a transactional leader treats employment as a mere economic transaction: “I (the manager) will give you something (money, security, status) in return for you doing work for me.” In other words, “I will help you meet your Physiological and Safety needs, and in return, I expect you to do your job.” In that transactional view of the world, the higher needs—Belonging, Esteem, and Self-Actualization—are not the manager’s responsibility. Some may even view those things as having little place at work.

As a result, this style of leadership is all about reward and punishment, rules and standards, and the way things should be done and have always been done. The underlying assumption is that employees need to be externally motivated. They need clear instruction on how to do their job, with defined standards and deadlines. The manager tracks progress either passively (no interference unless there is a problem) or actively (anticipates problems and gives advice how to proceed).

The problem is, in a purely transactional world, the threat of punishment discourages employees from not meeting expectations, but there is no real incentive to do anything beyond those expectations because it will not be rewarded. Indeed, the employee may even be disciplined for spending time on what isn’t asked of them.

Leadership is about more than processes and deadlines

Where transactional leadership is authoritarian and directive, transformational leadership is inspirational and collaborative.

The transactional leader makes sure employees’ lower needs are taken care of, but encourages them to fulfill their higher needs at work. To the transformational leader, people are as important as the mission, so they go out of their way to forge strong relationships that are built on empathy and trust. This understanding enables the leader to empower people to make decisions, learn from mistakes, inspire others to do their best, while encouraging them to strive for more.

Underpinning this is an assumption that motivation is internal and intrinsic. The transformational leader knows there is nothing they can do to motivate an employee: employees have to motivate themselves. Everyone is accountable for their own engagement. The leader’s job then becomes to create an environment in which employees can find that motivation.

As a result, the transformational leader’s focus is on removing barriers, accessing resources and providing direction. They create an environment in which employees are focused on opportunity; where employees look for ways to contribute to the best interest of the team and the organization, rather than focusing on narrow self-interest.

Why transformational leadership matters

So, what kind of leader are YOU?

  • Are you telling people what to do more often than listening and encouraging others to share their perspective?
  • Do you respond to mistakes made by others with frustration and annoyance?
  • Have you avoided difficult conversations and conflict, hoping it will pass by?

If you answered ‘yes’ to any of these questions, then you are likely working from the transactional leadership approach. Keep in mind that not all situations require a transformational approach, however if you are always in a transactional leadership mode, it is very likely limiting your impact.

Ultimately, in most environments, transformational leaders get better results because they build around them a group of people who are inspired, stimulated and engaged; who will go above and beyond what is expected of them, especially when times are tough. And let’s face it, we face a lot of challenging times in the workplace with unexpected changes, ambiguous information and complex decisions.

In summary, if you want an organization in which people are highly engaged, exceed expectations, and focus on the success of the group as a whole, you have to take a transformational approach; you need to create an environment where people can belong and feel a sense of worth. It’s what I call, a Purposeful Workplace Experience™. You can read more about it in my forthcoming book Rules of Engagement: Building a Workshop Culture to Thrive in an Uncertain World.

In the next article in this series, we’ll look at the first step towards building that kind of workplace.