Transformational Leadership – Explained by a CEO: Examples, Pros/Cons

I have seen some amazing transformational leadership during my international career in business, I have met several true transformational leaders, and I have relied on transformational leadership myself several times. As a leader, creating significant change and transformation can be one of the most rewarding things. After all, you get clear before and after images, making it easier to understand the impact you had as a transformational leader together with your team. Let us start with a quick summary of what transformational leadership is all about.

What is Transformational Leadership?

Transformational leadership is when a leader creates substantial change together with the team members. Expectations, aspirations, and values are transformed into something better. Transformational leadership also develops the team members personally and inspires them to reach extraordinary success.

In this article about transformational leadership, I will explain this style and the basics of using it. You can read about the pros and cons of transformational leadership, some famous examples of transformational leaders, and a few stories about transformational leadership during my career. Let us start by explaining the basic concept to set the stage properly.

What is Transformational Leadership?

Transformational leadership can be thought of as a caterpillar evolving into a butterfly. It takes time. It takes motivation. It takes hard work. In the end, it is all worth it since the result is fantastic.

This change improvement journey, or transformation, is facilitated by an ideal embodied by the transformational leader who is a strong moral example in working towards the benefit of the team and a positive change in organizational culture. The transformational leader actively promotes challenging the status quo and opportunities for change and improvement in team members and in general.

Team members are very loyal to their transformational leader who they trust, admire, and respect. This belief in the leader coupled with the leader’s aims towards improvement for the team results in very motivated team members that are willing to perform out of the ordinary.

According to the initial theory of transformational leadership, it is one side of a coin. The other side, i.e. the opposite, is transactional leadership, which together with transformational and laissez-faire leadership form the Full Range Leadership Model.
Transformational leadership has a lot of similarities with Democratic leadership, read our article on that topic for more information: Transformational vs. Democratic Leadership.

What Are the Elements of Transformational Leadership?

The Full Range Leadership Model identifies four components of transformational leadership which represent different levels of leading through motivation and purpose.

The four components of Transformational Leadership are:

1. Individual Consideration (IC)
2. Intellectual Stimulation (IS)
3. Inspirational Motivation (IM)
4. Idealized Influence (II)

1.      Individualized Consideration (IC) – Caring

Each team member has unique needs and experiences a wide range of emotions. A transformational leader understands this and demonstrates genuine concern. When team members feel like their leader genuinely cares about them, they are more likely to perform at their best. This requires the transformational leader to have highly developed emotional skills and lots of empathy.

Individual Consideration also includes personalized feedback and praise, as well as recurring two-way communication between the leader and each member. (Check our article on communication: 17 communication tips.)
The leader also acts as a mentor as well as a coach to the team members to challenge them and help them to develop themselves further. (This part is similar to Coaching Leadership, which you can find in our leadership styles portal.)

2.     Intellectual Stimulation (IS) – Thinking

Respondents to a survey[1] conducted by Cangrade revealed that intellectual stimulation matters more than money to employees. According to the survey, intellectual stimulation accounts for 18.5 percent of job satisfaction while money contributes to 5.4 percent to job satisfaction.

Intellectual stimulation involves challenging the team to question the status quo, stimulating creative thinking, and encouraging risk-taking. This is a big step towards finding new and improved ways of doing things – a core part of transformational leadership. A transformational leader taps into the ideas among team members and learns from them. Reflection is also important, consider using interpersonal communication for a systematic approach to reflection.

3.     Inspirational Motivation (IM)

To reach higher performance, the transformational leader needs to provide the followers with an inspiring vision. The transformational leader communicates convincingly and with optimism about the vision and puts the short-term activities into a larger context. A strong sense of purpose and great inspiration is a big part of obtaining the increased performance of transformational leadership. Everyone feels like they are a part of the vision and that their contributions are essential to fulfill it. Some similarities with Visionary Leadership, refer to our in-depth article on that topic for inspiration, which is available in our leadership styles repository.

4.     Idealized Influence (IF) – Influencing

The team admires who the leader is and what he or she stands for. There are no double standards and the leader acts as an ethical role model; team members won’t be asked to do something that is wrong or that the leader wouldn’t do him or herself. Trust is the thread that binds the organization.

These four components of transformational leadership all need attention and focus if you want to become a good transformational leader. It will not work if you push three out of four components and leave the last one unattended. I suggest you reflect every now and then over which components you use the most and how you can improve further. It might even be a good idea to discuss the four components with your team and seek their feedback on the current state as well as their wished state for each of them. Transformational leadership involves everybody learning and improving, including the leader him or herself.

There is one thing that runs like a red thread through the above: Charisma. The ability to influence, inspire, stimulate, and being perceived as caring are all charismatic traits to some degree. The charismatic streams in transformational leadership are so strong in fact that it is often compared with charismatic leadership. There are indeed many similarities but there are also some very key differentiators between these styles. (Refer to our article on Charismatic Leadership which is available in our leadership styles section, and a separate article comparing the two styles: Charismatic vs Transformational Leadership.)

What are the Characteristics of Transformational Leaders?

There are quite a few characteristics that enable the successful implementation of transformational leadership. A successful transformational leader needs to have as many of the characteristics and skills of the below as possible. It is quite a list. Being a transformational leader is not easy and it is not for people without ambition.

1.   Communication Skills

You need to be a good communicator, perhaps by using metaphors and stories as part of communicating. This also includes two-way communication where skills as active listening, body language, and others are useful. You need to make people understand you and you need to be good at understanding them as well. What drives people? Knowing this helps you to inspire and motivate them for instance. Listening to people makes them feel part of the team and contributors to the overall transformation.

Versatility in communication means you can handle difficult one-on-one conversations as well as inspiring a larger audience from a stage. We have an article on leadership communication here: 17 tips for improved communication.

2.   Role model

You need to be a role model when it comes to setting high targets and expectations and delivering on them. People will look to you for strong values, courage, and a sense of ethics. You need to be stable and emotionally mature – not blowing off steam or having different attitudes on a weekly basis.

3.   Persistence and Passion

You need to be persistent and passionate about what you do. Show enthusiasm, optimism and consider failure an impossibility. Why would people believe in you if you don’t believe in yourself? (Some similarities with the Six Leadership Styles by Goleman with its Resonant Leadership, also available in our leadership styles portal.)

4.   Visionary and strategic

A big portion of success with transformational leadership rests on the vision of the future and understanding how to get there. The vision needs to be strong enough to inspire, and it needs to be realistic enough so people believe it can be achieved. This is a balancing act for any leader. The only way a good vision will become reality is if it is communicated properly of course, so remember that this skill set needs to be combined with communication skills – not just to sell people on it, but also to have them contribute in shaping the vision. (Contrast with Visionary Leadership here: Transformational vs. Visionary Leadership.)

5.   Self-awareness

As a transformational leader, you need to know yourself and understand how you affect others. This is probably true for most, if not all, leadership styles of course. Know your weaknesses, know your strengths. Never stop developing yourself.

6.   Coaching and ever learning

Transforming people is done through coaching amongst other processes, so you need to be effective in coaching and mentoring others. (Have a look at our article on coaching leadership for inspiration.) This applies to yourself as well by the way since transformational leaders should never stop learning. Learn from your own mistakes and others so you know what not to do. Learn from successes and repeat what you did in the future.

7.   Emotionally Intelligent

It is difficult to be good at communication, at inspiring others, coaching, being a role model, and knowing yourself if you aren’t emotionally intelligent. This part is essential for so many other things in this list. We can all learn how to be better at empathy and how to treat others. Transformational leaders need to be very emotionally intelligent to complete their visions, that’s for sure. (For insights on empathy, read our article on the importance of empathy in leadership.)

If you lack some of the things outlined above, then why not start with transforming yourself into the person you need to be by addressing any gaps you might have. We all need to start somewhere and continue to develop ourselves towards realizing our vision. After all, this is what transformational leadership is all about. Since transformational leadership contains democratic leadership, I also suggest you take my democratic leadership course where I teach you the techniques I have used when completely transforming organizations with more than a thousand employees. It will give you a professional edge by learning how to run effective meetings, empowering others, gathering ideas and input, as well as setting a common vision: all important areas if you want to excel as a leader and build yourself a great career.

What are the Pros and Cons of Transformational Leadership?

Transformational leadership, like all leadership styles, has a set of advantages and disadvantages.

Advantages of Transformational Leadership

Here are four examples of the strong advantages of the transformational leadership style. They are centered around vision, loyalty, change, and communication.

Shared vision

Everyone in the organization believes and supports the leader’s vision. A transformational leader has an uncanny ability to see the problems within an organization and create a vision for growth. The team understands the purpose of the vision and are willing to do what it takes to make it a reality.

Employee loyalty

Transformational leaders help each team member feel like a valuable part of the organization. They are more engaged, empowered and committed to helping the organization excel. All these aspects contribute to a strong sense of loyalty between the team members and their leader. All these combined results in low employee turnover in teams with good transformational leadership.

Change management is a strength

Change management is the process of preparing, equipping, and supporting a team to successfully respond to internal and external change. Furthermore, change is a requirement for an organization to grow. People normally fear change and will, therefore, resist it. All the four elements mentioned above, i.e. Individualized Consideration, Intellectual Stimulation, Inspirational Motivation, and Idealized Influence work together to enable change in a good, motivational and well-communicated way.

There is strong communication

Strong communication is necessary for change to occur. Transformational leaders provide clear, consistent messages to their teams and major portions of the leadership style are resting on a foundation of communication. These leaders also listen to and value the input of each team member.
Check out our article How to Improve Leadership Communication Skills? to learn more about how you can develop your communication as a leader.

The above advantages with transformational leadership have some commonalities with servant leadership, another visionary leadership style. Learn more in our separate article on servant leadership compared to transformational leadership.

Disadvantages of Transformational Leadership

The disadvantages of this style are centered around the importance of influence, overlooking details, high pressure on team members, risk and time requirements for the leadership style.

Influence is lost if the team disagrees with the vision

Transformational leadership depends heavily on the team being intrinsically motivated to achieve the vision. However, it is possible for the team to lose faith in the vision along the way. There are no extrinsic rewards to keep them going so they can simply stop performing. Transformational leadership relies too heavily on the acceptance of a common vision with little else to motivate people to work.

Minute details can be overlooked

Moving towards a common vision is like seeing a light at the end of a long tunnel.  This can result in tunnel vision, where everyone is so fixated on getting to that light that they neglect the small steps and details necessary to get there. It won’t be an obstacle-free journey. A transformational leader may overlook the minute details necessary for operational efficiency because of the strong focus on the long-term vision.

Puts added pressure on employees

There is a lot of pressure to do more than what is considered normal under the guidance of a transformational leader. A team member may believe that he or she is exerting maximum effort, but the leader may think otherwise. The added pressure of performance expectation may ultimately result in a demotivated employee.

May result in unnecessary risk

Some transformational leaders do not adequately assess whether the recommended change is right for the organization in its current stage of development. Therefore, they take on risks that may lead the organization to its demise.

Frequent communication is time-consuming

Everyone should be kept in the loop for transformational leadership to be effective. This requires several weekly meetings, progress reports, and other time-consuming communication. A breakdown in communication causes an employee to feel left out of the loop with loss of motivation which can cause things to spiral downward thereafter.

Change is almost a prerequisite

The act of transformation is such a core part of transformational leadership that it is difficult to use when there is no need for change. This is nothing strange really. A leadership style that is conceptually meant for change is unlikely to be the best fit when the change element is lacking.
This could for instance be in the very early days of an organization’s existence. Setting structures and systems up and getting organized is the key need here, and there is no existing structure to change.
Another example would be strictly transactional or bureaucratical organizations where efficiency and productivity come from setting standards and regulations and actually avoiding change on purpose. (See transactional leadership for reference.)

How to Be an Effective Transformational Leader?

There are some golden rules to follow to effectively deploy and implement transformational leadership. These rules are very focused on the team, passion, communication, and having situational awareness.

1.   Take the time to understand your team

Each team member has a life outside of the job and the team. Get to know all your team members on a personal level. Learn more about their values, interests, hobbies, skills, and unique traits. They want to feel valued and want to believe that you genuinely care about them. Furthermore, learning more about their skills and interests can help you assign tasks that they will execute and complete well.

2.   Effectively communicate with and listen to your team    

Effective communication is time-consuming. However, it helps prevent dissonance within the team. Communication isn’t restricted to keeping team members up-to-date with what’s happening in the organization. It also involves listening to and acting on their concerns as well as providing them with constructive feedback about their performance. Open and honest communication is important for creating a thriving business.

3.   Develop situational awareness

Consider the circumstances of each situation you get involved in and what you should do as part of that interaction. Situation awareness is a mindset that you should develop so that change can be effectively implemented to propel the organization towards growth. Essentially, let the situation at hand influence your actions and how you lead. (There are some lessons to be learned from the Situational Leadership Model, which you can find in our leadership styles portal.)

4.   Improve your change management skills

Study the process of change and the known pitfalls with implementing changes. This will give you knowledge of potential problems so you can mitigate those beforehand, and it will help you with understanding how communication can be used in conjunction with change. The overall idea is to transform the company or organization into something else – why would you want to embark on that journey without essential skills in change management? Consider learning more about the adaptive leadership framework.

5.   Be passionate

Passion is contagious. However, too much passion can lead to an overwhelmed workforce. You should learn to balance your passion and how you communicate it, so you avoid overwhelming your team. Passion can also cause you to overlook the minor details that will help you achieve those long-term stellar results that you are aiming for. If you are planning on changing the world, all the operational things might seem important in comparison, right? Organize your team in a way that ensures that those minor tasks are completed, and everyone is clear about their roles, while still retaining the long-term focus and the passion for getting there.

You can learn many of the above skills in our democratic leadership course, a step-by-step course that teaches you how to include, empower and push your co-workers or employees to become more creative and communicative.

What Are the Situations in Which Transformational Leadership Works Best?

There are two types of organizations that usually need a transformational leader. The first is an organization that is outdated and needs change before it becomes completely obsolete. The second type is an organization that needs restructuring or improvement to produce good results, such as a company turnaround. Essentially, a transformational leader is often needed in organizations where radical change is necessary.

Transformational leadership style examples in business

There is an abundance of examples when transformational leadership has been used with success. Here are a few transformational leadership examples I have experienced myself:

• A company turn-around, more than doubling the profit in a few years time
• Transformation of an organization’s mindset concerning quality, including the clean up of long-lasting warranty issues and systematic improvements minimizing future quality problems
• Transforming a quiet and subdued team to a vocal and opinionated team that felt strong empowerment and accountability for the future of the organization

I wrote a separate article on two major examples from my career, one concerning a transformational turnaround journey of a company, and the other a failed change project that had a complete lack of transformational leadership. I break down both examples into the four elements of transformational leadership to provide a deeper analysis. You can read this extensive article right here: Transformational Leadership Examples from real life in business.

Transformational leadership vs transactional leadership

According to the original theory, transactional and transformational leadership were opposites.

These two leadership styles are very different in general as well as in-depth. Otherwise, they would not be suggested as a set of two styles being polar opposite of each other. For an in-depth comparison of the two styles, read our article here: Transformational vs. Transactional leadership.

The table below shows some big topic areas with a comparison between the two styles. Please read our separate article on transactional leadership if you are interested and also consider 12 common leadership styles and how to pick yours.

Who Are Famous Examples of Transformational Leaders?

Sir Richard Branson  (1950 to present) – Founder of the Virgin Group

Branson epitomizes a transformational leader. He fervently believes[2] that “If you can motivate your people, use their creative potential, you can get through the bad times and enjoy the good times together … if your employees are happy and smiling and enjoying their work, they will perform well.” This philosophy is part of the reason he formed the Branson Centre for Entrepreneurship with locations in several countries.  Furthermore, each of his companies depends heavily on innovation and supporting creativity.

Lee Iacocca (1924 – 2019) CEO of Chrysler in the 80s

Lee Iacocca is known for developing the Mustang and Pinto cars while employed at Ford during the 1960s ending up as the president of the company in 1970. At the end of the decade, he went on to Chrysler and served as its CEO until 1992.

Iacocca made an astonishing success as he transformed Chrysler from the brink of bankruptcy to a highly profitable company. He created a vision and mobilized employees to reach it while he let go of 60 000 employees at the same time. Iacocca challenged the status quo, trimmed the costs of the company, and instilled a culture of innovation and efficiency.[3]

History of Transformational Leadership

Our explanation of Transformational leadership is a mix of the original theories of Burns and the additional adaptations by Bass and Avolio.

It started when James MacGregor Burns conceptualized transforming leadership as a part of his Full Range Leadership Model (FRLM) in 1978. He believed that there are two mutually exclusive types of leadership – transactional and transforming. According to Burns[4], transforming leadership occurs when “leaders develop their followers and motivate and/or inspire them to achieve extraordinary levels of success.”

Bernard Bass and Bruce Avolio developed the FRLM framework further. They delineated three leadership styles – transactional, transformational, and laissez-faire. In fact, Bass was the first to use the term “transformational” to describe this leadership style. They disregarded that transformational and transactional leadership is mutually exclusive, i.e. they believed both styles could be used by the same leader[5]. Bass and Avolio believed that transformational leadership is the most desirable form of leadership.

It turns out that they were right. Beckett Frith cites[6] a study conducted by Freshminds revealing that 40.2 percent of respondents agree that transformational leadership positively impacts the motivation of junior employees. These 247 respondents ranged from entry-level and middle management to senior executives and C-suite executives. Democratic leadership followed closely behind in popularity with 36.5 percent of the respondents believing it motivated junior employees. Autocratic leadership, however, was deemed the least effective for motivating employees with only 9.5 percent of the votes. (Autocratic and Democratic leadership is available in our leadership styles portal.) Check out our article containing a comparison between transformational leadership vs. democratic leadership and another on autocratic leadership compared to transformational leadership for more information.

References

https://online.stu.edu/articles/education/what-is-transformational-leadership.aspx#benefits
https://www.langston.edu/sites/default/files/basic-content-files/TransformationalLeadership.pdf

[1] https://www.huffpost.com/entry/employee-happiness-intellectual-stimulation-money_n_3948466
[2] https://sites.psu.edu/leadership/2017/03/27/famous-transformational-leaders/
[3] https://sloanreview.mit.edu/article/the-leadership-challenge-a-call-for-the-transformational-leader/
[4] https://www3.nd.edu/~jthomp19/AS300/1_Fall%20Semester/27%20Sep/Full_Range_Leadership_V1.pdf
[5] https://www.langston.edu/sites/default/files/basic-content-files/TransformationalLeadership.pdf
[6] https://www.hrmagazine.co.uk/article-details/millennial-workers-prefer-transformational-leaders