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What Is Transformational Leadership Theory?

July 15,2020 Leadership
Kaya Ismail
By Kaya Ismail

Leadership has an enormous impact on the success of an organization, from employee engagement to customer satisfaction. That’s why Infopro Learning found that 83% of enterprises believe it’s important to develop leaders at all levels of the company.

But how do organizations develop great leadership? We’ve asked leadership experts what transformational leadership theory is and how companies can instill it into their C-suite.

What is Transformational Leadership Theory?

In the past, many leaders have used a transactional management style that rewards and punishes certain behaviors. But transformational leadership theory has emerged as a way to understand the unique qualities of a motivational leader. “It fits closely with a democratic leadership style, with a focus on motivation and transforming the entire group from within,” said Vanessa Keating, founder of Ojai, Calif.-based Evolve Creative.

“Transformational leadership is a leadership style used by managers and other influential figures that emphasizes vision, empowerment and support to inspire followers toward action and change,” said Kara Fasone, talent development manager at Chicago-based Kin + Carta. And according to transformational leadership theory, there are four key characteristics of an influential leader.

  1. Intellectual Stimulation: “Transformational leaders encourage followers to innovate and to form new ideas for the organization and themselves,” Fasone said. For example, leaders can create a work environment that’s more open and collaborative, which helps employees achieve new goals. Transformational leaders are highly creative and challenge the status quo, Keating said, shaking things up in order to get employees more engaged and encourage them to come up with unique solutions to company challenges. “Team members are encouraged to explore new approaches to old systems as well as welcome opportunities to learn and grow in the process,” she said.
  2. Individualized Consideration: “Transformational leaders oftentimes adopt the role of a coach,” Fasone said, “actively working to know each of their followers as individuals and providing proactive feedback to guide growth and development.” By acting as a mentor, leaders encourage managers and employees to support each other as well. That way, teams can share ideas and recognize unique contributions from each member of the group.
  3. Inspirational Motivation: “Transformational leaders take time to understand where they are and where they are headed,” Keating said. They’re able to see the strengths and weaknesses of the entire organization and leverage them to achieve company goals. Moreover, the greatest leaders use motivational techniques like communicating transparently, setting a clear vision and recognizing accomplishments. “Passion and motivation are shared between leadership and team members,” Keating added, “as they move towards the goal as ‘one organism' or ‘one body’ together.”
  4. Idealized Influence: Transformational leaders should “embody the energy and focus needed to move forward and serve as a role model for the team,” Keating said. Leaders have substantial influence over the company culture so it’s crucial they present positive qualities that fit the organization’s values and goals. “Team members are able to trust and respect the leader,” Keating continued, “they easily emulate this individual and internalize the ideals the leader has set for the organization.”

Related Article: Technology Leaders Lead Innovation by Seeing Around Corners

How Companies Can Instill Transformational Leadership

Getting a company’s C-suite to adopt the qualities of transformational leadership requires clarifying its importance. “Transformational leadership has been well-studied and has been shown to have a direct impact on multiple desirable work outcomes,” Fasone said. Positive outcomes could include increased trust in leadership, higher employee engagement or enhanced innovation throughout the company. Companies need to help senior leaders understand the benefits or what Fasone terms WIIFM, or “What’s in it for me?”

Keating said training is essential for transformational leadership. “It would be advised that [companies] enroll a transformational business coach to work with the C-suite first,” she said, “grow the inherent leadership skills within each management team and then support the transition of this leadership style to the teams they lead.” By using a top-down approach to training, positive leadership qualities can spread throughout the organization.

But companies should extend their efforts beyond training. “While workshops and training programs can be effective when designed, communicated and facilitated correctly, they're oftentimes not sufficient for cementing key cultural changes,” Fasone said. Companies need to move beyond the knee-jerk reaction of implementing training and find ways to integrate the principles of transformational leadership into their organization’s core values.

In the end, Keating said transformational leaders can not only “transform the trajectory of their business, motivate their teams, but also transform themselves for the better in the process.”

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