Transactional vs. Transformational Leadership: a free patagonia vs. a strong company vision

During my first week of training at AlphaSights, I immediately noticed the use of both transformational and transactional leadership. During my theories and models class, we discussed how the best leaders tend to be both transactional and transformational. While this seemed true in the examples we read about, this orientation week helped me understand how they can coexist and the different ways these two styles present themselves. Transactional leadership focuses on contingent reward whereas transformational leadership works to inspire followers to internalize the group cause. Our orientation consisted of around 8 speakers a day for 5 days. So, I was able to explicitly see both of these theories in action throughout my week.

When we showed up on the first day, our desks were covered with a gym bag, patagonia, water bottle and computers. The first speaker we had gave us a high-look overview of what to expect this summer and was extremely transactional. She told us that AlphaSights was going to do everything in their power to make this a great summer, whether this be through free “swag,” fun office events, or a dedicated personal development team. In return, we were expected to work hard and generate revenue for the company. She explained that our earnings would be tracked through a credit system. Further, we were all told about a contingent reward for high-performing interns: a full time job offer. During this first talk I immediately saw the goal-driven nature of the company and their use of transactional leadership in motivating interns to succeed. If we wanted a reward of receiving a full time offer, we were told we had to work hard and have results to back this work.

This first talk, however, differed from many of the other sessions that we heard. When the founder of AlphaSights came to talk to us, he took a much more transformational approach. He talked to us about what it means to have your first real job and the impact that succeeding can have on the rest of your life. Interestingly, he explained his own perspective on what this job signaled: us shifting from being consumers of society (children, students) to being producers. This idea was something I had never really thought about before his talk. He was charismatic, humble, and provided inspiration for why we should try to be the best interns possible this summer. He explained the opportunity we have to make an impact on the organization by hi-lighting the different ways we could voice our ideas and the importance of our work. I gained a true understanding of what the vision of this company was and the impact I could make if I worked hard. It gave me an intrinsic desire to succeed. This was a stark contrast from getting lectured about performing well if we want to get an offer.

In theories and models class, we learned that transactional and transformational leadership correlate at r=.8. This means that a leader is more effective when they have both. From a holistic perspective, AlphaSights as a company takes both a transactional and transformational approach. They assign you mentors to work on your personal development, but these mentors still track success in terms of how much revenue you bring in. The founder’s speech had me inspired, but I was given an extra layer of motivation to work hard because of the potential offer presented by the first speaker. I think this backs the claim that the most effective leaders are both transactional and transformational. As a company, AlphaSights seems to embody both these leadership styles. However, when individual leaders only used one style I found them to be less effective. I believe employees, like myself, will be more likely to succeed if our leaders are both transactional and transformational. Then, if I ever feel like the work is mundane, I can focus on the rewards associated with my job. These rewards can then be supplemented by, for example,  having mentors who focus on helping us succeed. So, the next time I am dreading waking up at 6 am for work, the combination of transactional and transformational leadership from my orientation week will serve as inspiration to work hard!

One thought on “Transactional vs. Transformational Leadership: a free patagonia vs. a strong company vision

  • Nice reflection and good examples to illustrate transactional/transformational and the complimentary way in which the two work together. As the internship continues, may want to note whether – in the day to day – one (transactional/transformational) if favored or employed more than the other.

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