Transformational and Transactional Leadership in Economic Consulting

Leadership researcher James MacGregor Burns makes an important distinction between two types of leadership styles: transformational and transactional. Burns argues that some leaders “transact” with followers in order to get things done. Such transactions are typically aimed at satisfying the leader’s and the followers’ individual interests. In contrast to transactional leadership, some leaders engage followers not only to get them to achieve something significant but also to morally uplift and develop them. Transformational leaders are more concerned with the collective interests of their groups, organizations, or society.

For my alternative experience, I interviewed Faizan Ehsan Dogar, a recent UR graduate who currently works as an associate analyst for a multinational economic consulting firm and think tank called NERA (National Economic Research Associates). Faizan’s description of leadership at NERA reminds me of Burns’ distinction between transformational and transactional leadership styles. In conversation, Faizan describes his supervisor’s behavior towards him and his coworkers as combining both transactional and transformational styles but leaning more heavily towards the latter. One of the distinctive transactional features of leadership in NERA is that it believes in incentivizing its employees to work harder and to increase overall productivity. Hard work is rewarded, but slacking is not tolerated at all. Resultantly, a lot of Faizan’s exchanges with his immediate supervisors and upper-echelon managers involve strictly impersonal and mainly-transactional themes.

For the most part, however, Faizan’s description of NERA’s leadership would fit under the category of transformational style. This is largely because of the sort of work that NERA undertakes. NERA’s clients include government agencies, multinational law firms, billion-dollar businesses, and investment banks, to name a few. Hence, many of the projects that NERA undertakes are glamorous, high-risk, and have far-reaching consequences. For example, in a recent project, Faizan’s team worked with the economic research wing of a governmental agency in Europe in order to face some of the trade-related challenges caused by Brexit. Since the success of this project would have consequences at the global level, Faizan realized how important his individual efforts were to the success of the project at hand. This motivated him to work harder and to cooperate with his team members better. This could easily be construed as what Burns describes as the upliftment of followers through inspirational leadership. Granted that the inspiration here comes more from the stakes involved within the project, and not the immediate leadership within the organization, but transformational leadership is still an accurate metric to describe the organizational structure and dynamics within NERA.

Cited:

Burns, James M. Leadership. New York: Harper & Row, 1978.