Leadership is often emphasized in today's business press as being a critical success factors for individuals in organizations. Effective leaders are needed at all levels of the organization, yet it is often difficult to define what separates effective leaders from those less effective. This research considers the nature of leadership, characteristics of effective leaders, how organizations can develop leaders, the differences among leaders at various organizational levels, and how leadership is affected by and affects the new business realities.
Transactional leadership suggests that leaders respond to lower level subordinates' basic and security needs (Kouzes, 2003). Leaders and subordinates are viewed as bargaining agents where relative power regulates an exchange process as benefits are issued and received. There are two types of behavioral patterns used in transactional leadership: passive and active. The passive style is described as management by exception where employees do not receive notice for their positive contributions to the organization, but instead are paid attention by their manager only when an error or problem arises. Punishment or disciplinary acthon is often the medium used in this approach. Active transactional leadership uses contingent rewards. With this approach, employees are praised for their performance and may be eligible for pay increases or other incentives (Flannery, 1996).
Transformational leadership incorporates transactional leadership approaches, but moves beyond them. Here, the leader-subordinate influencing relationship is one where relative power is used to pursue organizational and personal goals. Three types of transformational leadership approaches have been identified: charisma/inspirational, individual stimulation and consideration for the individual (Flannery, 1996).
Under charisma/inspirational approaches, the leader demonstrates a high degree of popularity or celebrity...