being transactional or transformational. Transactional leadership suggests that leaders respond to lower level subordinate basic and security needs (Deluga & Souza 50). 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 action 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 (Matey 600).
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 (Matey 601).
Under charisma/inspirational approaches, the leader demonstrates a high degree of popularity or celebrity status and is held in high esteem by peers, subordinates and superiors alike. Typically, the charismatic leader is also visionary, courageous, value driven and serves as an agent of change within the organization. Transformational leaders who use individual stimulation exhibit a high level of awareness of current employee problems. Ways in which this awareness is created include life experience, the ability to handle ambiguity, the ability to handle complexity and uncertainty, and the demonstration of intellectua...