Transactional vs. Transformational Change

Introduction

Transactional refers to working in accordance with predefined modes of operation; being more concerned about ensuring continuous, effective and efficient, daily functioning so that
"...ensuring seamless operations by establishing systems and processes in place and focus towards achievement of set targets..."
Prachi Junrja, 2022

It is more concerned with detail and daily operations while working within the existing institutional and structural arrangements. Some examples can include changes in minor rules and regulations; adjusting and fine-tuning processes and systems; staff retention; working with immediate problems. For example, during the pandemic (starting early 2020) staff absenteeism, supply chain issues, hybrid working, etc proved challenging.

While transformational change involves providing a vision that can influence and motivate others to achieve excellence in business performance; it is more about developing cohesive groups of people so that an environment of collaboration for achieving better performance is fostered rather than completion of daily operational tasks; it is more about the long-term viability
"...the focus is more on teambuilding, empowerment of employees, alignment of individual-organisational goals and culture building......motivating individuals to embrace the change for the better..."
Prachi Junrja, 2022

Some examples include changing business models; achieving sustainability; major technical changes like digitalisation, the Internet of things, etc; cultural changes like promoting diversity, etc; working arrangements (remote working), etc

Key functions of transformational leaders

- creating a vision (needs to be shared and communicated across the organisation to inspire and motivate people)

- setting an example ('walking the talk"; modelling good behaviour or a desired code of conduct)

- establishing standards (guiding staff through a desirable pattern of behaviour while working towards common goals through a collaborative approach)

- culture and climate building (developing a
"...climate and culture of mutuality, interdependence and flexibility......conducive organisational culture can motivate individuals for delivering performance excellence and exceeding expectations..."
Prachi Junrja, 2022

- external communications and liaising (establishing contacts with the external world, especially key stakeholders and strengthening relationships with them)

- teambuilding or synergy (
"...by building a motivational climate and creating a positivity in the work environment for completing tasks collaboratively..."
Prachi Junrja, 2022)

- talent acquisition and development (identifying the best talent and developing them with adequate training and support)

Disadvantages of transformational leadership

- with focus on  the bigger picture, you can miss detail. This latter area is a strength of transactional-orientated people who tend to be more organised and detail-orientated. Lack of detail orientation can result in missing significant things.

- over-reliance on
"...inspiration, passion and emotional aspects, which may lead to a neglect of the facts or realities through research, investigations or information gathering..."
Prachi Junrja, 2022