What Is Transformational Leadership? Definition and How to Apply It

By Drew Moffitt

Change can be challenging, especially for a business or organization with well-established practices. Individuals and groups tend to prefer the status quo rather than taking the risks required to change. Transformational leadership can drive change by building momentum to overcome these tendencies.

Personal changes, such as improving focus at work, require discipline, determination, and inspiration. In a group setting, like an office, everyone must act to bring about change. Employees must agree that the changes are beneficial, buy into the plan to bring about those changes and be motivated to take action, even when challenges arise.

A transformational leadership style blends planning and convincing group members to apply the changes by inspiring and rallying them to overcome the roadblocks hindering the planned advances.

The importance of transformational leadership in today's business world

Change is the one constant in today's business world. Technology has taken operations from analog office settings into a connected digital environment. In the past few years, companies have transitioned from in-person operations to digital offices, with people working remotely some or all of the time.

This change was necessary because of the COVID-19 pandemic, and it highlights the importance of transformational leadership. Companies with workers who could not adapt to the new conditions did not survive.

The rate of change continues to accelerate with the adoption of new technology, automation, and other advancements. Companies that do not develop may not be competitive in their industry.

Transformational leaders who can drive new developments may be essential to their company's future success.


What is transformational leadership?

Transformational leadership focuses on more than just bringing about operational or strategic changes. It is about inspiring employees to make positive changes that benefit themselves and the larger group.

Managers and team leaders with a transformational leadership style often take a positive approach. They rely on enthusiasm and passion to inspire their employees and create a supportive, well-structured environment where team members can take the necessary actions to bring about beneficial changes.

The origins of transformational leadership

The practices that define transformational leadership have been practiced throughout history. However, the concept of transitional leadership theory was first described in modern times by a presidential scholar named James MacGregor Burns. He was the first to describe a leadership style focused on inspiring individuals and groups to make changes for the good of the entire organization.

Others expanded on this definition over the decades, saying that transformational leaders had a positive style that garnered the respect, admiration, and trust of those under them. These qualities made it easier for them to inspire and convince employees to buy into their plans and goals for the company.


The key components of a transformational leadership style

Each leadership style has its own traits and characteristics. Transformational leadership might seem complicated to define on the surface because its leaders have passionate, enthusiastic, and likable personalities. However, this leadership method is about more than personality. Four key qualities make up transformational leadership theory.

The four "I"s of transformational leadership

You can break down transformational leadership into four distinct traits, known as the Four I's

  • Idealized influence: Any leader needs to be able to influence others to take specific actions. Transformational leaders often exemplify the enthusiasm, passion, and persistence they want others on their team to display. In other words, they provide an example of the ideal transformational mindset. Of course, influence also requires charisma and excellent communication skills.
  • Inspirational motivation: Transformational leaders are experts at motivating employees to make necessary changes. They typically keep motivation positive. For example, this type of leader rewards good performances, praises enthusiasm, and encourages effort. These traits help encourage employees to participate actively in company meetings and provide insights that could prove valuable during changes.
  • Intellectual stimulation: Transformational leaders do not expect others to simply fulfill their orders. They involve everyone in the decision-making process and encourage creativity and participation, helping employees feel engaged and valued. They understand that they can influence the direction of the company with their input and are free to think creatively and independently.
  • Individualized consideration: Transformative leaders guide the company or team toward new goals and changes. However, this leadership style also requires individual attention. Employees need to have the necessary support and environment to perform at their best. The leader engages with each team member to discover their needs and understand how they work and communicate. 

All four I's focus on getting the best performance and the highest level of engagement and investment from each member of the team. Without these qualities, each employee might focus on being productive and contributing only when it is in their interest to do so.


Other characteristics of transitional leaders

Transformational leaders take additional steps to bring about the desired level of engagement, enthusiasm, and performance from team members.

  • Role modeling and integrity: Transformational leaders provide examples that employees can follow. However, the example that you provide in a leadership role needs to be authentic. You cannot simply act enthusiastic or engaged when others are watching. You must have the integrity to maintain your mindset, enthusiasm, and willingness to collaborate.
  • Building trust and credibility: All leaders need team members to trust their decision-making and plans for improving the company. On a basic level, this means displaying the skills and knowledge necessary to make good decisions and lead effectively. In addition to this professional credibility and managerial competence, employees need to trust that you value their contributions and won't criticize or punish creative solutions or out-of-the-box thinking.
  • Setting a compelling vision: Transformational leadership requires having a vision of a better future for your organization. However, coming up with the plan is only half the battle. You also need to communicate your vision in a way that convinces everyone else to join the effort. Your plan must be compelling, and your team must also think it is realistic and achievable.
  • Encouraging enthusiasm and optimism: Transformational leaders create positive work environments. You can actively encourage team members to be excited about achieving goals and engaging in improving the company. This effort will create a general sense of positivity that could promote further engagement and effort and help everyone feel optimistic about the future. This trait can boost morale throughout the workplace and make workdays more enjoyable and positive for the entire team.
  • Promoting creativity and innovation: Transformational leadership theory encourages input from everyone involved in a team. You can ask for solutions and reward workers who think independently and devise different ways to accomplish goals and overcome problems. Creativity only thrives in an environment where mistakes and failures are not punished. Therefore, you must avoid unconstructive criticism when someone's ideas do not work as expected.
  • Encouraging critical thinking and problem-solving: Transformational leaders can help team members succeed by encouraging them to be critical of their solutions and ideas to see if they solve specific issues or provide desired benefits. Soft skills like critical thinking and problem-solving will help employees feel more confident about making contributions and communicating them effectively when you ask for solutions.
  • Personalized support and coaching: A transformational leadership style seeks to take advantage of each worker's unique qualities and attributes. Rather than asking every employee to fit a specific mold, you can offer personalized support and guidance that helps them develop these strong points so that they can bring unique insights and skills to the team.
  • Fostering growth and development: The overall goals of a transformational leader involve improvements to the company or team. However, individual growth can help drive these larger developments. Formal or informal training will help workers bring more value to both the company and their careers. 

These components combine to create a leadership style that is unique compared to other management approaches.


Transformational leadership vs. other leadership styles

Transformational leadership is often contrasted with transactional leadership and likened to servant leadership.

Transactional leaders set goals for their employees and reward them for achieving the goals. In some instances, these managers may punish or demote people who do not meet the required aims.

Transactional styles work best when a company has proven processes and does not need to change them, whereas success requires repeating proven methods and reaching well-defined benchmarks.

This style directly contrasts with transformational leadership, which values individual development, participation in problem-solving and decision-making, and creativity. The company culture is built around these invested and engaged employees.

Servant leaders support the development of their employees, giving them the individual skills to achieve results for the company. Transformational leaders also focus on providing support and seeking input from their workers. However, they focus primarily on professional development that will ultimately benefit the company and help the group reach its collective goals.

When is transformational leadership most effective?

Transformational leadership is most effective when a company is struggling with employee performance, in a period of stagnation, or struggling to compete with others in their industry. This management style can spur innovation and provide the framework for significant changes to operations.

Transformational leaders can also assist companies suffering from low morale. The focus on getting employees to buy into a new set of goals and to participate in shaping these changes can positively affect attitudes in the workplace.


Benefits of transformational leadership

The advantages of transformational leadership vary depending on the current state of a company or department. However, in most cases, it brings three distinct benefits to every organization.

  • Increased employee engagement and satisfaction: Employees will feel more engaged and valued if you successfully apply transformational leadership theory. They will have the opportunity to participate in innovations and feel free to pursue creative or unusual solutions. Increased job satisfaction could result from feeling this new people-first approach to work.
  • Higher levels of innovation and creativity: Because they are free to innovate, experiment, and make suggestions, this leadership style can lead to significant changes to company operations and processes. Because these innovations focus on achieving specific goals, they can push the company forward and transform previously weak areas into strengths.
  • Improved organizational performance: Better morale, more engaged employees, and innovations can improve overall performance. Transformational leadership focuses everyone on specific goals, so it is easy to measure the success of transformational efforts.

These benefits are most evident in companies needing to make significant operational changes or improve employee morale.

How to apply transformational leadership principles

The first step in applying transformational leadership is to assess your current management style. If your office meets its goals and employee morale is high, there may be no need to change. If you aren't sure about the level of job satisfaction, you can seek input from employees by talking to them or collecting input via an anonymous survey.

If you decide that changes are necessary, you can adopt office practices and behaviors aligned with transformational leadership. This step may take time. For example, if you ask for innovative ideas from employees, some may be reluctant to offer anything. Perhaps the office previously operated under a transactional leadership style, and employees do not have enough trust to provide creative solutions.

Rewarding and praising participation and innovation should eventually shift employees' attitudes and give them the comfort level needed to offer ideas and fully engage their creativity.

You can also offer professional improvement opportunities and support those who want to learn new skills or test their ideas and innovations. Eventually, this shift in values and focus will lead to a new culture where these practices become normal for employees.


Challenges and criticisms of transformational leadership

Potential pitfalls could limit the success of this leadership style.

Some employees may need more direction and oversight. By its nature, transformational leadership lacks the checks and balances of other management styles. Employees could get off track and work on solutions or tasks unrelated to the company's overall goals.

Another issue is a lack of communication. Transformational leaders walk a fine line between guiding employees as they try to innovate and stifling creativity by micromanaging activities. An inability to communicate goals and provide broad direction for employee efforts can lead to unfocused efforts or innovations that aren't useful. Effective meetings and regular check-ins can help avoid this issue.

Other potential drawbacks include employees without the skills to contribute to office transformations, favoritism for certain employees, and disagreements and rivalries between employees invested in innovations.

Success stories: transformational leadership in action

There are several examples of successful transformational leaders throughout history.

  • Henry Ford ensured his employees had livable wages and challenged everyone from designers to factory sweepers to contribute to the success of the company.
  • Netflix founder Reed Hastings relied on out-of-the-box thinking from employees to create a company that challenged existing brick-and-mortar movie rental stores and eventually pioneered content streaming.
  • Charismatic entrepreneur Richard Branson developed a diverse range of companies by focusing on his strengths and relying on others’ creativity and skill to handle aspects of the business that were outside his skill set.

Tips for transitioning to a transformational leadership style

Transformational leaders are often known for their charisma and enthusiasm. However, you can craft a style that includes all the traits of a transformational leader regardless of your innate personality characteristics.

  • Start by assessing your current leadership style and skills. Do they align with those of a transformational leader? What areas do you need to change?
  • You can seek feedback from peers, senior people within your organization, or other leaders whom you admire. They may have insights about developing specific traits, such as communication skills, needed for this leadership style.
  • The development of your transformational leadership skills is an ongoing process. You can constantly assess your performance, decisions, and actions to look for areas for improvement. 

You can also seek feedback from employees about what they need to feel engaged, valued, and supported.

Adopting a transformational leadership style

Transformational leadership theory focuses on creating well-defined goals and then developing a culture of engagement, innovation, and improvement. The changes that take place under a transformational leader are driven by engaged employees who are empowered to improve and think creatively.

If you run a company suffering from poor morale, if employees are not engaged or enthusiastic, or if you are struggling to compete and innovate, a transformational leadership style could be a game-changer to reinvigorate your office.


What is transformational leadership?

Transformational leaders set clear goals for their company or team and then encourage employees to actively engage in reaching these aims by taking innovative and creative steps.

What are the four elements of transformational leadership?

The four elements are idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration.

Which type of leadership is most similar to transformational leadership?

Servant leaders are the most similar to transformational leaders because both focus on support, development, and encouragement.

Why is transformational leadership important?

Transformational leadership can drive change, improve morale, and expedite improvements by seeking employee innovation.

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Headshot for Drew Moffitt
Drew Moffitt

Drew leads marketing at Kumospace. Prior to joining Kumospace, he spent his career founding and operating businesses. His work has been featured in over 50 publications. Outside of work, Drew is an avid skier and sailor. A wholehearted extrovert, he organizes VentureSails, a series of networking events for founders and tech investors.

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