In John F. Kennedy’s 1961 inaugural address, he challenged Americans to “ask not what your country can do for you; ask what you can do for your country.”

His call to action, which rallied Americans around a vision and a higher ideal, was an expression of transformational leadership.

What Is Transformational Leadership?

A leadership style in which leaders motivate followers to transcend their immediate self-interests and accomplish more than what is expected of them. Transformational leaders are often charismatic visionaries, inspiring followers to achieve higher levels of performance by attending to their needs and appealing to their values and beliefs, rather than influencing them with external rewards.

Transformational leadership focuses on enhancing the motivation and morale of followers, and developing them as people, to influence them into action.

It’s the kind of leadership we naturally think of when we imagine heroes and icons throughout history, whether in sports, politics or business.

But what is transformational leadership, really? And how can managers and aspiring leaders practice it today?

More on LeadershipWhat Is Leadership, Really?

 

What Is Transformational Leadership?

Historical Background

Political sociologist James Burns introduced transformational leadership as a formal concept in his 1978 book Leadership, in which he linked the success of various world leaders to their ability to connect with followers and lift their spirits.

Burns described transformational leadership as a process where “leaders and followers raise one another to higher levels of morale and motivation.”

Leadership studies scholar Bernard Bass expanded Burns’ conception of transformational leadership in the mid-1980s and applied it to organizational management.

In this framework, transformational leaders cast an inspiring vision for their organization, build trust with their employees and motivate them to go above and beyond the punch-in, punch-out mentality.

 

Transformational Leadership Versus Transactional Leadership

Transformational leadership is perhaps best understood when contrasted with a different leadership style, called transactional leadership.

Here’s how Bass described the difference between the two: “Whereas transformational leaders uplift the morale, motivation and morals of their followers, transactional leaders cater to their followers’ immediate self-interests.”

In other words, transformational leaders persuade people to pursue a vision, while transactional leaders give people rules and contingent rewards. Transformational leaders create trust, while transactional leaders use a carrot and stick.

Transactional leadership can take various forms. It’s the boss who promises, “If you surpass your quota, I’ll give you a raise” or the manager who says, “I’ll monitor your progress and correct you if you fail to meet standards.”

Motivation and inspiration aren’t necessary in order for transactional leadership to work. What it requires is consistency on the part of the leader — by meeting expectations and doing what they say they will do.

Transactional leadership was popular in the first several decades of the 20th century. During this time, managers had a greater need for worker compliance, predictable outcomes and operational efficiency, while employees wanted clear goals, steady pay and job security.

“[Transformational leadership] was developed in response to workplace needs and workplace concerns.”

That changed when a more diverse and educated pool of professionals entered the workforce by the 1970s and 1980s. Workers started to expect more from their jobs. They wanted autonomy and challenge, and they wanted to feel both supported and inspired by their bosses.

Transformational leadership “was developed in response to workplace needs and workplace concerns,” said Suzette Bryan, a leadership consultant and lecturer at the Naveen Jindal School of Management at the University of Texas at Dallas.

By this point in time, “the whole command and control idea was not very effective,” she said.

The political and economic landscape of the 1980s was such that it needed “change agents,” Ochieng Walumbwa, a professor and chair at Florida International University’s College of Business, said. “Leaders that would come and inspire people to take it to the next level.”

That said, it’s not the case that transactional leadership fell out of favor because it’s necessarily “bad” and transformational leadership replaced it because it’s necessarily “good.”

Leaders don’t have to be transformational all the time in order to be effective, Walumbwa said. In some instances, like at the beginning of a manager-employee relationship, taking a hands-off approach (called laissez-faire leadership) or disseminating instructions and laying down rules (transactional leadership) may be a more effective approach than giving a pep talk or appealing to employees’ intrinsic motivation (transformational leadership).

 

The 4 Components of Transformational Leadership

Transformational leadership is commonly thought of as having four main components, known as the four I’s:

  • Idealized influence
  • Inspirational motivation
  • Intellectual stimulation
  • Individualized consideration

Here’s what each one looks like in action.

 

Nelson Mandela calls for the end of apartheid upon his release from prison. | Video: NowThis News

Idealized Influence

Idealized influence refers to a leader’s ability to act as a role model other people want to emulate. They are charismatic, reliable and morally strong, which earns them the trust, respect and admiration of followers.

Consider the charismatic and influential presence of Nelson Mandela, the activist and first non-white president of South Africa who united the nation to end apartheid. In the video above, he gives a winsome presentation of his vision of civic reform and invites listeners to join him in his efforts.

 

PepsiCo CEO Indra Nooyi describes the company’s commitment to “performance with purpose.” | Video: Fortune

Inspirational Motivation

Inspirational motivation describes the way leaders articulate a compelling vision for their organization and rally followers around it. They set high expectations and instill a sense of team spirit that energizes followers to accomplish them.

When Indra Nooyi took over as PepsiCo’s CEO in 2006, she knew she had to communicate a higher purpose for the organization so employees were excited to come into work. So, she changed PepsiCo’s portfolio to include healthier products and focused on making the company more environmentally conscious. She labeled this vision for the organization “performance with purpose.”

 

Netflix founder Reed Hastings explains why employees shouldn’t please their bosses. | Video: The Economist

Intellectual Stimulation

Leaders who practice intellectual stimulation solicit ideas from their followers. They give followers support to be creative and innovative at work, and encourage them to think outside the box and try new approaches without fear of repercussions. Under intellectually stimulating leadership, followers are encouraged to think for themselves and challenge widely accepted beliefs.

Take Netflix CEO Reed Hastings as an example. In his book, Hastings said that workers are given the greenlight to implement ideas they like, even when their managers don’t. That way, the smartest ideas rise to the top.

 

Ford CEO Alan Mulally is known for using individualized consideration. | Video: Leadership Freak

Individualized Consideration

This component of transformational leadership is when leaders listen carefully to the individual needs of their followers, demonstrating that they care about them as people, not producers. They often adopt the posture of a coach or an advisor, developing employees and giving them the support they need to grow and become more autonomous.

Alan Mulally is credited with turning around the Ford Motor Company during his tenure as CEO from 2006 to 2014. He not only fixed the company’s balance sheets from a financial perspective, but he also changed its culture into one where managers lead from humility and ask struggling employees, “What can I do to help you out?”

More on LeadershipHow the Best Leaders Talk

 

Is Transformational Leadership Effective?

Transformational leadership isn’t without its critics (more on that later), but in the more than four decades since it became a formalized concept, it has been shown to be effective.

 

Employees Prefer Working for Transformational Leaders

Employees like working more for managers who are more transformational, according to a 2014 article published in the Leadership & Organization Development Journal.

Another study, which examined 447 employees from a multinational company going through a merger, found that transformational leadership behaviors were positively linked to job satisfaction and performance.

 

Employees Are More Engaged by Transformational Leaders

One study looked at 42 employees and their managers in two different companies in the Netherlands. The researchers of the study found that employees approached their work with more vigor and dedication when their managers used a transformational leadership style.

 

Transformational Leadership Helps Reduce Turnover and Burnout

One survey, which collected data from 308 telecommunications employees, found that transformational leadership had a strong, positive relationship to employees feeling less fatigue and emotional exhaustion and who were more intrinsically motivated to do their work and participate in their organization.

 

Transformational Leadership Boosts Business Performance

Transformational leadership is said to have an “additive effect.” That is, under transformational leadership, followers are more likely to perform above and beyond what is expected of them. And with that often comes improved business performance.

 

Transformational Leadership Works Across Cultures

Transformational leadership’s efficacy isn’t limited to certain cultures or contexts. There’s a universality to it.

“We have documented evidence that it works across cultures,” Walumbwa, the Florida International University professor, said. “Some of those behaviors are really critical, not only in the United States or in the West, but those are things that are known to be critical almost everywhere around the globe.”

 

But It May Not Work Well With Millennials

Scholars found that transformational leadership may not be very effective with Millennial workers (people born roughly between the early 1980s and mid-1990s).

Managers may find it difficult to motivate Millennials through an idealized vision, the article’s authors suggest. The reason is that Millennials tend to give their careers a less-prominent place in their lives. Painting a compelling picture of a better future for the organization is less likely to galvanize them to go above and beyond at work.

 

The Dark Side of Transformational Leadership

Despite the positive effects of transformational leadership, it’s not without its shortcomings.

A common critique is that the theory tends to view leaders as charismatic visionaries whose time is best spent motivating followers and giving inspirational speeches.

But according to Suze Wilson, a senior lecturer in executive development at Massey University in New Zealand, this tendency foists unrealistic expectations upon people in leadership positions.

Managers regularly carry out administrative tasks and attend to operational duties that are unglamorous but necessary for the business to function. Transformational leadership theory encourages managers “to see that work as somehow beneath them,” Wilson told Built In. 

“All of this discourse about ‘transformational: good,’ ‘transactional: bad,’ can have a really distorting and disruptive effect,” she added. “It can make managers who are actually doing a pretty good job [feel] inadequate because they don’t have a great vision, they’re not charismatic.”

“The temptation of a successful transformational leader over time is that they actually become toxic. … What started off as transformational leadership can actually go awry.”

Not only that, but transformational leadership is sometimes said to put leaders on a pedestal, portraying them as heroes who alone hold the keys to large-scale social and organizational change. This conception exacerbates a power imbalance. It makes followers vulnerable to idolizing their leaders, and tempts leaders to indulge their narcissism. This mixture can lead to abuse of power in relatively short order. (Bass termed this sort of behavior “pseudo-transformational leadership.”)

“The risk of this being quite exploitative or manipulative is quite high,” Wilson said. “The temptation of a successful transformational leader over time is that they actually become toxic. … What started off as transformational leadership can actually go awry.”

Wilson pointed to recent research on a phenomenon called Hubris Syndrome, which contends that the longer people are exposed to feelings of power, the more corrupted and blinkered by their own sense of self-importance they become.

This dynamic has played out in recent years, perhaps most notably in the cases of a few tech startups.

“There have been some very charismatic, on-the-stage, bright-lights leaders in the last couple years that have flamed out,” said Edward Sullivan, CEO of Velocity Group, an executive coaching firm. “They were selling a vision and running purely on charisma, and not actually creating the connections required to build long-term loyalty.”

Here are three cautionary examples to consider.

 

The Case of Adam Neumann (WeWork)

Adam Neumann, founder of co-working company WeWork, exhibited many of the characteristics of a transformational leader. He exuded charisma and passion, and often spoke in grandiose terms.

Whenever Neumann spoke about his company, “it sounded revolutionary,” the New York Times wrote. “As more people bought into his vision, WeWork’s value kept soaring.”

The rise and fall of Adam Neumann at WeWork. | Video: Bloomberg Quicktake

Behind the scenes, WeWork’s business fundamentals were far from sound. The company burned through cash at an incredible rate, even as Neumann made lofty promises.

Neumann led WeWork to a $47 billion valuation in 2019. But within a year, the company lost the majority of its value and barely escaped bankruptcy. It let thousands of rank-and-file employees go unceremoniously, but Neumann walked away with a hefty exit package.

 

The Case of Travis Kalanick (Uber)

Travis Kalanick is another recent example of a leader who appeared to be transformational, but whose story now serves as a cautionary tale for other startup executives.

Kalanick founded rideshare startup Uber in 2009, laying the foundation for what ultimately became the modern gig economy. By 2017, Uber was the most valuable startup in the United States.

By many accounts, Kalanick led Uber like a natural salesman: self-assured, confident, persuasive, an “excellent storyteller” who is “inspirational” and “busts his ass.”

The rise and fall of Uber CEO Travis Kalanick. | Video: Bloomberg Quicktake

At the same time, though, Kalanick reportedly fostered an aggressive, cut-throat culture at Uber. He encouraged employees to step on each other’s toes, which led to people undermining their supervisors to ascend the corporate ladder.

During his tenure as the company’s CEO, he became embroiled in several controversies, from being caught berating an Uber driver to bragging about his sexual conquests to GQ magazine. And he was accused of letting “toxic sexism” run rampant under his watch.

Uber became such a toxic work environment for many people that those who left the company said they had a difficult time securing their next job because of its reputation. Some former employees told The Guardian they had to convince recruiters they weren’t “an asshole” for having worked there.

 

The Case of Elizabeth Holmes (Theranos)

Elizabeth Holmes became the U.S.’s youngest self-made female billionaire. Her healthtech company, Theranos, claimed it could quickly run hundreds of medical tests with a single drop of blood.

This revolutionary claim attracted both talent and investors. Holmes grew Theranos to 800 employees at its peak. And the company landed a $9 billion valuation, bringing onboard high-profile investors like media tycoon Ruport Murdoch and Oracle founder Larry Ellison.

Elizabeth Holmes had employees and investors convinced that Theranos’ technology worked. | Video: ABC News

“She possessed many of the classic characteristics that we normally associate with charismatic leaders,” Linda Neider, who chairs the management department at the University of Miami business school, told [email protected]. “A captivatingly optimistic vision of the future, an exceptionally high confidence level and adept communication skills marked by the ability to modulate her voice and mesmerize others with her piercing eye contact.”

Ultimately, though, Theranos’ technology didn’t work, and Holmes’ deception led to a trial. In 2022, she was found guilty of conspiring to defraud investors.

 

Ways to Avoid Becoming a Pseudo-Transformational Leader

Wilson offered a few points for how transformational leaders can avoid using their influence in exploitative or unethical ways.

  • Leaders should find a sense of mission and purpose that is bigger than themselves, “that takes them beyond ego and orients them around a [noble] cause.” On this point, Wilson said that leadership training and development is important and can play a role. Colleagues and mentors should encourage leaders to find their sense of purpose.
  • Leaders should “learn the practice of reflective thinking and instill it as a discipline.” Another way of putting it: Leaders should be intentional about noticing how their behavior affects others.
  • Leaders should surround themselves with people who think differently than them, and ensure they feel safe challenging the leader. “The more we can actually encourage low-ego behavior from leaders, the better,” Wilson said.

More on LeadershipWhat Is Ethical Leadership?

 

How to Become a Transformational Leader for Today

“In these uncertain times” has become such a ubiquitous sentiment over the past couple of years that the phrase has become a meme.

But there’s truth to it: Between the pandemic, social unrest and workforce upheaval, leaders of organizations have their work cut out for them, especially when they’re trying to transform a business.

Here are a few ways transformational leaders can face the workplace challenges of today.

Tips for Becoming a Transformational Leader

  • Build trust by focusing on people first.
  • Set a clear vision of the future.
  • Foster a culture of nonconformity.
  • Practice servant leadership.
  • Serve others.
  • Create a sense of psychological safety.

 

Build Trust by Focusing on People First

Juan-Carlos Pastor, associate professor of human resources and organizational behavior at the International University in Spain, said that the key for aspiring transformational leaders is the cultivation of trust between leaders and their followers.

“To transform people, they need to trust you. For people to trust you, they want to see that you care about them,” he said. 

During the pandemic, Pastor has seen leaders become really sensitive to how their people are feeling. It’s a way they can build a foundation of trust so that, “when the pandemic is over, people will be ready to follow you and go for your vision.”

“To motivate people in these times, maybe you need to focus less on the task,” he said. “That’s probably secondary to [asking] ‘How are you feeling?’ ‘How are things going?’”

 

Set a Clear Vision for the Future

Employees have experienced lots of uncertainty lately. Bill Pullen, academic director at Institute for Transformational Leadership at Georgetown University and president of BPA Coaching and Consulting, said people are experiencing “change fatigue,” and it’s on leaders to give them a sense of security.

“People are hungry for some sense of stability and certainty,” he said. “The most effective leaders are able to communicate a compelling future — where we’re going, how we’re going to get through this and what’s on the other side, while also helping people feel … like their feet are underneath them.”

 

Foster a Culture of Nonconformity

Haley Grayless, founder and CEO of workplace consultancy Växa Collective, said one of the best things leaders can do to create a healthy workplace is to “explicitly ask for divergent ideas — encourage it.”

Research shows that leaders who give their employees the space and safety to bring wild ideas to the table helps breed innovation.

Soliciting ideas from others — and letting them challenge your ideas without fear of retaliation — is key for transformational leaders who want both to create an engaged environment and avoid the echo-chamber thinking that often plagues companies.

 

Serve Others

Servant leadership is its own leadership style, but aspiring transformational leaders can heed some of its basic principles.

Brandon Randolph-Seng, associate professor of management at Texas A&M University-Commerce, thinks servant leadership is an appropriate approach for today’s context, in which employees want to work for leaders with empathy.

Servant leadership has three main components, Randolph-Seng said:

  • Prioritize service to others — stakeholders, not shareholders.
  • Put employees first and help them feel empowered.
  • Have integrity and be transparent.

“You have to be flexible, you have to change, maybe even on the same day,” Randolph-Seng said. “And so changing always in the interest of the relevant stakeholders is the goal of a servant leader.”

 

Create a Sense of Psychological Safety

Sullivan, who runs the executive coaching firm, believes that leaders can set the right emotional tone for the rest of their organization by creating an environment where people feel safe bringing their whole selves to work.

Sullivan has seen this in action from a leader he coaches. This leader has demonstrated vulnerability and authenticity with his team during the pandemic, Sullivan said. They have been open about their struggle with isolation and disconnection, and even encouraged breakout groups where employees were invited to do the same.

“That creates an opening for others to connect with each other. And the connective tissue between the entire organization [gets] a little bit tighter,” he said. “People feel unified around a shared experience.”

When employees feel psychologically safe, they are able to be led feeling like someone’s in their corner, not hovering over their shoulder. And that’s the sort of environment where true transformation occurs.

Great Companies Need Great People. That's Where We Come In.

Recruit With Us