Which leadership models are best for your organisation?

A single-point improvement in leadership effectiveness on a five-point scale drives the same increase in output as a 25% increase in the labour force or a 65% increase in invested capital. At a time when recruitment proves challenging and risk-averse investors hit many balance sheets hard, optimising your leadership makes more sense than ever.

But:

• 40% of UK workers are unhappy with the quality of leadership at work;
• 80% of UK workers have experienced bad management at some point in their career;
• 43% of UK workers have actively quit their role due to their manager.

Leadership development is an urgent challenge and a major opportunity. That starts with evaluating the state of leadership across your organisation, and identifying the leadership models that will best contribute to your strategic goals. 

In this article, we’ll explore the most common types of leadership, focusing especially on transactional versus transformational leadership models.

What are leadership models?

A leadership model is a best practice framework that guides how your leaders lead their teams, with the ultimate goal to get the most from your people.

Individual managers and leaders likely have their own leadership style based on their personality, traits and values. In contrast, a leadership model is an overarching structure that your managers and leaders operate within.

Leadership models are relevant for anyone in a people management position, from first-time managers to executives. Every manager should lead to unlock the best from your workforce.

Why do leadership models matter?

Leadership models matter because they empower your people leaders to be more effective. Great leaders are make-or-break for organisational health, impacting outcomes like productivity, engagement, retention, and ultimately business performance. For instance, best practice leadership drives an increase in organisational performance of 23% – but 56% of corporate failures in the UK are caused by ineffective management.

That’s why it’s so important to be proactive and intentional about developing your managers and leaders. This might involve equipping them to lead more effectively within a model that works for your organisation. Let’s look at some of the most common leadership models.

What are the most common leadership models?

One of the earliest theories of leadership came in 1939. The Lewin, Lippet and White study worked with school children and teachers to identify three leadership models:

• Authoritarian
• Democratic
• Laissez-faire.

This study had a significant impact on the science of leadership development, triggering mountains of research that impacts how modern organisations operate.

Moving beyond this early study, two of the most common leadership models today stem from the influential 1985 book, ‘Leadership and performance beyond expectations’ by Bernard Bass. Bass introduced the now-common models of transactional leadership and transformational leadership. Let’s unpick them.

Transactional versus transformational leadership models

Although transformational leadership is very much in the spotlight today, both transactional and transformational leadership models have advantages.

Transactional leadership: an overview

The transactional leadership framework is so-called because it views the leader-follower relationship as a transaction: employees receive compensation in exchange for good work.   

Transactional leadership is a practical, pragmatic and results-focused model that rewards desirable behaviour and punishes undesirable behaviour. In this model, employees aren’t seen as intrinsically motivated. Instead, leaders have a responsibility to closely monitor performance and provide external motivation through incentives (and disincentives).

Transactional leadership emphasises rules, processes, routines and structures as the proven path to achieving fixed and clear outcomes.

Is transactional leadership right for your organisation?

Transactional leadership can be highly effective when applied within the right workplace context. This type of leadership often suits big corporations with rigid organisational hierarchy, clear job roles, proven processes, and well-established structures that have been time-proven to deliver results. A good example could be large manufacturers or sales organisations (or the manufacturing and sales departments within organisations).

Now let’s explore the main alternative: transformational leadership.

Transformational leadership: an overview

Transformational leadership has become an increasingly popular framework over recent years, often seen as a path to navigating the changing world of work. For many organisations, stability is a distant memory:

• Brexit and the pandemic have accelerated disruption. 30% of UK businesses in manufacturing and wholesale and retail trade report global supply chain disruption.
• Competition has increased as disruptors challenge incumbents in every industry.
• The traditional full-time, office-based employment model has evolved, as organisations embrace new models like remote working.
• Employee expectations have evolved, especially among younger generations like Gen Z.
• New conversations are happening around purpose, inclusion and employee empowerment.

These conditions have been fertile soil for a new model of leadership – transformational leadership – to emerge, aiming to inspire change and innovation that counteracts these challenges.

According to Bass and Riggio in the classic 2006 book ‘Transformational Leadership’, transformational leaders ‘stimulate and inspire’ employees both to ‘achieve extraordinary outcomes’ and to ‘grow and develop into leaders’ themselves. They treat individuals as individuals, ‘responding to individual followers’ needs by empowering them and by aligning the objectives and goals of the individual followers, the leader, the group, and the larger [organisation].’

Unlike transactional leadership, then, transformational leadership thrives without rigid structures, processes or hierarchy. It’s an empathetic and empowering framework that aims to inspire intrinsic motivation around a sense of alignment and purpose with long-term organisational goals.

Is transformational leadership right for your organisation?

Transformational leadership is often a great natural fit for purpose-driven organisations that are comfortable navigating with more fluidity. It’s also an effective type of leadership for organisations, or teams, where creativity is critical.

Good ideas often happen outside imposed restraints like a hierarchy. Transformational leadership can help create a culture where everyone can freely contribute and where failure isn’t punished but encouraged as the path to success.

Developing a leadership model that works for your organisation

The transformational leadership model might feel unattainable for large, complex, global organisations. Likewise, the pace of growth in many start-ups and scale-ups might make the hierarchies and processes of transactional leadership feel unattainable.

But according to Bass, organisations can simultaneously exhibit elements of both types of leadership, so a mix-and-match approach might be a shallower entry-point. Roll out change in increments by identifying specific teams or departments that would naturally be better suited to a specific leadership model, and mapping the current state.

Then work with the leaders within those areas in a focused, targeted way. L&D and talent acquisition should work together to ensure you’re hiring and developing the right skills, and upstream managers of managers should be coached to bring new skills into performance evaluation. The Multifactor Leadership Questionnaire (MLQ) is an established methodology for evaluating, developing and coaching different leadership models.

With disruption looming tall, now is a fantastic time for business leaders to evaluate the state of leadership across your organisation. Are you intentionally championing the right leadership models for the business, and do leaders have the right skills, tools and support to lead effectively within those models?