People-oriented leadership, as well as transactional and transformational leadership are not a new concept in the leadership studies. Managers can successfully utilize these styles to improve their leadership effectiveness. They tend to use transactional leadership for subordinates that have clear performance indicators and use transformational leadership for subordinates in managerial duties that have decision-making or administrative roles. For instance, it may be practically easier for managers to motivate the sales team that there will be a 10% benefit increase for every 10% increase in customer acquisition, rather than trying to inspire them to work harder.

Among the three, I think people-oriented leadership is the one that significantly diverges from my style. I tend to limit work relationships as professional as possible and avoid close relationships. I believe that team cohesion can be built through inspiration to achieve common goals instead of the establishment of a good relationship between the people. Nevertheless, these three are important concept in the leadership studies.

People-oriented Leadership

In people-oriented leadership, the main objective is to enhance the quality of human capital and the relations between them (Yukl, 2012). The most common leadership behavior in this style is encouraging the subordinates to focus on the well-being of the team (Derue et al., 2011). Leaders are not only developing close relationships with their subordinates, but they also push them to build good relationships among themselves (Russell, 2011). It assumed that by showing respect and empathy, people will develop trust and it will ultimately enhance organizational effectiveness.

Herb Kelleher, the former CEO of Southwest Airlines, was famous for building employee-centered airlines. He believed that when employees are happy, they provide the best service to the passengers, proven by high customer satisfaction (Cote, 2018). This approach has made Southwest’s workforce recognized in the industry as the most productive and providing the best customer service (Freiberg & Freiberg, 2019). When successfully applied, people-oriented leadership can be very powerful.

Also read about: Situational Leadership

Transactional Leadership

In transactional leadership, the main objective is to clarify roles and task requirements as well as create a reward and punishment policy depending on the performance in these roles and tasks (Kinicki & Fugate, 2017). The most common leadership behavior in this style is that they clearly define their expectations in terms of performance, as well as the reward and punishment based on the expectation (Derue et al., 2011). It assumed that to improve task performance, employees can always be motivated and be controlled by fair rewards and punishments.

Bill Gates is considered a transactional leader since he closely monitors operations and ensures high performance using these means (Carter, 2022). This approach can be very quick and effective when applied properly. However, research has found mixed results in an organization that practices transactional leadership.

Transformational Leadership

In transformational leadership, the main objective is to develop the subordinates in terms of overall value system, skills, motivation level, as well as moralities (Al Khajeh, 2018). The most common leadership behavior in this style is that they inspire the subordinates to push beyond their personal interests for the sake of the organization (Robbins & Judge, 2017). It assumed that inspiration can be instilled in the subordinates’ minds to enhance performance.

Sam Walton, the founder of Walmart, can be considered a successful transformational leader since he frequently visited Walmart stores across the country to speak with colleagues and express his gratitude for what they had done for the firm (Jack, 2022). He tried to inspire subordinates to the lowest level in the organizational hierarchy. His story is also proof that transformational leaders can be very effective to enhance organizational performance.

The comparison and contrast

Aside from the contrast in the main objective and assumption described above, another clear contrast between these leadership styles can be observed in the leaders’ behaviors. Yukl (2012) described this contrast in his hierarchical taxonomy of leadership behaviors. He noticed several leader behaviors that are used to influence their subordinates. For transactional leadership, the behaviors are clarifying, planning, monitoring, and problem-solving. For people-oriented leadership, the behaviors are supporting, developing, recognizing, and empowering. While for transformational leadership, the behaviors are facilitating collective learning, advocating and envisioning change, as well as encouraging innovation.

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Al Khajeh, E. H. (2018). Impact of Leadership Styles on Organizational Performance. Journal of Human Resources Management Research, 1–10.

Carter, L. (2021, December 28). Does A Transactional Leadership Style Work Today? Louis Carter.

Cote, R. (2018). Leadership Analysis: Southwest Airlines-Herb Kelleher, CEO. Journal of Leadership, Accountability & Ethics, 15(1).

Derue, D. S., Nahrgang, J. D., Wellman, N. E., & Humphrey, S. E. (2011). Trait and behavioral theories of leadership: An integration and meta‐analytic test of their relative validity. Personnel psychology, 64(1), 7-52.

Freiberg, K., & Freiberg, J. (2019, April 7). 20 Reasons Why Herb Kelleher Was One Of The Most Beloved Leaders Of Our Time. Forbes. 

Jack, M. (2022, June 17). 20 Examples Of Transformational Leaders. The Human Capital Hub.

Kinicki, A., & Fugate, M. (2017). Loose Leaf for Organizational Behavior: A Practical, Problem-Solving Approach (2nd ed.). McGraw-Hill Education.

Robbins, S. P., & Judge, T. A. (2017). Organizational Behavior, Global Edition (17th ed.). Pearson.

Russell, E. (2011, September 8). Leadership theories and style: A transitional approach. General Douglas MacArthur Military Leadership Writing Competition.

Yukl, G. (2012). Effective leadership behavior: What we know and what questions need more attention. Academy of Management perspectives, 26(4), 66-85.

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