Management Update: Are you a transactional or transformative leader?

BY FORREST FLINN

The field of leadership is the number one researched topic by management scholars today. Specifically, the concepts of transformative and transactional leadership styles are the current topics studied. This month's blog will focus on these current trends in leadership and how they apply to today's complex powersports business, not just at the dealership level but at the department level as well.

What is transformative leadership?

Transformative leadership/management is a leadership style that can inspire positive changes in your department or dealership as a whole. Transformative leaders promote intellectual stimulation by challenging the status quo and encourage creativity—they explore new ways of doing things. Transformative leaders care about the individual by offering support and encouragement to individual employees that they lead. Transformational leaders keep the lines of communication open so employees can feel good about sharing new ideas and to be able to give personal recognition when it is due. Transformational leaders also inspire motivation by having a clear vision that they can communicate distinctly. These types of leaders help share the passion and insight across the dealership. Lastly, transformative leaders exhibit idealized influence, meaning that they serve as a role model for those they lead and are able not just to talk the talk but also walk the walk. In plain terms, transformational leadership means leading with the heart, soul, and love to transform individuals within the dealership.  

What is transactional leadership?

Transactional leaders increase employee performance through rewards and punishments. Transactional leaders are self-serving in the sense that the leader exchanges benefits with employees regarding work productivity and goal attainment. Transactional leadership has a set of clear goals and formal agreements regarding employee performance and productivity. The focus of transactional leaders is on increasing the efficiency and profitability of the dealership through established routines and procedures. Transactional leaders have more concern over following existing rules to the letter instead of trying to make new and positive changes in the dealership. And lastly, transactional leaders tend to be more rigid in their thinking and management style. However, sometimes transactional leadership may be required. For example, you need a transactional leader to manage in a crisis. If the dealership was on fire, you do not need a transformational leader to get employees out of the dealership---you need a transactional one.  

Are you a more transactional or transformational manager/leader?

The good thing about leadership styles that are based on contingency theory is that there is no wrong or right way to be a leader/manager. It all boils down to the situation that you are trying to influence or manage. Some cases call for a more transformative type of leadership. And in other conditions, a more transactional type of leadership is called for. For example, when trying to manage a parts receiving person, perhaps a more transactional kind of leadership is the better fit of leadership since the job is repetitive and often complicated. In this type of situation, documented procedures and tasks are better suited and follow a transactional nature.

Conversely, a more transformative leadership style would bet better suited when trying to influence the department or dealership as a whole to move towards some specific goal. For example, I have seen many dealerships struggle with implementing CRM systems or basic traffic logs in sales departments. Here, being able to challenge the status quo and sharing new ideas can inspire employees to see the bigger vision of implementing such programs. Employees must be sold the upside to having these types of systems in the dealership, and they must understand how they drive profitability in unit sales and personal income. The passion of the leader can be catchy to others and help the implementation process go more efficiently with less resistance from the sales staff.  

You may have heard the terms transformational and transactional managers/leaders, but know you know what they actually mean. We all are, or should be, evolving all the time in our leadership knowledge, skills, and abilities. I know I am continually growing in my management style. I know that I can use both transactional and transformative leadership styles, depending on the situation at hand. And with a little bit of leadership training, I know that you can, too! 

In closing, it has often been said that if you are managing everyone the same way, you are doing it wrong. Just food for thought.

After all, it is just good business.

Forrest Flinn, MBA, PHR, SHRM-CP, SMS has been in the motorcycle industry for more than 23 years and has been a true student and leader serving in various capacities. He previously worked as an implementation consultant for Lightspeed and as a general manager with P&L responsibility for a large metro multi-line dealership. Recently Forrest became an Associate Recruiter with Henry Lonski and Associates and is also the managing partner and chief visionary for a consulting firm that specializes in outsourced accounting, social media strategy, dealership operations consulting and Lightspeed/EVO training.

Contact: Forrest@powersportsmc.comor Forrest@HenryLonski.com

2 comments

  1. Forrest has hit the nail on the head once again with this outstanding article. Dealerships (or companies) that fail to recognize and respond to changing customer (and employee) needs and behavioral trends struggle to grow or even survive in the long term.

    A big part of this is the ability of the store's leaders to adapt and apply the proper management techniques to drive/allow the dealership to evolve with the market. It is too easy to slide into the "this is how we've always done it..." model. This is simply not a good leadership model for success.

    Thanks Forrest - nice work.

    • Thank you Steve! I have been intrigued by the field of leadership for so long---so much I am getting my doctorate in education in the field of organizational leadership and innovation. I see so many dealerships that have the potential to be great! It all comes down to the leadership of the dealership. Leading with a transactional iron fist all the time is a recipe for lackluster performance, low dealership morale, high employee turnover, and lower overall profit. We need to foster innovation in all that we do in the dealership. Again thank you for your compliment on this month's blog.

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