Professional Documents
Culture Documents
term planning. This style follows the principle of reward and punishment in which an act that is good
will merit a reward while the opposite can result to a disciplinary action. Still popular among
managers, this type of leadership includes clear structures that subordinates need to follow. It also
makes the followers responsible for their actions despite the instructions being fed or handed down
to them. Although this management or leadership style has its benefits, it does not come without
drawbacks.
Howard Schultz
Howard Schultz was born in 1953 and grew up in the Brooklyn housing projects. He escaped the
projects with a football scholarship from Northern Michigan University. After college, he started
selling coffee makers to companies that included the Starbucks Coffee Tea and Spice Company,
which originally sold coffee beans rather than made-to-order drinks. He was hired by the company in
1982. In 1984, Schultz opened the first Starbucks coffeehouse based on the concept of an Italian
espresso bar.
Schultz wanted to grow Starbucks, but the owners wanted to stay small. Schultz left and opened his
own company in 1985. With the help of investors in 1987, he bought Starbucks and merged the two
companies. By 2006, Schultz was ranked 394 on Forbes magazines list of the 400 richest people in
America. As a transactional leader, he was responsible for the vision and implementation of the
Starbucks model.
Does not Encourage Creativity
Since this leadership style is rigid and not into bending principles and rules as well as listening to
suggestions from people under the management, this hampers creativity from members of the team
who might have sound and effective recommendations for the betterment of the organization. The
short-term goals and structured policies make it hard for transactional leaders to make changes and
be open to ideas from others that do not go with their existing goals. And since the company or
organization relies on a transactional leader, if this person leaves, it can affect the business because
most of the employees are have not been given the opportunity to become leaders but merely
followers.
3. Accountability of Employees
Another disadvantage of transactional leadership is its practice of providing the tasks to employees,
along with their policies and principles to be strictly followed.
4. Insensitivity
Since transactional leaders operate within rules that cannot be changed, managers with this style of
leadership do not really put the emotions of employees in consideration so long as tasks are done.
Employees are given clear and detailed instructions but they are also expected to perform these
tasks efficiently and on time.
TRANSFORMATIONAL LEADERSHIP
In the words of our Chairman, "Quintessentially, transformational leadership is about taking people on
an all-together different plane. At the same time though, few great leaders follow a path deliberately
designed to make them popular. Nor do they promise easy times ahead. On the contrary, they ask for
sacrifice, for 'blood, toil, tears and sweat'. Nor do great leaders always score high on charisma, as we
normally think of it. And surprisingly, many leaders don't even have a platform that automatically
leverages them with the power and the authority. Rather, their influence derives from their idea, their
conviction, the example they set, and their extraordinary ability to mobilise people and make things
happen.