The two most prominent leadership styles across nonprofits are transformational and transactional. One leadership style creates a positive work environment. It opens doors of opportunity for both the employees and the organization, while the other threatens the long-term viability of an organization.
Effective leadership is often easier said than done. For a long time, many leaders prioritized a more transactional leadership approach with their employees. Getting things done was the primary focus. However, many organizations have shifted towards transformational leadership with outstanding results, and nonprofits would benefit greatly by adopting this approach.
What is a transformational leadership style?
A transformational leader inspires and motivates employees to deliver greater performance and organizational commitment. They create a mindset of innovation and growth within the organization. The idea of transformational leadership is grounded in the four “I’s” :
Transformational leaders focus on nurturing and positively motivating nonprofit employees without micromanaging them. Some characteristics often associated with transformational leaders include the ability to engage and inspire; charisma; a collaborative approach to work; emotional intelligence and focus on the team rather than on themselves.
They clearly communicate their vision, inspire, and motivate employees to deliver results that often exceed expectations. A transformational leadership-driven nonprofit is usually more effective, and one of the main reasons is that employees tend to exert extra effort on behalf of their leaders. Transformational leaders are regarded as agents of change and considered essential in modern day nonprofit organizations.
Tips for cultivating a transformational leadership-driven nonprofit
- Challenge your team to think creatively and tap ideas from all ranks. You have to engage the right people at the right time and give them autonomy to generate successful initiatives developed from their imagination.
- Promote innovative thinking, which occurs when people from different backgrounds and areas of expertise share and collaborate. Remember, diversity enhances creativity, which improves innovation.
- Create a culture of risk-taking exploration to increase employee engagement. Transformational leadership harnesses the leadership team’s and organization’s collective intelligence. This is bigger than just one person or small team, so use your leadership role to empower your employees. Show them you believe they can accomplish great things.
- Engage and motivate employees by communicating powerful narratives to change the culture and create new organizational growth opportunities.
- Build trust among your team members by creating a psychologically safe environment for them to fail. Failure is a part of success, and as a transformational leader, you need to walk the talk and create a safety net for your employees to fall into from time to time.
- Watch your ego! Transformational leaders need to leave their egos at the door. Show your employees that you view yourself as a member of the team, so avoid pulling rank whenever possible.
What does a transactional leadership style look like?
Dr. Cristina Rosario DiPietropolo
A transactional leadership style focuses on establishing specific goals and emphasizes meeting targets and objectives through a strict reward-and-punishment system. This leadership style may be effective for certain situations, but don’t be seduced by the short-term success of transactional leadership. In the long term, this leadership style is damaging for nonprofits.
Transactional leaders put goals, results, and rule-following on a pedestal. A loss of genuine interest is common in teams led by transactional leaders, as most employees feel unappreciated. As a result, employees are unwilling to walk the extra mile for a manager who treats business as a give-and-take transaction.
Here are some of the most concerning dangers of having transactional leaders working for your nonprofit. This leadership style:
- Promotes compliance through rewards and punishments, which has an adverse impact on employee morale.
- Lacks the ability to build long-term relationships with their employees and improve retention.
- Constrains organizational change because they do not prioritize continuous improvement and are comfortable maintaining the status quo, damaging a nonprofit’s growth potential.
Final thoughts
The negative consequences of transactional leadership are high, especially in today’s Great Resignation work environment. This type of leadership places nonprofits at greater risk of losing talented employees or having a disengaged workforce.
Building a highly effective and committed nonprofit organization demands a leadership style that can inspire and motivate the workforce to work together and achieve a unified vision. Transformational leadership focuses on team building, collaboration, and motivation-driven organizational change for the better — all the elements you need for your nonprofit to thrive.
Dr. Cristina Rosario DiPietropolo is the Founder and Chief Executive Officer at Leader Essentials Group, an executive consulting firm specializing in developing and executing strategies with their clients. Cristina has extensive experience across multiple industries, including over ten years as a professor of management with a special focus on leadership in entrepreneurship, organizational behavior, and international management.
