Transformational leadership can broadly be seen to be exhibited, when followers and leades jointly work together to achieve a higher degree of work morale and motivation. According to one of this theory's founders James MacGregor Burns (1978), the transformational leadership style can alter and strengthen perceptions, values and aspirations of employees. The transformational leader probably exhibits this leadership style through his/her personality and ability to make lasting changes through visions and goals. Furthermore, a transformational leader is concerned with satisfying needs of the followers, which can e.g. be higher ranked needs put forward by Abraham Maslow .

 

In comparison, the transactional leadership style is based on a contractual relationship between leader and follower, where the transactional leader is more focused upon rewards and punishment rather than on transforming mindsets, satisfying followers' needs and involving followers.

Below, four elements of transformational leadership are listed:

 

1. Consideration of individual needs: This element concerns the degree to which the leader tries to satisfy the needs of the followers', acts as a mentor or coach to the follower and listens to the follower's concerns and needs.

2. Use of intellectual stimulation: This element concerns the degree to which the leader challenges assumptions, and listens to the advices coming from followers. A leader showing this trait potentially sees this as an opportunity for organizational learning and growth, and as a way of involving and motivating followers.

3. Inspirational motivation techniques: This element concerns the degree to which the leader is able to articulate a vision that is appealing and inspiring to followers, and the ability of communicating the importance of the company's mission and goals. The articulated goals and purpose of the company can provide the energy and drive that pushes a group forward.

4. Role and identification model: This element concerns the degree to which the leader is able to provide shared understandings of vision and purpose. The leader plants pride and feelings of mission within the stakeholders, and can potentially develop a shared organizational culture within the company, which can potentially act as an informal control mechanism.

Using a transformational leadership style therefore has many potential advantages, however, this leadership style may not work in all work settings, and there may be audiences and followers that do not appreciate this leadership style. Some followers may therefore prefer a transactional leadership style instead, which does not show the same traits as the transformational leadership style.