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Inspirational vs Transactional leadership. Here Are 4 Fundamental Differences Between The Two.

Have you ever had a great idea or an excellent proposal that got rejected because it was deemed to “out of the box” for the company? It can be very demoralizing to put so much effort into something, only to have the leadership of the company shut it down because they are not prepared to go outside their comfort zone.

On the flip side, have you ever have the privilege to work for a company that embraced creativity, innovation, unrealistic expectations. There is a reason why good companies become great, and the average companies remain average.

Great leaders are prepared to push the limits of their industry while embracing innovative concepts and ideas. Many companies come to mind, Apple, Amazon, Alibaba, Air hub, Netflix, Facebook, Uber, The Wright brothers, Google, Standard Oil.

If you look closely at all of these companies; their leader’s thinking and mindset are vastly different from the average, they are not prepared to settle for “what is,” passionately believe that they can achieve the impossible and are not afraid to go against popular opinion to fulfill their dream. It is not easy, you will lose loads of money at times, but the payoff at the end will be huge.

But that’s what inspirational leaders live for; a chance to inspire and motivate people towards a shared vision. On the other hand, Transactional leadership, also known as managerial leadership, focuses on the role of supervision, organization, and group performance. Leaders who implement this style focus on specific tasks and use rewards and punishments to motivate followers.

Transactional leaders operate within existing boundaries of processes, structures, and goals; too afraid to shake the boat. How do you identify a Transactional leader from an Inspirational leader, here are the 4 fundamental differences between the two?


Transactional leaders reward and punish in traditional ways, according to Joseph Chris. This means that subordinates are rewarded with something ‘substantial’ (e.g., cash, gift certificate) for doing the desired behavior, and punished for any deviation.

Inspirational leaders are magnetic; they attempt to achieve positive results from employees by keeping them invested in projects, leading to an internal, high-order reward system.


Transactional Leaders are very practical or realistic. They tend to solve problems or deal with issues pragmatically, taking into account all realistic constraints and opportunities.

Inspirational leaders believe that anything is possible and are more likely to address the issues before they become problematic.


“If it ain’t broke, don’t fix it!” Transactional leaders probably have this as their motto. These are the kind of people who can work with the existing system or environment without feeling the need to change a part or overhaul everything. They do not seek to transform things, wanting everything to remain exactly as they are.

Inspirational leaders emphasize new ideas, seek to destroy the status quo, and live in a world where change is the only constant.


Transactional leaders place much importance on corporate structure and culture. It often compliments rigid organizational hierarchy. For example, when reporting a problem or issue, the report is expected to pass through from the employee’s immediate leader before reaching the top management. Bypassing the hierarchy could be taken as insubordination.

Inspirational leaders create a flat organization, limiting and removing any trace of bureaucracy while creating an environment that is mentally stimulating and enjoyable.

Many leaders allowed their mindset and their environment to trapped them into a Transactional style of management; I have seen this time and time again. Their comfort zone becomes a straitjacket, never trying anything new and settling for the familiar. While Transactional leadership can be useful in some situations, it is considered insufficient in many cases and may prevent both leaders and followers from achieving their full potential.

Inspirational leaders move the world forward; they challenge people with an attractive vision and tie that vision to a strategy for its achievement. They engage and motivate people to identify with the organization’s goals and values. Inspirational leaders are seen as role models by others because of the way they behave and the values they espouse. They encourage others to think outside of the box and give individual attention to colleagues and subordinates when it is needed. They also drive the organization forward by developing (and efficiently articulating) a vision of the future that is compelling and convincing to others, according to Nicholas Bremner.

Leaders with an inspiring vision challenge followers to leave their comfort zones, communicate optimism about future goals, and provide meaning for the task at hand. If you are a Transactional leader, it is time to move forward with Inspirational leadership. You must see the world differently; look at your company differently; I am 100% sure someone is actively working and creating something new to make your product or business obsolete.

If you want to develop into an Inspirational leader and become someone who inspires people to believe that the impossible is possible while in the process, challenging yourself to try something new, send me an email at I am committed to helping you become one of the best leaders this world has ever seen.

The world needs more Inspirational leaders who are not afraid to upset the status quo, but more importantly, leaders who can provide a robust platform to help develop this generation of Inspirational leaders.


About Gifford Thomas

I am the founder of Leadership First and the author of The Inspirational Leader, Inspire Your Team To Believe In The Impossible. At Leadership First, we are committed to publishing the very best inspirational leadership quotes and articles to inspire our 125,000+ community of leaders to believe in the impossible, while creating an environment free from toxic, fearful and intimidating leadership. We believe everyone can and should enjoy their work, but it must start with the leadership leading by example. Follow our community of leaders HERE, and let's change the leadership status quo to help inspire and motivate our leaders to make a difference and create an organization their people will love. 

You can download a copy of my book The Inspirational Leader and Inspire Your Team To Believe In The Impossible by clicking on the word inspirational below:

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