Transactional leadership is much like authoritative leadership except that it relies on a rewards-based system to motivate subordinates. According to this system, rewards or punishments are handed out based on a subordinate’s performance and adherence to the rules. The theory is that individual officers will conform to the rules and vision of the leader — influenced by the fear of discipline for poor performance versus the anticipation of positive reinforcement for a job well done.
Transformational leadership focuses on a “people-centered approach” that aims to inspire, empower and motivate one’s team. A leader following this approach works with subordinates to commit to a shared vision and goals for the organization, encouraging innovation and creativity in pursuit of those goals. Transformational leaders are inclusive, considering each individual’s unique needs, skills and motivations. They often have an “open door” policy to facilitate open communication.