Charismatic leadership theory relies on leaders’ ability to inspire followers to believe in them. In contrast, Fiedler’s model, situational leadership theory, and path–goal theory describe transactional leaders, who guide their followers toward established goals by clarifying role and task requirements. A stream of research has focused on differentiating transactional from transformational leaders, who inspire followers to transcend their self-interests for the good of the organization.

Transformational leaders and their teams perform well and can have an extraordinary effect on their followers, who respond with increased performance, organizational citizenship behavior, creativity, job satisfaction, and motivation. Transactional and transformational leadership complement each other; they aren’t opposing approaches to getting things done. The best leaders are transactional and transformational. Transformational leadership builds on transactional leadership and produces levels of follower effort and performance beyond what transactional leadership alone can do.

Transactional leadership is more important for leader effectiveness and follower job satisfaction.