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Comparison between two retail companies picked are Walmart and Costco

The two retail companies picked are Walmart and Costco whose 2017 Financial statement links are provided below: WALMART https://www.nasdaq.com/symbol/ wmt/financials?query=income- statement COSTCO https://www.nasdaq.com/symbol/ cost/financials?query=income- statement Both organizations are well known brands and position themselves well with their customer base. Walmart’s value proposition is “We save people money so they can live better”. On the other hand, Costco’s value proposition is “All-in-one convenience and everyday affordability”. Both retailers focus on cost saving for their customers. Looking at their financial statements and by analyzing them a few key areas are evident when comparing the two organization. Looking at the current ratio and quick ratio we can determine the short-term solvency of each organization. The current ratio can be determined by dividing the assets by the liabilities. Walmart’s current ratio sits at 0.86 while Costco’s sits at 0.99. The quick ratio is c...

Often these two theories are looked at it contrast to each other but is it possible for a leader be both?


In the knowledge economy where information is decentralized, there is a need for both collaboration and consolidation of insights. Leaders know that they need to rely on their team members while asking for accountability in their performance. We have two leadership styles that are widely used in our current era, they are namely: transformational leadership and transactional leadership.  Transformational leadership empowers team members to go the extra mile for the company with the faith that their personal interests would be fulfilled by doing so. Transactional leadership sets standards of performance for team members and according to their metrics, team members are either rewarded or punished. Transactional leadership is the most common form of leadership because the philosophy behind this leadership style is based on the fact that human beings will perform to gain something and will do their best to avoid pain and punishment. Knowing that they may be punished, employees may be more conscientious when they are working. However, this leadership style may stifle creativity because if employees are scared of making mistakes, they won't dare to innovate, propose new ideas or challenge the status quo. 

Briefly draw some comparisons between them. 

Transformational leadership is about growth and transformation. The transformational leader is a change agent. He identifies areas of improvement and is not afraid to challenge the status quo. The transformational leader has a vision and includes his team members in his vision. He creates a sense of purpose and a common roadmap for the team. By doing so, he encourages his team members to sacrifice their personal interests in favor of this vision. The transformational leader explains how each team member is interdependent and that they have to work together to achieve their personal goals. As the team works for the company, they will be rewarded both collectively and individually. 

Transactional leadership can be viewed as responsive and the leader who uses this style is in alignment with the organizational culture of the company (Odumeru, J. & Ifeanyi, G., 2013, p.5). The transactional leader is not interested in change. Actually, he is concerned with consistency and maintaining the current system and level of performance (Odumeru, J. & Ifeanyi, G., 2013, p.4). In addition, the transactional leader is constantly supervising his team looking for mistakes and variations in performance (Odumeru, J. & Ifeanyi, G., 2013, p.4). This can lead to biased evaluations because the leader is so focused on spotting mistakes that he doesn't see the things that have been done well. Transactional leadership will most likely lead to positive results when used in the management of crisis situations and complex projects that require accuracy in the execution phase (Odumeru, J. & Ifeanyi, G., 2013, p.4).


Steve Jobs was a transformational leader who made use of transactional leadership when he was leading his teams(Clark, 2015, para. 9). For instance, he would criticize his engineers when they would deliver projects that are below his expectations. Through his severe criticism, he was setting the bar for his team. If they wanted to be in his good books, they had to meet his expectations. To some extent, transactional leadership instils a certain amount of fear in subordinates because they don't want to be punished.  

Can they be complimentary to each other?  

They can be. I have seen a leader make use of both styles. However, it doesn't yield positive results in the long run. 

Have you ever seen a leader use both styles?  Was it effective? Why or why not? .

I previously had a manager who was making use of transformational and transactional leadership. He would gather the team and have a motivational speech in order to boost team morale. During 1-to-1 meetings he would make use of transactional leadership to encourage team members to perform better. If you increase your performance during this quarter, you will get a salary raise. 

It was an effective strategy in the short run. However, in the long run, it started to have negative consequences on team motivation and performance. I think that the combination of these two styles is strenuous on the leader himself. It can be quite difficult to inspire your team members to greatness and be willing to switch to a transactional style where you punish them when they don't meet your expectations. In addition, it's going to be difficult for the team to understand the reasons behind why the leader has shifted from a transformational to a transactional leadership style. Some team members started to get angry and frustrated because they thought that our manager had hidden agendas. He could be inspiring, charming, witty and intelligent when he wanted to and he could switch to a more ruthless style where he assesses your metrics and take corrective measures if it's not as per his standards. 

Conclusion

According to the research work done by Ames and Flynn (2007), leaders who display moderate levels of assertiveness and empathy are more effective. In their research, they found out that there is a sweet spot where these leaders are able to get things done while showing that they care for their subordinates. I believe that this same philosophy should be considered by leaders who use both transformational and transactional leadership. 

References: 

Ames, D.R., Flynn, F.J. (2007). What Breaks a Leader: The curvilinear relation between assertiveness and leadership. Journal of Personality and Social Psychology, Vol 92(2), 307-324.

Clark, D (2015, Sept 10). Transformational Leadership. Retrieved from: http://www.nwlink.com/~donclark/leader/transformational_leadership.html

Odumeru, J. & Ifeanyi, G. (2013). Transformational vs. transactional leadership theories: Evidence in literature. International Review of Management and Business Research (2)2. Retrieved December 3, 2015 from: http://www.irmbrjournal.com/papers/1371451049.pdf

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