Shiny new tools and software can offer a lot to a growing nonprofit, but they can not solve every problem. Some issues like organization, productivity, efficiency, and motivation require a more human-focused strategy such as transformational leadership, which can “achieve unexpected and remarkable results” largely through utilizing inspiration, empathy, rapport, and respect. Most of the guidelines focus more on relationships instead rather than results, but there is empirical evidence that transformational leadership is an effective strategy in public and private organizations particularly in formalized settings. This is especially true when compared with a more familiar transactional leader who uses a reward system that is contingent on effort. There are some drawbacks to transformational leadership but there is also no doubt that transformational leaders are “more effective in mobilizing their followers to exert extra effort” than transactional leaders.

What Is Transformational Leadership?

Transformational leadership is a style of management that hinges on communication and emotional intelligence in order to transform existing structures to be better for workers as opposed to making workers conform to the outdated structures. Some of the key characteristics include frequent feedback, transparency, flexibility, and collaboration. The term “leader” necessitates that there also be “followers;” a transformative leader is often described as a charismatic visionary because they have the ability to make individuals want to change. They transform their environments to meet the needs of their team members and often change long-held beliefs in the process.

The term “transformational leadership” originated in 1973 with sociologist James V. Downton in Rebel leadership: Commitment and charisma in the revolutionary process. Another expert, James Burns, expanded on the concept in his book Leadership in 1978 saying transformational  leaders and their teams “raise one another to higher levels of morality and motivation.” Leaders who use this style are ‘quiet leaders’ who lead by example, are willing to make sacrifices, and can shape their teams into integral units. They must be well-organized, have high expectations, and emphasize mutual respect.

Transformational leadership is a style that focuses on empathy, rapport, workers’ autonomy, and the essential needs of the workers. It transforms old systems and patterns while optimizing the capacity of the whole team and each of its members. This is in direct contrast to “transactional leadership,” which rewards and punishes behaviors, works within old systems and patterns, and forces experiences to fit within those boundaries. There are many benefits of this style including new ideas, balancing short- and long-term goals, building trust, high levels of integrity and emotional intelligence, and reforming outdated or small organizations. This style is best suited for outdated organizations with existing structures in need of a change and less suited for organizations in their initial stages or bureaucratic environments.

Steps to becoming a transformational leader

  • Create a vision that inspires

It is important for your team to be centered around a single purpose and vision. In order to do this everyone must understand your organization’s resources, capabilities, and most importantly, values. The leader will set the purpose by analyzing their environment, which can be done with the Mullins’ Model (Seven Domains of Attractive Opportunities). Then they will forge a path forward with a strategy – possibly Lafley and Martin’s Five-Step Strategy Model. Next the leader will craft a business plan and mission statement to reflect these analyses.

  • Motivate people to buy into and deliver the vision

A transformational leader must appeal to the values of the organization as well as its workers. They must use storytelling to connect these to where the organization is going and why. This can be accomplished in part by talking about the vision often and linking it to the context of individual goals and tasks.

  • Manage the delivery of the vision

Do this through combining project management with “sensitive change management.” The leader needs to communicate responsibilities and connect them clearly to the plans. Set clear, SMART (Specific, Measurable, Achievable, Realistic, Time-bound) goals including some short term ones for quick wins that keep the team motivated. As tasks are accomplished, use management by objectives to connect short- and long-term plans. Provide clear and regular feedback so that expectations are clear. Most importantly set a good example for the team to follow and stay visible, managing by walking around.

  • Build trust-based relationships

This can be done by focusing on your people and helping them achieve their goals and dreams. Understand those developmental needs by meeting individually and understanding the aspirations of each person. Where do they see themselves five years from now? How can you help them reach this goal? Above all be open and honest, inviting new ideas and feedback on your performance as well.

Case Studies: Lead By Example

Below are examples of exceptional transformational leaders who might inspire you to inspire others.

“Education will open doors. Talent will open worlds. But it is hard work that will enable you to accomplish more than you ever imagined.”

Mary Barra is the current Chairman and CEO of General Motors who started as an electrical engineer at 18. Her vision for GM includes a world with no crashes, no emissions, and no congestion.

In 2014 Barra became CEO and within just three months faced a major crisis involving defective ignition switches that led to deaths, injuries, and hearings before Congress. Barra may not have been responsible for the defect, but she took responsibility for the consequences and their solutions. Through compassion, transparency, and “a commitment to create a new company culture” Barra took on the massive task of fixing “systemic dysfunction” as the first female top executive at a top-eight auto manufacturer.

Barra empowers others with simple policy changes such as reducing the corporate dress code to simply “dress appropriately,” making the point that her team members are trusted with supervising others as well as budgets worth millions of dollars and therefore can be trusted to wear appropriate clothes as well.

“Our commitment to diversity and engagement is not only a source of tremendous pride; it’s also a source of strength.”

Indra Nooyi was the first female CEO of PepsiCo from 2006 to 2018, the fifth Chairman and CEO in the company’s 42 years, and “one of only 11 female chief executives of Fortune 500 companies.” Over her tenure Nooyi was able to transform the company’s strategy over and over again “to outperform competition and build a strong sustainable business.” Her strategies were centered on the preferences of her customers, steering the company in a healthier, rather than just fun, direction and diversified with healthier products not offered by its main competitor.

Nooyi led PepsiCo’s pledge “Performance with Purpose” to do right by the world and the environment and the “Transformational Leadership Program (TLP),” which seeks to increase diversity as a means of unlocking potential. This led to more than 300 women gaining more workplace skills through experiential workshops and improving their ability to make an impact in business. Nooyi’s commitment to authenticity and her team make her the type of leader who exemplifies transformational leadership principles.

“The idea that you can create a template that will work forever doesn’t happen in any business. There’s some really, really bright people in this business. You can’t do the same thing the same way and be successful for a long period of time.”

As the General Manager for Oakland Athletics, Billy Beane used sabermetrics – the analysis of baseball statistics in making recruiting choices – and became the inspiration for the book and movie Moneyball. The story is compelling largely because it is about an underdog team with a small budget. Wealthy baseball teams are able to outspend others and get all the best players. However, Beane realizes that most players are chosen by the scouts superficially and decides to hire a mathematician to devise better metrics for decision making. One of the most important was on-base percentage and even though their team is out of the ordinary with “ugly swings,” they begin to win over and over again.

“Punishing honest mistakes stifles creativity. I want people moving and shaking the earth and they are going to make mistakes.”

Ross Perot was a former IBM salesman who started his own company, Electric Data Systems (EDS), and empowered workers to make choices for their customers without waiting for approval. His emphasis was on a strong bias to action, never taking credit for others’ work. His common slogans were “Go, do” and “We bring order to chaos.”

“A bad system will beat a good person every time.”

Edwards Deming taught the military statistical process control techniques during World War II and also helped Japan become a world industrial power in 4 years using statistical methods.

How Nonprofits Can Use Transformational Leadership

Leaders of nonprofit organizations highly value the methods inherent in transformational leadership – inspiration and integrity. This style’s main result is using a singular vision and higher purpose to create motivation within workers to go above and beyond the call of duty, which would work well in the often thankless world of nonprofit management. The strategy is also practical for both large and small nonprofits since it focuses on openness, collaboration, and innovation. These principles are important with ever-changing problems and global dynamics.

Nonprofits, compared to for-profits, emphasize a cause, rely on volunteers, have less attractive compensation, and often require outside funding. There is a “significant positive relationship between transformational leadership … and the three subscales of employee engagement (vigor, dedication, and absorption).”

Addressing the Weaknesses of Transformational Leadership

Knowing the weaknesses of this strategy upfront will help you mitigate them. So, in the spirit of authenticity and openness be aware that transformational leadership has some downfalls. While transformational leadership’s principles are easy to apply they can also underestimate the complexity of corporate life. Complexity leadership is an alternative approach that considers the “full range of social interactions.” The concept can also place too much emphasis on the “Great Charismatic Leader” while its guidelines remain vague. This can be mitigated with leadership teams.


Nonprofit organizations can benefit from transformational leadership strategies, which emphasize a singular cause and vision, collaboration, openness, and integrity. Creating empathy and respect between leaders and “followers” will help increase productivity, efficiency, and innovation. While there are some drawbacks to any strategy, being aware of these will help create a better strategy overall.