Article of the week 7 – 2023

What leadership methods do your team managers use?

In this article of the week, I would like to give you an overview of the history of leadership in the first part, and then present two prevailing leadership models in more detail in the second part. In the final part, I will link the two leadership models to the current and future challenges facing team managers in customer service.

First of all: What is leadership actually? The term „leadership“ refers to the purposeful influencing of the behavior of individuals in order to achieve common tasks and goals. The tasks of leaders also include planning, controlling, communicating, motivating and ensuring group cohesion. A distinction is made between task-oriented and person-oriented leadership. In task-oriented leadership, the focus is on performance. In contrast, person-oriented leadership focuses on the relationship between the manager and the employee.

1. Leadership – the historical development from the 19th century until today

The first leadership theory was described by Thomas Carlyle in 1840 and was called the „Great-man theory„. This theory assumed that great heroes shape and determine history. Associated with this was the belief in qualities inherent in a person. In this theory, only the individual performance counts, not the team.

According to early „Great Man theories,” certain people were born to lead. They are „natural born leaders“ – leaders who are naturally suited to become heroes.

Traits theory (1910 to 1948)

In scientific studies, attempts were made in the early 20th century to capture character traits and abilities of successful leaders. In this approach, which has become known as trait theory, it is assumed that successful leaders possess certain characteristics that enable them to exert influence on the actions of their employees. Traits have been defined as stable over time and independent of the situation; they should be clearly identifiable and measurable. 

However, it was not enough just to have the features, such as

  • the pursuit of responsibility and task fulfillment,
  • Ambition and perseverance in achieving goals, 
  • Willingness to bear consequences, 
  • etc.

but would also have to fit the situation that arose, which meant that they were no longer situation-independent.

Situational leadership theories (1958 to 1979).

In the 1950s and 1960s, more differentiated approaches were pursued, dividing them into task orientation and employee orientation. Blake and Moulton then developed the Managerial Grid in the 1960s. A manager no longer behaves according to a pattern, but there are different facets between employee and task orientation. Leadership psychology considered a high degree of employee orientation and at the same time task orientation to be ideal.

In the 1970s, the situational leadership theory developed according to Hersey and Blanchard, which is still frequently used today. In this theory of situational leadership, behavior is adapted to the ability and willingness of the employees. 

Transformational Leadership (1980 – today) 

In the 1980s, transactional and transformational leadership theory emerged. At the heart of transactional leadership is a barter system. The employee receives a reward, such as a bonus, for his or her commitment and achievement of goals. The limits of this model are where it is about more than working through and fulfilling routines, and complexity increases.

Transformational leadership, which has been developing since the 1990s, therefore targets intrinsic motivation as a further development of the transactional model. In this approach, the view is broadened for the first time and also includes the team. 

For the sake of completeness, I would like to mention systemic leadership (2000 to the present), which I consider negligible in the context of team managers in customer service, however, and therefore do not go into it in detail

2. Transactional and transformational leadership in detail

Transactional leadership

Transactional leadership refers to the agreement on the exchange of performance for performance, i.e. the exchange of an employee’s work performance for a reward. This principle was first described by the American sociologist James Downtown in 1973 and later further developed and shaped into a model by James MacGregor Burns.

Probably the most catchy example is about a horse that is held a carrot in front of its face so that it will keep running. Here, the performance exchange is „running for a carrot as a reward“. In the sense of transactional leadership, it would therefore be important that the horse also gets the carrot. 

The leadership success of transactional leadership is based on…

  • the clear and operational definition of goals (management by objectives) and
  • delegating tasks that are incentivized to achieve goals.

Motivation is achieved by an expected or superior performance leading to a formal reward. This primarily addresses material needs.

However, transactional leadership does not lead to any lasting change in behavior and attitude, but only to a motivational boost limited to a certain period. Various incentives quickly provide a strong extrinsic motivator, which also works for many people. This turns the seemingly strong advantage into a disadvantage at the same time. The motivation does not come from the respective employees themselves, but is based on what the manager offers them.

Transactional leadership can make sense as a supplement to other leadership styles if you want to give an employee a motivational boost for a short period of time by means of a reward, such as in a backlog situation. However, care should be taken to ensure that all employees are treated equally.

Transformative leadership

Transformative leadership is the ability of managers to convincingly act as role models and thereby earn trust, respect, appreciation and loyalty. Employees are intrinsically motivated and inspired to change (transform) their behavior and their willingness to learn and perform. (Bass, B. M.: The Bass Handbook of Leadership, New York 2008).

Transformational leadership (in contrast to transactional leadership) promotes intrinsic motivation, i.e. motivation from within the employee. This offers the decisive advantage that the employee is motivated by his/her own values and attitude and by the manager as a role model. No extrinsic motivation is required in order to quickly reach one’s goal.

In addition, a lasting transformation of values and attitudes to the attitudes/values of the manager or the company takes place.  This leads to a lasting success of the organization or the team, since the employees act independently and in the sense of the organization. If motivation is intrinsic and therefore long-term, the job satisfaction of the employees increases. The associated fulfillment of tasks pleases people far more than constantly working towards a short-term reward.

Today, more than ever, the success of companies depends on their employees. Transformational leadership encourages cooperation instead of a competitive mindset and thus strengthens team spirit.

3. Why is transactional and transformational leadership crucial for the success of team managers in customer service?

A great deal is expected of team managers in customer service today. This includes empathy and knowledge of human nature, setting clear goals, making decisions, coordinating and delegating (according to the skills of the employees), leading and motivating, supporting each team member individually, giving constructive feedback, etc.

In customer service, the whole thing is made even more difficult by very heterogeneous curricula vitae (from no training to academics with doctorates) and, as a rule, by pay around the minimum wage. In addition, we currently have an employee labor market, and insufficient leadership is reflected in high turnover rates, among other things, while recruitment is becoming increasingly difficult.

This makes it all the more important for middle managers in customer service organizations to be familiar not only with leadership in general, but also with transactional and transformational leadership in particular, and to be able to implement this in line with their goals.

Classically, transactional leadership (if consciously led) has prevailed in customer service operations. Customer service itself has been in a major transition phase for a while now, as ever greater volumes of simple contacts (thanks to AI), chatbots, conversational AI, etc. are being solved. Conversely, this means that the employees in customer service are increasingly becoming solution managers who have to decide in real time in conversation with the customer whether there is goodwill and how high it is or what other solutions might look like.

This no longer works with the mechanisms of transactional leadership, which aim for extrinsic reward. If this reward is not given or is considered too low, then the customer does not receive a solution or at least not the optimal solution. This is where the mechanisms of transformational leadership come into their own, as the employee does not help the customer because he/she is rewarded, but because he/she wants to give the customer the best solution.  The employee benefits from his or her meaningful work; the customer benefits from the best solution at the first contact and the company benefits from satisfied and thus loyal customers, not to mention a higher NPS and a high first-time resolution rate.

Michael Jurisch –  Senior Consultant


To subscribe to the article of the week, click here.