sues, problems, or mistakes occur. An active management-by-exception involves leaders who monitor the performance of their subordinates throughout the course of the task or activity. This allows the leader to track whether mistakes happen in line with the completion of the task or activity. A passive management-by-exception on the other hand considers leaders who are unaware of mistakes within their team until his/her subordinates report the issues or the problems that happened. In transactional leadership, the leaders appeal to their subordinates' self-interest through rewards in order to achieve the team's objectives.
In the team setting, leaders who are solely transactional leaders created an environment built upon positive and negative reinforcement (Ruggieri, 2009). The reinforcement came in the form of compliments and awards in money and gifts when milestones reached completion during the life of the project. Transactional leaders used negative reinforcement when team members miss milestones or fail to complete project deadlines, generally in the forms of chastisement, censorship, and in some cases, release from the organization (Ruggieri, 2009).
Sanders et al. (2003) indicated most leaders utilizing this leadership style exhibited less confidence in their ability to lead or make an impact within the organization. It is important to express that nearly all leaders in a virtual or in a traditional team environment have utilized the transactional leadership theory as part of decision-making (Ulmer, 2005). The transactional leadership theory is framed around an award-based system, which motivates followers to contribute to the success of the team.
Servant Leadership
Servant leadership theory suggests that the leader places the good of those led over the self-interest of the leader and promotes the idea of valuing and developing by sharing their power and prestige with those they lead (Greenleaf, 1977). Greenleaf (1970, 1977) introduced theoretical concepts to the body of leadership literature on servant leadership. Greenleaf, who is the founder of the Greenleaf Center for Servant Leadership, created the idea of servant leadership after reading Nobel Laureate Herman Hesse's (1956) Journey to the East, a story about a spiritual pilgrimage of a band of men on a fairy-tale journey.
The term 'servant leadership' may not be familiar to a large number of individuals or corporations, but many organizations have adopted and embraced this concept within their leadership structure. Servant leadership is radically changing how leaders lead and treat subordinates under one's area of responsibility in the organization that creates a caring and understanding atmosphere within the organization (Chung & Chia-Hung, 2009).
Greenleaf (1970) stated, 'Caring for other persons is the foundation upon which a decent society is built' (p. 54). Transformational leadership and servant leadership have several similar characteristics, but are not quite the same in their approach to leading subordinates. Servant leadership is based on the notion of egalitarianism and assumes that the leader is no better than those led, but considered equal in value (Greenleaf, 1977).
Bass (2000), as well as Farling, Stone, and Winston (1999), see parallels between transformational leadership and servant leadership. However, while the theory of transformational leadership says that
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