Welch’s Transformational vs. Schultz’s Transactional Leaderships

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Leadership is an integral part of success in every institution. In simple terms, it refers to the ability of a person to influence other members of the firm to follow a certain direction to achieve institutional goals (Padilla, 2019, p. 9). Presently, various forms of leadership may be used by leaders to promote their agenda (Torres, 2022, p. 2). The purpose of this essay is to comparatively evaluate Jack Welch’s transformational leadership style with Howard Schultz’s transactional leadership as well as Martha Stewart’s autocratic leadership styles to practically demonstrate key differences between these leadership approaches on a case-by-case basis. Jack Welch, General Electrical CEO, has effectively used a transformational leadership approach. The essay will further contrast and compare his leadership approach to Howard Schultz-Starbucks CEO’s transactional leadership. Finally, it will explore how Martha Stewart differs from the above. Exploring the three varied leaders will help compare and contrast Jack Welch’s leadership approach to others and recommend the best to be adopted in an organization.

One of the most interesting leaders in the management context is Jack Welch-the, the General Electric’s CEO. Jack Welch was the organization manager from 1980-2000. During that period, Welch experienced tremendous revenue growth of $26.8 billion to $130 billion (Hunt and Fitzgerald, 2018, p. 62). Notably, throughout his helm of the organization’s leadership pyramid, Welch rose from various ranks to ascend to the top leadership. During that period, he has shown exemplary performance through his leadership approaches in every aspect of his work. He ensured that the firm remained united in spirit to work towards the achievement of its goals.

One of the major reasons why Welch has continued to perform exceptionally well is his transformational leadership approach. This style comprises three critical dimensions, which comprise effective actions and practices. Welch promoted these critical aspects of management by effectively using life experiences to make changes in the institution (Cardona et al., 2019, p. 60). Welch created a reasonable organizational culture by fostering a strong alignment of everything to the institution’s goals, mission, and vision (Zeeshan et al., 2019, p. 54). Welch further promoted his work through well-oriented ambition, optimism, and innovation. The approach made him influence the other members positively and create the expected organizational changes. In other words, he worked to effectively stimulate every aspect of members’ potential, thus achieving the best.

The distinctive characteristics of Welch’s leadership include adaptability, commitment, and empowerment. The aspect of adaptability has enabled him to make the required adjustments while at the same time exercising his influence in the institution. Through his commitment, he has managed to model a unique setting that discerns what most customers and other players desire (Insan and Andriani Yasin, 2021, p. 61). Subsequently, he has promoted employee self-esteem and confidence and aligned their feelings to specific proactive concepts. This trend has led to the need for most employees to contribute proactively towards the achievement of the objectives of the institution (Santoso et al., 2022, p. 182).

For the employees, Welch specifically regarded employee engagement as a central pillar alongside customer satisfaction. He practiced workplace culture and environment building by listening and directly communicating with them (Murari and Mukherjee, 2021, p. 2592). He focused on three essential practical approaches, which include care, competence, and career. He believed that every employee wanted to grow professionally, advance in his or her career, and receive support from the leadership. Thus, he focused on these employee needs within his 3Cs practice of employee engagement. Furthermore, Welch has used creative leadership mechanisms, a great recipe for stimulation and imaginative response among the organization’s workers. He also acted as a perfect problem solver to General Electricals’ challenges, where the interests and voices of employees were considered (Hunt and Fitzgerald, 2018, p. 62). These proactive approaches made him excel in almost every aspect of the activity he participated in.

Welch organized his team into small and independent units with specific performance contracts. Compared to the scenario before his tenure, the renowned leader was at the forefront of promoting optimal performance through the motivation of the sub-units. Through ideal management, Welch created a good process where the entire business promoted setting, planning, and managing the customer’s demands at the right time to help achieve specific goals. Further, he innovated new ideas for encouraging employees and setting a safe and standardized setting for business operations (Nugraha, 2021, p. 100). This strategy has been successful since the CEO has concentrated on doing what is right irrespective of the challenges he faced in the firm. His approach has consisted of other research findings, which state that intellectual stimulation is a powerful approach to maximizing employee performance.

However, Welch’s transformational leadership required excessive attention and focus on employee engagement and customer satisfaction. A valid criticism can be made that it makes a leaderless focused on a larger strategy. In addition, constantly seeking to support and transform employees might not be as worthwhile as deliberately targeted efforts to increase customer satisfaction since these two are not necessarily linked. The biggest concern in Welch’s approach and transformational leadership, in general, is the problem of favoritism, where the voices and preferences of a minority become amplified over the majority, disrupting the practical and effective operational process for the sake of a transformative change.

Ultimately, the transformative leadership that Welch has used has contributed significantly to the organization’s growth. The institution has also improved its performance in the global stock exchange while marketing itself as an exemplary institution in producing electrical products. This trend may not be regarded as a mere achievement but a significant growth that has put the institution on the global roadmap. He has achieved the above growth through his consistency, commitment, and team leadership oriented toward the goal. Even though some critics believe that he acted as a hero, Welch operated independently with the main ambition of transforming the institution.

Criticisms of the transformative model believe that transaction leadership could be the best to create organizational change. One of the leaders who perfectly employed the approach is Howard Schultz–Starbucks CEO. Historical records indicate that even though the organization was doing well in the food and beverage sector, its international sales were not satisfied until the entry of Howard Schultz (Oktavia et al., 2020, p. 10). His radical skills ensured that he had set a clear vision with good intellectual stimulation, resulting in focus among the organization’s key players (Khan, 2021, p. 90). Further, the renowned businessmen instituted programs that would support the employees, such as part-time workers, a stock purchase program, and veterans hiring, which highly motivated these players.

Unlike Welch, Howard Schultz focused on making the organization perform effectively in the global market. Therefore, he ensured that he blended his beverages in the form of classes that would meet international standards (Kanchana, 2019, p. 45). For example, he spurred the coffee status revolution by ensuring that he created the “American third place” in most areas where they served their products (Hunt and Fitzgerald, 2018, p. 62). That implies that the approach of transactional leadership aims to promote class and the status quo. The categorization created some of the best positions where Americans could stop and grasp a cup of coffee before proceeding with their journey (Pratama, 2022). Even though it was a great idea, critics believed that such a method promoted segregation among the social classes in America.

Subsequently, it is notable that Welch’s transformational leadership recognizes the predecessor’s contributions and weaknesses. This approach is contrary to Schultz’s, which is rigid and disciplinary to the former mistakes that the institution may have made (Donkor and Zhou, 2020, p. 32). For instance, in the first years of his tenure, Schultz took the opportunity to close all the sub-stores that were not performing as well as fired the extra employees who had minimal influence on the institutional progress (Kehr et al., 2022, p. 21). this trend is typical in transaction leadership, where employees are subjectively rendered to both reward and punishment without proper consideration of the impact of the action. Applying such a principle may discourage employees and create a poor organizational image.

Contextually, it is clear that transactional leadership failed to achieve acceptance among the global community when Schultz ordered the creation of America’s preferred brands. The style proved ineffective in promoting unity and understanding among the employees and customers (Dube et al., 2022, p. 32). Further, by setting his standards, Schultz has proved that this approach is only effective when there is a need to centralize the management (Sheehan et al., 2020, p. 411). Ideally, this leadership approach is Compared to the Welch transformational approach, which focuses on creating positive change without any form of disparity (Fouad, 2021, p.8). In other words, the Welch approach aims to create the right principles of strategic change embedded in the organization’s vision and mission.

On the other hand, autocracy is another approach that global leaders have used to promote their organizations. One such leader is Martha Steward, who believed in developing her brand (Fosuaa and Junior, 2021, p. 34). Compared to Welch, Martha has presented a bad coercive leadership that may have yet to achieve much. She struggled to hold much power by creating a brand that does not have distinct institutional value but only maintains public order (Murphy, 2022). As an iron lady, she believes in creating a new style without caring about the form of causalities that she may have caused. This trend has led to the loss of appeal to most global customers and players in her business organization, thereby proving not to be the most effective approach to leadership in an organization.

Even though it is believed that Martha acted to attract the natural forces in the global market, she propounded a new doctrine that has yet to appeal to most customers. Unlike the transformational leadership that promoted every class of customers, Martha’s brand ambassador approach only appeals to certain classes. Ideally, the mechanism has made her respond only to a few groups around the globe, hence losing most of the customers. Her spirit of appealing to the Y-generation customers by acting as a brand ambassador has made her lose most of the old generation (Kuknor et al., 2021). This trend suggests that transformational leadership is highly effective and well-joined to the organization’s objectives compared to the autocratic approach.

In conclusion, based on the analysis, it is clear that Welch’s transformational leadership approach is an effective way of achieving the best as compared to transactional or autocratic. Welch’s approach is more robust, focused, and attached to the organizational objectives, vision, and mission. In the best interest, this approach is mostly geared at providing the right direction that may create the positive changes required in the institution. Unlike the transactional and autocratic, the former is decentralized and allows every member to operate effectively and provide the right changes required in the firm. The transformational model allows managers to maintain the team and effectively utilize the resources while motivating every employee to carry out their services effectively. Through his method, he created tremendous growth in General Electricals Inc. Therefore, potential leaders should continue with the trend and adopt Welch’s transformational leadership approach to help deliver the best results in their operations.

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