A laissez-faire style leader is one that gives their employees complete freedom to make decisions and do the jobs any way they want to do it.
Robbins and Coulter (2002) state that transactional leaders are leaders that motivate their employees to achieve the goals of the company by clarifying role and task requirements. Transactional leaders are usually task oriented, autocratic and makes most decisions pertaining to achieving goals on their own.
Transformational leadership's goal is to motivate others to achieve more than they originally intended or ever thought they possibly could. Higher and more challenging expectations are required so higher performance is accomplished. Bass and Avolio (1994) state, "transformational leadership is seen when leaders stimulate interest among colleagues and followers to view their work from new perspectives and generate awareness of the mission or vision of the team and organization: they develop colleagues and followers to higher levels of ability and potential, (p. 3).
Transformational leadership is an extended version of transactional leadership. Transactional leadership identifies the transactions and exchanges that occur between leaders, colleagues and followers. The leader discusses what is required and explains the conditions and rewards they will obtain if they fulfill the requirements. Transformational leaders extend beyond setting up single exchanges and agreements with associates and subordinates. They act to achieve excellent results by using idealized influences, inspirational motivation, intellectual stimulation and individual consideration (Bass and Avolio, 1994).
When the leaders act in a manner that results in them being role models for their cohorts, they are achieving idealized influence. Leaders are trusted, respected and admired. They share risks with their followers, are consistent with their decisions, exhibit high standards of ethical and moral conduct and avoid using their power for personal gain.