With the inner workings of major industries and companies getting more and more complicated, lot of research has gone into finding the key ingredients of making the perfect leader. Here’s a brief look at the three major leadership theories that have become the norm of industry-level management –
Transactional Leadership
It is fair to say that transactional leadership theory is the oldest and the most commonly used leadership theory in most administrations. It is grounded on the concept of transactions or agreements made between a worker and his or her employer. In the simplest of terms, transactional leadership theory is based on the age old ‘Carrot and Stick’ notion.
The fundamental basics of Transactional Leadership include the following-
 Remunerations and reprimands are the two key factors that inspire workers to maintain a healthy code of professionalism.
 A strong chain of command operates the best in administering a company.
 Once employees cede to the demands of the chain of command, they must do as instructed. A worker must fulfill the work requirements of the management team. In return, he or she must be reasonably recompensed financially.
Transformational Leadership
Compared to transactional leadership theory, transformational leadership is more modern and humane. It is founded in the belief that encouraging employees can be best done when the leader of the team works by setting examples and the unit’s efficiency is directly correlated to its leader's personality.
The fundamental basics of Transformational Leadership constitute the following–
 The key assumption is that workers will eagerly follow a manager who motivates them.
 The forethought and desire of one man or woman can transform his or her co-workers and in unison, they can accomplish remarkable feats.
 Vigor and eagerness are the stimulants that get the work done.
 Cultivation of original ideas and the ability to express these ideas is crucial for workforce bonding.
 Challenges are something to look forward to as a team.
 The influence of innovative thinking and group motivation can be more effective than any other financial or materialistic enticement.
Situational Leadership
This unique leadership theory states that neither transactional nor transformational leadership approaches will function in all circumstances. The attitude of a leader must be accommodating enough to acclimatize to all types of circumstances and varying times.
The fundamental basics of Situational Leadership involve the below-mentioned aspects-
 A balanced combination of transactional and transformational leadership methods is needed in order to get certain tasks done.
 A leader must adapt his or her management strategy as the circumstances demand.
 Every worker has a unique set of skills and talents. So, a balanced man-management approach is the best way to exploit their talents efficiently and in a result-driven manner.
A leader can only be successful with a clear knowledge of all of these theories. Balancing this technical knowledge with a practical understanding of every worker’s level of enthusiasm and talent and avoiding the use of a rigid strategy towards everyone is the best way of being successful.
Summary
The three major prevailing leadership theories are that of transactional leadership, transformational leadership, and situational leadership. A good leader should have proper clarity on all these theories, so that he can apply them appropriately, balancing the same with practical knowledge and technical acumen. Only then can an organization taste success.

Author's Bio: 

Reshali Balasubramaniam
Head of HR, HR Counselor and adviser at https://work.lk/. Do you offer a Service? Signup for an account at work.lk