GM586 Unit 7 Transactional vs Transformational Paper Example

Two Managers, Two Seasons, One Storefront: A Unit 7 Comparison of Transformational Appeal and Transactional Control

[Student Name]

Purdue University Global

GM586: Transformational Leadership

Unit 7 Transactional Comparison Paper

[Instructor Name]

[Date]

The tax preparation office, both managers and every figure are composite and illustrative; the research cited is real.

The Office

The office is one of about 60 locations of a regional tax preparation franchise, serving mostly working families in a mid-sized city. It is open for about three months each year, from late January to mid-April, and in the seasons compared it prepared about 4,000 individual returns each. The franchise supplies the software, the training course and the review rules, including a requirement that a sample of returns get a second review before filing. Many clients claim refundable credits for low-income working families, which carry strict documentation rules and attract close scrutiny.

The office employs 22 seasonal preparers. Most are new each year: in the first season compared, 15 of the 22 were in their first season.

Two Managers

The first manager led the office in the first season. She spoke often, in morning huddles and individual conversations, about the families whose refunds and credits the office handled, telling preparers that a refund might be the largest single payment a family received all year. She stayed late coaching preparers on difficult returns. She set no numeric targets and sampled returns for second review only at the franchise minimum of 1 in 25.

The second manager led the office the following season. He posted each preparer's accuracy figures on a board every morning, based on rejections and reviewer findings from the day before. He sampled 1 in 10 returns for second review. He paid a bonus of $3 for each return accepted by the IRS without rejection or later amendment, about $350 for a typical preparer over the season. He rarely spoke about clients beyond the work.

In Burns's terms, the first manager appealed to purpose and the second ran an exchange (Burns, 1978). In the full range model, the second manager's approach combines contingent reward with active management by exception (Bass & Riggio, 2006).

The Results

Rejected electronic filings. In the first season, 6.8 percent of returns were rejected by the IRS on first submission. In the second, 3.1 percent were.

Amended returns. Returns later amended because of preparer error fell from 2.9 percent to 1.2 percent.

Client complaints. Written complaints recorded by the franchise fell from 41 to 22.

Preparers who returned the next season. Of the first season's 22 preparers, 13 came back the following year, or 59 percent. Of the second season's 22, only 6 came back, or 27 percent.

The second manager's season wins the first three measures clearly. The first manager's season wins the last by a wide margin.

The transactional season produced more accurate returns, and the transformational season produced preparers who wanted to come back.

What the Preparers Said

Every preparer fills in a brief franchise questionnaire when the office closes in April, and the answers from the two seasons mirror the results above. In the first season, 82 percent of preparers agreed that they understood why their work mattered to clients, against 48 percent in the second. But only 51 percent in the first season agreed that they knew what a good return looked like, against 86 percent in the second. Several first-season comments asked for more feedback on errors, and several second-season comments described the morning board as stressful. Both managers, in other words, supplied something the preparers valued and left out something they asked for.

Confounds

The comparison is not clean. The most important confound is experience. Because 13 of the first season's preparers returned, the second season had only 9 first-year preparers instead of 15. Returning preparers make fewer errors. To adjust, I compared first-year preparers only: their rejection rate was 8.1 percent in the first season and 4.0 percent in the second. The second manager still wins by a wide margin, but part of his apparent advantage came from inheriting the first manager's returners.

Other confounds are smaller. The franchise updated its software between seasons, adding a check for missing dependent documentation that likely reduced rejections everywhere. Across the franchise's other locations, rejections fell by about 0.8 percentage points that year, far less than the office's 3.7 points. Tax law changes between the two seasons were minor, and the client mix, judged by the share of returns claiming refundable credits, was similar in both years at about 60 percent.

What the Season Needed

A short season staffed mostly by first-year preparers needs accuracy above all. A rejected return delays a family's refund by weeks, and an amended return can cost a family a credit it was owed or create a debt to the IRS. The first manager's purpose talk was sincere, but it did not tell new preparers what a good return looked like or catch their errors early. Across decades of studies, Edwin Locke and Gary Latham found that a clear and demanding target improves performance more than a general appeal to try hard (Locke & Latham, 2002). The second manager's posted figures gave preparers that kind of goal every morning.

Timothy Judge and Ronald Piccolo found that contingent reward predicted follower performance about as well as transformational leadership in their meta-analysis, and was more strongly related to job performance in some settings (Judge & Piccolo, 2004). A three-month season with new staff and clear accuracy rules is such a setting.

But the second manager's approach had a cost the office paid the following season. With only 6 returners, the third season again had mostly first-year preparers, and the office lost the accumulated experience that had helped the second manager. Steven Kerr's classic warning applies: a reward system can pay for one thing while managers quietly hope for something else (Kerr, 1975). The bonus rewarded accepted returns, not the decision to come back.

A Combined Approach

The evidence suggests the office needs the second manager's controls and the first manager's purpose together. Daily accuracy figures, a 1 in 10 review sample and a bonus for accepted returns should stay. To them, the office should add the first manager's evening coaching and a small retention bonus paid at the start of the following season, along with the reminder, delivered by the manager, that each accurate return is a family's refund arriving on time. Bass argued that transformational leadership works best when built on a reliable transactional base (Bass & Riggio, 2006). In this office, the transactional base was the part that a new preparer needed first.

References

Bass, B. M., & Riggio, R. E. (2006). Transformational leadership (2nd ed.). Lawrence Erlbaum Associates.

Burns, J. M. (1978). Leadership. Harper & Row.

Judge, T. A., & Piccolo, R. F. (2004). Transformational and transactional leadership: A meta-analytic test of their relative validity. Journal of Applied Psychology, 89(5), 755-768. https://doi.org/10.1037/0021-9010.89.5.755

Kerr, S. (1975). On the folly of rewarding A, while hoping for B. Academy of Management Journal, 18(4), 769-783. https://doi.org/10.2307/255378

Locke, E. A., & Latham, G. P. (2002). Building a practically useful theory of goal setting and task motivation: A 35-year odyssey. American Psychologist, 57(9), 705-717. https://doi.org/10.1037/0003-066X.57.9.705