Leadership styles and transformational leadership explained

Short answer: transformational leadership is a style where the leader inspires staff with a vision and develops them. Staff then achieve more than pay alone would produce [2][3]. AQA 7138 lists it in topic 3.2.1 next to autocratic and democratic leadership, and it is new to the course. Unit 3.2 is examined on Paper 2 [1].

What the 7138 specification asks

Topic 3.2.1 covers managing people. It names three leadership styles: autocratic, democratic and transformational. It also asks how leadership affects performance at three levels: the individual employee, the team and the business as a whole [1].

Two things have changed from the old 7132 course. Transformational leadership is new. Laissez-faire leadership, where the leader gives staff almost total freedom, was in 7132 but is not listed in 7138. We explain all the changes in AQA A-Level Business is changing.

The style also appears in topic 3.3.4, on change. There, the specification lists transformational leadership as one way to build an agile business, alongside a flat structure, empowerment and cross-functional teams [1]. An agile business is one that can change direction quickly. So this topic can earn marks on Paper 3 as well.

The three leadership styles in 7138

No style is right everywhere. In the exam, the marks come from matching the style to the situation in the case study.

Transformational leadership: Burns and Bass

The idea comes from James MacGregor Burns, an American political scientist. His 1978 book Leadership is described as the watershed work for research on transformational leadership [2]. Burns compared two types of leader:

• Transactional leaders run an exchange. Staff do what the leader wants and receive something they value in return, such as pay [3].
• Transforming leaders raise themselves and their followers "to higher levels of motivation and morality" [2].

Burns saw the two types as opposite ends of one line [3]. Bernard Bass changed this in his 1985 book Leadership and Performance Beyond Expectations. Bass treated the two as separate dimensions, so one leader can use both. He argued that transformational leadership builds on transactional leadership, not the other way round [3].

Bass's model is usually taught as four components [3][4]:

1. Idealised influence: the leader is a role model staff respect and want to copy. Some studies call this charisma [3].
2. Inspirational motivation: the leader shares a clear, exciting vision.
3. Intellectual stimulation: the leader challenges staff with new ideas and asks them to question old ways [3].
4. Individualised consideration: the leader coaches and mentors each person [3].

How leadership affects individual, team and business performance

Individual. Leadership shapes motivation. A leader who coaches staff and gives them responsibility meets higher needs in Maslow's hierarchy and supplies Herzberg's motivators. Studies reviewed by den Hartog and colleagues found that staff of transformational leaders reported more satisfaction and more extra effort than staff of transactional or laissez-faire leaders [3].

Team. The same review reports higher-performing work groups under transformational leaders [3]. A shared vision gives the team one direction, which is a condition in Hackman's model of team effectiveness.

Business. Extra effort and better teamwork can raise productivity and quality, so costs fall and profit can rise. But be careful. These findings come from earlier studies, and leadership is one cause of performance among many, such as demand, costs and competitors.

Real example: Rolls-Royce since 2023

Tufan Erginbilgic became chief executive of Rolls-Royce, the UK aero-engine maker, on 1 January 2023 [5]. Early in 2023, he described the company as a "burning platform" in need of change [6].

On 17 October 2023, the company announced a simpler structure. It would remove an estimated 2,000 to 2,500 roles out of about 42,000 worldwide. It said the change would create "a more agile business" [7]. Fortune reported that Erginbilgic also ran workshops where 500 employees suggested ideas to improve the business [8].

Results then improved. Underlying operating profit rose from £1,590m in 2023 to £2,464m in 2024, and the margin rose from 10.3% to 13.8% [9]. In 2025, underlying operating profit reached £3,462m, a margin of 17.3% [10].

You can read this case through all three styles. The vision and the push for a "high-performance culture" [9] fit transformational leadership. The staff workshops have a democratic element. The job cuts were decided at the top, which is closer to autocratic. Fortune also notes that air travel recovered and some contracts were renegotiated [8]. So not all of the gain was leadership.

Notice the structure. The analysis is a chain joined by "so" and "because". The counter-argument uses the other two 7138 styles, and the judgement names what it depends on.