Transformational versus Transactional Leadership

In these challenging (and exciting) times it appears that most leaders are playing safe and adopting a transactional style of leadership. By that I mean they focus on being technically good in areas such as their knowledge of the business, developing strategies, maintaining their skills, and generally working hard. The bad news is that 2011 is about leverage if you really want to be competitive, and transactional leadership will only drive more of the same, let's call it a five percent improvement on 2010's results.
A transformational leader behaves in a way that literally "transforms" themselves and their business (and their business results), achieving a 25 percent step change, rather than more of the same. Studies on transformational leadership have identified three things that transformational leaders do well, they increase their people's vision for the business and their self-belief in their competency (technically called self-efficacy), they facilitate their team members' social identification with the group, and they link the work values with the employees' values (Bono & Judge, 2003).
To improve the self-efficacy you can link the organizational vision directly to that of each person by showing them how they can benefit in where the company wants to go. Linked to that you need to clearly demonstrate how the person will gain the skills, and be supported, so that they cannot fail to achieve their part of the vision. Do not assume that they will work this out for themselves.
Building social identification is a hot topic today, but this is more than Facebook, or Twitter. The transformational leader breaks down organizational silos, encourages social interaction, and takes a personal interest in all their people. Simple things like awards, logos, newsletters, and praise help build the social collateral.
Do you have your company values clearly defined and communicated? Mindshop has five values, continuous improvement, community contribution, best practice, value to others, and fun. You need to encourage your people to adopt and embrace your values so that there is a clear link between the two value sets.
The symptoms of an organization with transformational leadership include, confident staff, a pride in belonging to the company, a commitment to be the best, and a burning desire to make a difference. Does that describe your organization?  If not, perhaps you have too much emphasis on transactions and not enough transformation?