“Boss” and “leader” are used interchangeably, but that doesn’t mean they’re one and the same. The difference between a boss and a leader has nothing to do with a title or position, but it has everything to do with power and authority.

While power is defined as a person’s ability to influence the actions and beliefs of others as a result of their advanced knowledge, experience, or skills, authority grants an individual the right to manage employees, their employment status, and their tasks. It’s how an individual uses their power and authority over others that determines whether they’re a “boss” or a “leader.”

Many managers are not leaders, and many leaders lead without a title or authority. Still confused? We got you. This guide will break down the key differences between a boss and a leader and explore each one’s common character traits.

Who’s a boss?

A boss is someone who has attained a senior position in the management section of the corporate pyramid. They hold a specific title or position, like sales manager, creative director, or assistant manager. Using their power and authority, they make decisions that affect the direction of the company, delegate tasks, supervise business operations, and often control how money is spent.

But those characteristics alone don’t make them leaders.

Okay, then who’s a leader?

A leader is someone who isn’t just in charge of a business, organization, or team — they pave a path to success and lead the team. They stand with them and use their power and authority to set an example that inspires action rather than demanding it. They provide support and focus on developing the skills needed to achieve objectives, rather than just focusing on results.

Leaders value the stakeholders involved in a project and see their relationship as more than just a transaction of services. They connect with their team on an emotional level and foster meaningful relationships that last. This is why people seek out good leaders and turn to them for advice and encouragement.

The difference between transactional and transformational leadership

Transactional leadership is centered around exchanges or “transactions.” Managers establish specific goals for employees and offer a reward for completing them (typically their salary or pay) — nothing more, nothing less.

Transformational leadership shifts the attention so that it focuses more on the employee than the employer. This type of leadership emphasizes personal and professional growth and encourages all employees to think creatively in developing solutions to longstanding challenges.

By positively influencing, inspiring, and motivating employees, employers create a strong sense of corporate culture and promote employee ownership and independence in the workplace.

Traits of transactional leaders:

1. They use extrinsic motivators.

Transactional leaders operate on a system of rewards and punishment to elicit the desired results and performance from their employees. Employees receive extrinsic rewards such as money, fame, grades, and praise for behaving in some expected manner and face consequences for any deviation.

2. They’re results-oriented.

These types of leaders only care about the numbers. They don’t invest much of their time and effort in the personal development of employees nor do they care about cultivating meaningful relationships with them. Transactional leaders see employees as mere tools to achieve the goals and objectives of the organization.

3. They’re resistant to change.

Transactional leaders want everything to work the way it always has. They seek to work within existing constraints, systems, and policies and operate within these boundaries to steer the company towards its goals.

Since they don’t want to disrupt the already established set of rules and regulations, they don’t believe in thinking out of the box. As a result, there’s no room for creativity and innovation, and employee empowerment and individuality aren’t taken into consideration.

4. They’re hierarchy based.

Transactional leaders tend to place importance on organizational hierarchy. Their treatment of employees is based on their position in the organization. Since these leaders are positioned higher up on the corporate ladder, they assume that only they can make the best decisions for the company, and employees must simply follow their directives. As a result, they tend to micromanage business operations and not give their team enough freedom to take care of tasks themselves.

5. They lack empathy.

Transactional leaders tend to put their emotions aside at work and fail to see their employees’ perspectives. As long as work is completed as instructed, goals are achieved as targeted, and rules are obeyed as expected, transactional leaders are satisfied.

They maintain a purely transactional relationship with their subordinates, which makes their employees insensitive to the company's growth, and turns them into robotic performers who are motivated by rewards.

Traits of transformational leaders:

1. They’re open to change.

Transformational leaders don’t feel confined to previously established policies, frameworks, and rules. Since they adopt a growth mindset, they’re always open to new ideas, perspectives, and ways of doing things. Transformational leaders prioritize innovation and try to adapt themselves to changing markets.

2. They’re inspiring.

These leaders have an appealing vision that inspires and motivates others to perform beyond expectations. Transformational leaders have a strong sense of purpose so they provide purpose and meaning to drive their group forward. This encourages followers to invest more effort in their tasks, be optimistic about the future, and invest in their abilities.

These individuals are seen as role models because they usually have very high standards of moral and ethical conduct. Therefore, employees tend to not only identify with these leaders and emulate them but also develop a strong sense of vision and mission.

3. They take responsibility.

Pointing fingers at others when faced with failure is a quick way to lose the respect of your team and peers. When a business dabbles with risks and ventures into uncharted territory, a transformational leader owns the results of doing so, regardless of the outcome. They take the fall when an idea fails and see every misstep as an opportunity to learn.

4. They stimulate intellect.

The best transformational leaders can challenge people’s preconceived notions. They utilize their communication skills to help people ask old questions in new ways, or ask entirely new kinds of questions about the work they do and the world in which they do it.

By identifying peoples’ current mindsets and shifting them in ways that allow them to step out of their comfort zones, transformational leaders help people grow both personally and professionally.

5. They value relationships.

A transformational leader aims to build a strong, emotional bond with their peers and employees and invests their time and effort to foster meaningful relationships. This leader listens to the concerns and needs of each team member, provides support, and is empathic to each person’s situation and background.

They also use active listening techniques so that their team members feel seen, understood, and respected. With these methods in place, they inspire others to share their thoughts without self-censoring.

How to be a leader, not a boss

A boss dictates, but a leader inspires.

Bosses tend to abuse their power and authority to control employees, dictate tasks, and dish out criticism. Instead of pushing employees to become the best version of themselves, bosses tend to direct them by employing scare tactics or manipulation. Ever had a manager that always seems to be telling you what to do while they sit around surfing the ‘net? Yeah, that’s a boss — not a leader.

A leader uses their power and authority to inspire their co-workers and employees. They don’t look at employees as cogs in a machine waiting to receive instructions for execution. Instead, they recognize employees as people who need to be supported, motivated, and mentored in the journey of personal development.

A boss dominates, but a leader collaborates.

A boss’ motto? “It’s my way or the highway.”

Your typical boss is closed off to change, and convinced that their ideas and perspectives are the only ones that matter. Since they hold a position of seniority in an organization, they assume that suggestions from people at the bottom of the organizational hierarchy are invalid. Bosses think they know best, and they take an inflexible approach that leaves little room for debate or experimentation.

Leaders, however, actively seek out new ways to develop themselves and the company. They work alongside their employees and are just another valued member of the team united under a common goal. This helps foster a more collaborative work environment where each individual is given equal importance.

A boss puts results first, but a leader puts employees first.

Profits are important to a business — without them, a business wouldn’t survive. However, a boss puts profits over people. They are willing to chase results and profits, even if it’s at the expense of their employees' well-being.

They fail to realize that employees are instrumental to the success of the business, and unhappy employees aren’t sustainable for a business in the long run. A study revealed that the cost of an unhappy worker for an organization can run up to $550B.

Leaders aren’t driven by profits but by a powerful vision. They invest time and effort into developing employees in their profession, teaching them new skills, and helping them advance their careers. Leaders know that when they put people first and live their purpose in life, profits come naturally.

A boss passes the blame, but a leader takes it.

When an organization comes face to face with failure, a boss will play the blame game and point fingers at their co-workers and fellow employees. A boss might also unfairly take credit for their team’s successes, rather than passing it on to those who made significant contributions to the project. Both tactics make workers feel undervalued and underappreciated.

Great leaders take responsibility for projects when they don’t go as planned. They take the time to carefully review what went wrong and take the necessary steps to steer the team back on track and prevent them from making the same mistakes again. Being accountable for your actions goes a long way toward encouraging other members of your team to follow suit.

Be a leader, not just a boss

While a boss and a leader may seem like interchangeable terms, when you start examining their definitions and roles a bit deeper, you’ll notice key characteristics that differentiate the two. And it all boils down to one largely psychological factor: the vision through which they see the world.

Shifting from a boss mindset to that of a leader requires developing a range of people management skills. True leaders commit to assessing their management styles, understanding key differences, and then making a concerted effort to put these good leadership characteristics into action.

Trainual’s LMS-alternative makes investing in professional development training a breeze. While there are countless software platforms available on the market, a top-level, LMS-alternative can meet all your training, onboarding, and development needs in a single, streamlined platform.

Plus, it provides a great opportunity to get all those processes, policies, and SOPs out of your brain and into a centralized business playbook where your employees can benefit from them.

Great leadership deserves great resources. Take a deeper dive on the boss versus leader debate with the "Organize Chaos" podcast (with Trainual CEO Chris Ronzio) linked below:

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