The Impact and Challenges of Transformational and Transactional Leadership on SMEs of the Banking Sector in the UK during the Covid-19 Pandemic Period

Literature review
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Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
The rationale of the Research..........................................................................................................2
AIMS AND OBJECTIVES OF RESEARCH.................................................................................3
Aim of Research..............................................................................................................................3
Research objectives.........................................................................................................................3
Research Question...........................................................................................................................4
CHAPTER 2....................................................................................................................................4
LITERATURE REVIEW............................................................................................................4
CHAPTER 3..................................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCE................................................................................................................................12
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Topic: The impact and Challenges of transformational and transactional leadership on SME's of
the Banking sector in the UK during the Covid 19 pandemic period
CHAPTER 1
INTRODUCTION
Leadership is the continuous process of influencing group of individuals who get ready to
work continuously by accepting challenges. To become a good leader there is need to have good
understanding and skills which could be used to take collectively and managing the all functions.
The leadership influences a group of individuals with shared purpose as it helps to manage the all
functions and activities. A leaders helps employees and themselves to do right things by guiding
them properly and get work done effectively. In other words, leadership is the ability to inspire
and influence a team for the purpose of achieving a certain goals, This is important for each
individual to analysis the business environment and comes to know how their employees will be
motivated so that kind of services are provided to staff. This is important for each organization
to have good leader and management as they understand the goals and given their contribution to
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accomplish the business goals. Leadership is the regular process of influencing the number of
people and develop the organizational performance. The types of leadership are transformational,
and transaction that are used by business organization for the purpose of operating their business
in changing environment as it helps to accept the changes at the workplace and supports to
increase the business profits. The term "transformational leadership" refers to a leadership style
that affects people and societal structures. It promotes meaningful and good transformation in
teammates in its optimum context, aiming to grow followers into leaders (Klein and Todesco,
2021). Whereas, Transactional leadership is a leadership style wherein leaders use both
incentives and penalties to encourage subordinates to comply. Transactional leaders may
maintain followers engaged in the immediate term by using incentives and penalties structure.
Transactional leadership involves setting goals, rewarding goals to achieve goals and punishing
goals that are not achieved (Mendy and Harrison, 2021). Today, the business management style
is the new business model for small and medium-sized businesses. Understanding aspects of this
performance and the Transactional leadership concept can provide essential insights into
integrating critical areas of management and leadership (Adam and Alarifi, 2021).
The business environment is changing day by day where it became important to introduce
the kind of products and services which supports to operate a business effectively. In addition,
many small and medium-sized companies do not have access to group certificates and insurance
offered by insurance companies to large institutions when it comes to the insurance sector. Due
to the relatively high cost of services for small companies, the allocation of insurance funds to
small and medium-sized companies is one of the most important factors (Klein and Todesco,
2021). New technologies are already being used to develop business models for small and
medium-sized enterprises, and COVID-19 has changed the way companies now view small and
medium-sized enterprises. To understand about leadership and impact of covid-19 on business
on banking finance sector Jyske Bank has been selected that is small and medium size bank in
UK, offering different types of loan, payment, and banking services to their organization. The
leader of such organization plays an important role as they introduces the new technology and
innovation while pandemic that supported to operate their business and increase the productivity
effectively. Harrison (2021) stated that the banking sectors faced significant challenges during
the coronavirus outbreak, like payment delays and communication problems. Within covid-19
period it became challenging for organization to operate their business in changing environment
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as government declared the lockdown where all businesses have been closed and no one is
allowed to visit the other places. All businesses have faced the challenge of lower productivity
and profitability where leaders have controlled the business activities and functions.
In addition, this research will have two sections: the first section of the study discusses
the introduction of the research which includes the research background, research aims,
objectives, research question and rationale of the research. The second section of the research
discuss the literature review of the research which will examine in relation to the research
objectives and research questions.
The rationale of the Research
Leadership plays an important role in stimulating innovation and improving the productivity
of SMEs in Banking. An important concept of management style is the concept of Burns (1978),
which divides management into two types: transformational and transactional. In addition, this
research will analyse the challenges of different leadership styles and the performance of SMEs
in the banking sectors. One commonly cited argument is that small and medium enterprises of
Banking Sector are sensitive to the economic disruptions which are unique to businesses due to
its substantial economic limitations and the significant cost of complying with state rules. This
viewpoint argues that SMEs needs assistance not to provide them an unfair edge over larger
businesses, rather to compensate for the disadvantages they face as a result of its small
dimensions and to counteract the negative consequences of many other government regulations.
This is important research related to the current development debate in the private sector on the
importance of creating a favorable business environment for the SMEs of the banking sector
(Atiku and Randa, 2021).
As current research is about leadership which is followed by organization for the purpose
of influencing number of employees at the workplace and get works done effectively. It has seen
that small and medium size enterprises are main drivers in economic development as it provides
the job opportunities to individuals who have good knowledge about market and business
industries as it helps to know how each function and activity will go to perform well by
managing all functions and activities. Each organization needs to bring changes, innovation, and
new technology as it influences the number of people and get ready to work continuously. This is
important for each organization to understand what employees wants and how they could be
influenced to work. The leader is having major role as it conduct analysis and states how each
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function and activity will be perform to manage all function and supports to develop the
organizational productivity. Moreover, effective leadership can help improve the performance of
an organisation as SMEs face many new problems and challenges. The current research will help
researcher to improve their personal and professional knowledge which supports to accomplish
the business goals effectively.
AIMS AND OBJECTIVES OF RESEARCH
Aim of Research
This research examines how transformational and transactional leadership traits have
affected the SMEs in the finance industry during Covid-19 in the UK. A case study of Jyske
Bank.
Research objectives
 To explore the relevant issues and challenges of transformational and transactional that
states how leaders responded to the impact of Covid-19.
 To analyse how transformational and transactional leadership overcome challenges
caused by Covid-19 for Jyske Bank in the UK.
 To evaluate the leadership strategies could be used by Jyske Bank to respond the changes
within Covid period.
Research Question
 What are the challenges of Transformational and Transactional leadership that states how
leaders responded to the impact of Covid?
 How did transformational and transactional leadership help overcome Baking challenges
in the course of the Covid-19 pandemic?
 What are the leadership strategies could be used by Jyske Bank to respond the changes
within Covid period?
CHAPTER 2
LITERATURE REVIEW
To explore the relevant issues and challenges of transformational and transactional that states
how leaders responded to the impact of Covid-19.
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