People respond to leadership challenge in different ways. Managers and supervisors commonly ask why staff are not simply self-motivated. They are often mystified that employees don't perform at levels natural to business owners and farming families. Many believe that when people are paid well they can be expected to perform.

But this mindset falls short of what is needed to fully release potential through effective leadership. It contrasts autocratic my-way-or-the-highway leadership style with more democratic, consultative and collaborative management methods. These two extremes of the leadership spectrum we may call 'transactional' vs 'transformational' leadership.

Transactional leadership says staff are paid to do as they are told. It assumes employees are there to work and the boss is there to give instructions and monitor results. In return the business rewards agreed performance outcomes; it rewards an employee's compliance with requests and his/her working within agreed systems. Here the leader's time is mostly spent refocusing people on the desired outcomes from their role.

Now contrast the transformational leadership style. This typically grows the skills and capabilities of team members. Though focused on performance outcomes, it gets results by developing people, with deeper appreciation of each individual's personality, learning and work style. This style recognises training and systems development secure gains from a culture of continuous improvement.

Transformational leadership is about helping people change to better meet the needs of the operation. Leaders mentor and collaborate so that their people better understand what is expected of them and how they can contribute to results. Each method has its place.

The transactional (more functional) focus is valid for short term projects or situations where results from operational tasks are unlikely to benefit from development of wider skills and capabilities. But such output focus tends to limit growth potential within the business.

Transformational leaders recognise that by developing their team they can delegate more, so reducing time they must spend on management, and instead work more on entrepreneurial or business development activities.

Striking the right balance in these aspects of people management is as much an art as a science. A fundamental is for leaders to truly understand themselves, including continuously improving their self-awareness and emotional intelligence, the better to 'read' what is going on for individuals and the team. This, in turn, engenders motivation and enthusiasm for developing people and a team culture to get best business performance: sustainable profits and delegation to protect the business focus and lifestyle of team leaders.

Kerry Ryan is an agribusiness consultant based in New Zealand.