Introduction The business environment is highly dynamic. High stakes in management have been raised rendering the traditional management theories ineffective and compelling new revitalized approach to organizational management. The human capital is the most important agent of change, innovation, and excellence in service in today’s business environment (Burns, 1979, p. 56). Thus, human resource management is no longer regarded as a factor of production but a business partner in the pursuit of the goals and objectives of organizations. This research proposal highlights the change in human resource management required given the current trends in business. Transformational leadership is the required ingredient to human resource management for effective realization of organizational goals. Discussion Organizations have realized that human capital is the most important driver for change to the extent that it facilitates the creation and maintenance of sustainable competitive advantage in an organization. Leadership style adopted by an organization is an important people management factor that the style of leadership as indicated by Bass et al. (2003, p. 102) sets the tone in every aspect of people management from performance management to organizational culture adopted and practiced everyday in the workplace. A study by Hay Foundation as explained in Berman et al. (2006, p. 99) examined over 75 components that promote employee satisfaction. It identified trust and confidence in leadership as the most important factors of promoting employee satisfaction and job commitment. The study also showed that effective communication was the most important leadership vehicle for winning workers’ loyalty, trust and confidence. The classical theories are no longer applicable in the management of people and specifically employees in organizations. These theories were autocratic and failed to realize that human capital has an important role to play in the performance and growth of an organization. Many organizations have embarked on using a modern theory of transformational leadership in managing their employees. According to Inkson & Kolb (2002, p. 69), one of the theories that successful organizations have adopted in the recent past is transformational theory. Transformational theory makes possible for individuals to redefinition of vision and mission, and refocuses on their pledge and the reformation of their systems for objective achievement. “A relationship of mutual stimulation and elevation converts followers into leaders and may convert leaders into moral agents” (Samson & Raft, 2008, p. 79). It is a process where leaders and followers create a mutual and collective approach to management by emphasizing upon one philosophy, vision, high standards of morality and performance. Transformational leadership style essentially transforms every worker into a leader; it is squarely pegged on egalitarian culture, empathy and self – management. The use of this type of leadership inhuman resource management will guide organizations to higher levels of performance. The modern organization employing transformational type of leadership usually applies its four components to their management styles to produce excellent out come for the organizations. Acco