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mutual stimulation and elevation that convertsfollowers into leaders, and it may also convertleaders into moral agents.

Never before have healthcare professionalsfaced such complex issues and practical difficul-ties to keep their organizations viable. With tur-bulent changes taking place in payment, delivery,and social systems, healthcare leaders are facedwith trying to meet their organization’s health-related mission in an environment of extremeoperational pressures. Responsible and appropri-ate leadership is critical to the success of anyindustry. Leadership in the healthcare environ-ment today is essential and mandated if ourhealthcare system is to survive. According to theCenters for Medicare and Medicaid Services(2003), healthcare is a business that in 2003 con-sumed 15.3% of our gross national product andhad gross expenditures of approximately $1.7 tril-lion. In the past decade, few sectors of the Amer-ican economy have been as whipsawed as has thehealthcare industry. On the one hand, U.S. healthconsumers continue to demand the highest qual-ity and most accessible care. On the other hand,current public policy, expressed as dramaticallylower payments for care delivered, has caused aca-demic medical centers and community hospitalsalike to hemorrhage financially, putting institu-

Abstract. The purpose of this study is to evaluate empiricallyin the hospital administrative environment the relationship ofleadership behaviors to subordinate manager’s perceived out-comes, through examination of B. M. Bass’s (1985) model oftransformational, transactional, and laissez-faire leadership.The author measured leadership orientation and outcome fac-tors through subordinate managers’ ratings of hospital CEOsusing a questionnaire, which asked: Is there a relationshipbetween the leadership styles of hospital CEOs and subordi-nate managers’ self-reported willingness to exert extra effort,perception of leader effectiveness and satisfaction with theirleader? Findings revealed that the relationship between trans-formational leadership and the outcome factors were strongerand more positive than were the transactional and laissez-fairestyles. These findings are consistent with the hierarchal pat-terns reported and support the universality of the model.

Key words: hospital administration, laissez-faire leadership,transactional leadership, transformational leadership

Introduction

urns (1979) developed the comprehensivetheory of transformational and transactionalleadership and Bass (1985) further applied it

to form a paradigm to discern effective leadershipin a variety of organizations. Burns noted that thetransformational leader recognizes the need for apotential follower, but he or she goes further, seek-ing to satisfy higher needs, in terms of Maslow’s(1954) need hierarchy, to engage the full person ofthe follower. Transforming leadership results in

Robert J. Spinelli, DBA, is an assistant professor in the Department of Health Administration and Human Resources at theUniversity of Scranton, Scranton, Pennsylvania. He serves as director of the undergraduate program in Health Administration

and teaches courses in healthcare finance, administration, leadership, and other health administration concentrations. Copyright © 2006 Heldref Publications

The Applicability of Bass’s Model ofTransformational, Transactional, andLaissez-Faire Leadership in the Hospital Administrative EnvironmentROBERT J. SPINELLI

B

tions on the brink of bankruptcy and patient careat serious risk (Patel and Rushefsky 1995). Thehealthcare system in the United States is facing afuture that is filled with challenges and opportuni-ties. Patel and Rushefsky (1995) characterizehealthcare delivery in the United States as being inan era of accountability. Attempts have been madeto control rising costs, improve the efficiency ofhealthcare delivery, address a lack of access, andfocus on the quality and appropriateness of care(Altman 1994; Patel and Rushefsky 1995).

Many factors have led to rising healthcare costs,which have increased faster than has general infla-tion over the past three decades. Some of the keyfactors contributing to higher costs of care—asidefrom demographic, as social, and technologicalforces—include an inadequate payment system,technology, an aging population, chronic diseases,prescription drug costs, litigation, the uninsured,and the tremendous labor shortages of registerednurses and other members of the healthcare work-force. The aging of the U.S. population with thesubsequent increases in chronic diseases, relianceon technology, unhealthy lifestyles, inefficienciesin production, and consumption of healthcare ser-vices, as well as the increased disparity betweensocial classes, have placed great socioeconomicpressures upon the healthcare industry (Arnold1993; Bently 1993; Kilpatrick and Holsclaw 1996;Oermann 1997; Sofarelli and Brown 1998).

Need for the StudyWhat is needed is a new type of leadership to

help healthcare providers survive in the current cli-mate. Even today’s most successful leadership prac-tices will not be adequate for healthcare providersin the future (Barker 1991; McDaniel 1997;Sofarelli and Brown 1998).

The importance of determining competent lead-ership traits presents research opportunities in theadministrative and CEO domain. There is a needto evaluate the efficiency of transformational lead-ership in administrative skills management in anattempt to develop a better understanding of thefactors related to effective and optimal administra-tive and CEO leadership. Capable leadership inhealthcare is not limited to issues of finance andmaterial resources. The ability to use humanresources optimally distinguishes great leaders, aswell as successful organizations. New leadershipstrategies are required by healthcare organizationsin order to remain viable to meet the current chal-

lenge of providing access to cost-effective, qualityhealthcare (Kent, Johnson, and Graber 1996).

Effective healthcare delivery does and willrequire CEO leadership that is both dynamic andprogressive. Effective management is needed toprovide quality, cost-effective patient care. A pri-mary responsibility of a leader in today’s healthcareenvironment is to provide resources and manage asupport system that enables maximum subordinateperformance. The success of an organization reliesheavily on the efficient and effective processes ofits management team.

The administrative environment of today’smodern healthcare organization presents a series ofchallenges for any healthcare executive. Theadministrative environment is challenged with anintense need for subordinate cooperation andsmooth working relationships. The stresses andintense demands on today’s healthcare executivesare prompted by the volatility and fragile nature ofthe U.S. healthcare system. The need to move ahealthcare organization forward in an era ofdeclining profit margins, diminishing capacity,manpower shortages, and technological expansioncannot be overstated.

MethodologyThe purpose of this study is to empirically eval-

uate the relationship of leadership behaviors tosubordinate perceptions in the healthcare environ-ment. This study will specifically determine thecorrelation between the transformational, transac-tional, and laissez-faire leadership styles of health-care CEOs as perceived by subordinate managersand their self-reported satisfaction with theirleader, willingness to exert extra effort, and percep-tion of their leaders’ effectiveness. The conceptualframework for this study is based on Bass’s (1985)model of transformational leadership theory. Thefollowing will describe the population, researchdesign, research hypothesis, instrument, data col-lection method, and proposed method of dataanalysis.

Hospital CEOs and their subordinate managersacross the United States are the theoretical popula-tion. The study population was subordinate man-agers from five hospitals in northeastern Pennsylva-nia. Survey data collected in 2004 by the AmericanHospital Association Resource Center (2004)reports that there are 4,919 community hospitalsacross the United States. These community hospi-tals have the relevant organizational structures that

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HOSPITAL TOPICS: Research and Perspectives on Healthcare 13

allow for a varying number of managers to report toa particular CEO, depending on the size and natureof an individual hospital. For the purposes of thisstudy, all hospitals are 61- to 232-bed, not-for-prof-it, acute-care general hospitals.

The survey instrument used was the MultifactorLeadership Questionnaire (MLQ) Form 5X-Short(Revised) (Bass and Avolio 1995) and I used an expost facto design. The MLQ is based on the FullRange Leadership Model developed by BernardBass and Bruce Avolio (1997). It is a short andcomprehensive survey that measures the full rangeof leadership styles. The MLQ has evolved since1980 to assess the components of the full range ofleadership. I designed the study to test the hypoth-esis that there is a correlation between the leader-ship styles of healthcare CEOs and subordinatemanagers’ extra effort, satisfaction with the leader,and perception of leader effectiveness.

I distributed the MLQ (Bass and Avolio 1995)as a self-administered survey to five hospitals innortheastern Pennsylvania and asked each hospitalto distribute the survey to subordinate managers. Idistributed a total of 150 surveys and received backtotal of 101 surveys. I accomplished this by obtain-ing agreement from each institution to distributethe survey firsthand to the subordinate managersand collect the survey when completed.

ResultsI analyzed and organized the results of the MLQ

self-administered survey based on the answers tothree specific questions from the survey. The ques-tions addressed the areas of leadership dimensionswith perception on leadership effectiveness, leader-ship dimensions for satisfaction, and leadershipdimensions for willingness to exert extra effort. Iused multiple regressions to examine the relation-ship between the combination of the three factorscomprising the independent variable of leadershipstyle (i.e., transformational, transactional, and lais-sez-faire) and the three dependant variable out-comes (i.e., satisfaction with leader, extra effort,and perception leader effectiveness). I tested signif-icance at the alpha equals .05 level.

I hypothesized that there would be no signifi-cant relationship between the leadership style (i.e.,transformational, transactional, and laissez-faire)of hospital CEOs and subordinate managers extraeffort, perceived leader effectiveness, and satisfac-tion with their leader. Respondents providedstrong empirical support for rejection of the null

hypotheses. I found this through the multivariatetechnique of multiple regression and analysis basedon product–moment correlation coefficients.

I tested hypothesizes at a significance level ofalpha equals .05, the calculated p values for theoverall models in the three regression analyses were.000. This indicates a rejection of all three nullhypotheses. The coefficient of correlations (R) forthe dependent variables of effectiveness, satisfac-tion, and extra effort was 1.000, 0.975, and 0.992,respectively, all greater than or equal to 0.975.

I used an analysis of variance and the combinedindependent variables measuring the dimensionsof leadership style with the dependent variable ofextra effort resulted in a multiple R of .992, F(9,92) = 625.743, p = .000, statistically for alphaequaling 0.05, thus demonstrating a strong linearassociation. The multiple R2 square is .984. Thus,the conclusion is that the observed data indicatesthat there is a significant overall regression using allthe independent variables against the extra effortvariable in the model (see Table 1 and Figure 1).

The combined independent variables measuringthe dimensions of leadership style with the depen-dent variable of leader effectiveness resulted in amultiple R of 1.000, F(9, 92) = 76405.198, p =.000, statistically significant for alpha equaling0.05, thus demonstrating a strong linear associa-tion. The beta partial regression coefficients p val-ues for transformation leadership, contingentreward, management by exception (passive), andlaissez-faire are statistically significant for alphaequaling .05. The B unstandardized coefficient ispositive at 0.046 (see Table 2 and Figure 2).

The combined independent variables measuringthe dimensions of leadership style with the depen-dent variable of subordinate satisfaction resulted ina multiple R of 0.975, F(9, 91) = 198.697, statisti-cally significant for alpha equaling 0.05, thusdemonstrating a strong linear association. The mul-tiple R2 is 0.952. The beta partial regression coeffi-cients p values for transformation leadership, con-tingent reward, and laissez-faire are staticallysignificant for alpha equaling .05 and the B unstan-dardized coefficient is again a positive number withthe value of 1.382 (see Table 3 and Figure 3).

As a result of the multivariate statistical tech-niques of multiple regressions, I found transforma-tional factors statistically significant and correlatedpositively with the outcome variable. The more thesubordinate manager perceived the leader asexhibiting transformational behaviors, the greater

Idealized Influence (Attributed)

Inspirational Motivation

Individual Consideration

Management by Exception (Active)

Laissez-Faire

Idealized Influence (Behavioral)

Intellectual Stimulation

Contingent Reward

Management by Exception (Passive)

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TABLE 1. Descriptive Statistics for Leadership Dimensionswith Willingness to Exert Extra Effort (N = 101)

Dimension Factor M SD

Transformational Idealized Influence (Attributed) 8.1114 42.42057Idealized Influence (Behavioral) 8.0743 42.32143Inspirational Motivation 8.7865 46.46309Intellectual Stimulation 7.4765 39.01959Individual Consideration 7.6405 40.79333

Transactional Contingent Reward 7.3812 38.35659Management by Exception (Active) 5.7983 30.09039Management by Exception (Passive) 4.1584 21.72535

Laissez-Faire Laissez-Faire 3.8280 22.65288

FIGURE 1. Leadership dimensions with willingness to exert extra effort.

9

8

7

6

5

Leadership Behavior

Mea

n V

alue

4

3

2

1

0


TABLE 2. Descriptive Statistics for Leadership Dimensionswith Effectiveness (N = 101)









Laissez-Faire



Contingent Reward


9

8

7

6

5

Leadership Behavior

Mea

n V

alue

4

3

2

1

0

FIGURE 2. Leadership dimensions with perceived leader effectiveness.

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TABLE 3. Descriptive Statistics for Leadership Dimensionsfor Satisfaction (N = 101)









Laissez-Faire



Contingent Reward


9

8

7

6

5

Leadership Behavior

Mea

n V

alue

4

3

2

1

0

FIGURE 3. Leadership dimensions for satisfaction with leadership style.


he or she reported exerting extra effort, expressedsatisfaction with the leader, and believed the leaderto be more effective. The relationship betweentransformational leadership and the outcome fac-tors were stronger and more positive than thetransactional styles and laissez-faire. Contingentreward correlated less positively with the out-comes; management by exception (active and pas-sive) and laissez-faire correlated negatively with theoutcome factors. These findings are consistentwith the hierarchal patterns reported by Avolio,Bass, and Jung (1995, 1996), Bass (1985), Bassand Avolio (1997), Hater and Bass (1988), andSeltzer and Bass (1990).

We found intercorrelations among the factorsfor transformational leadership as well as amongthe transactional factors and the transactional fac-tor contingent reward. High correlations amongthe five transformational factors and the transac-tional factor of contingent reward have beenreported by Avolio, Bass, and Jung (1995, 1996)Bass and Avolio (1997). Avolio, Bass, and Jung(1996) contend that these findings are to be antic-ipated as transactional and transformational lead-ership are active—as well as positive—forms ofleadership dimensions. Previous research hasdemonstrated that leaders exhibit both transfor-mational and transactional competencies. Theconsistency of transactional leadership behaviorsand trust developed as a result of the reinforcementforms the basis for transformational leadership.

The management by exception (active and pas-sive) transactional factor exhibited negative correla-tions with the transformational and contingentreward factors. The management by exception (pas-sive) and laissez-faire correlated positively with eachother and negatively with the transformational fac-tors. Avolio, Bass, and Jung (1995, 1996), Bass(1985), and Bass and Avolio (1997) have reportedconsistent findings whereby the active and positivetransformational and contingent reward prefer-ences are strongly and positively correlated, whilethe more corrective or avoidant leadership prefer-ences of management by exception or laissez-fairecorrelated negatively or not at all.

These findings provide further support forBass’s (1985) conceptual framework of transfor-mational and transactional leadership theory. Bass(1985) expanded upon the work of Burns (1979),contending that the leadership paradigm consist-ed of “complementary rather than polar con-structs” (Lowe, Lroeck, and Sivasubramaniam

1996, p. 386). Waldman, Bass, and Einstein(1987) reported that transformational leadershipaugments the effects of transactional leadership, asopposed to Burns’s contention that transforma-tional leadership substitutes for transactional lead-ership. Bass (1988) asserts that both transforma-tional and transactional competencies arenecessary for the maintenance and expansions ofcomplex organizations.

ConclusionsThe findings of this study provide empirical

support for the applicability of Bass’s (1985) trans-formational and transactional leadership paradigmin the administrative setting. Bass and Avolio(1994, 1997) have further developed the leader-ship model to what they have termed as the “FullRange of Leadership” styles, a continuum extend-ing from idealized transformational leadership tononleadership or laissez-faire (Bass 1998; Bass andAvolio 1994, 1997). A concept crucial to the “FullRange of Leadership” model is the theory thatleaders possess the ability to exhibit each style tosome degree (Bass 1998). This study supports the“Full Range of Leadership” by demonstrating thatsubordinate managers perceived their CEO as pos-sessing both transformational and transactionalleadership qualities. Transformational leadership isnot an alternative to transactional leadership, but itaugments transactional leadership in the “FullRange of Leadership” model (Bass 1988; Bass andAvolio 1997).

CEOs are cautioned about the limitations ofreliance on the contingent reward leadership prefer-ence. Although contingent reward has been catego-rized as a positive and active style, CEOs should beaware that there are drawbacks associated with sin-gularly relying on this leadership process. The con-tingent reward process produces only anticipatedlevels of effort and standard performance. A limita-tion of the transactional leadership style is that itoffers little encouragement to exceed and achieveperformance beyond the transactional contract(Bass 1985: Bass and Avolio 1990).

It is not the intent of this study to imply that thecurrent leadership models that have defined theadministrative environment be abandoned. It isthe intent, however, to strongly urge CEOs tobuild upon earlier models to increase understand-ing of the potential for the “Full Range of Leader-ship.” The MLQ and the transformational leader-ship paradigm can be used to enhance the

formulation and implementation of meaningfulmanagement training programs. Policies, as well aseducation and training programs, can be formulat-ed to foster a transformational leadership style. Acommitment to developing transformational lead-ers can foster recruitment, selection and training ofcandidates who have the qualities to become effec-tive leaders.

Concluding that Bass’s (1985) theoretical frame-work is associated with a more effective leadershipstyle relevant to the administrative domain, pro-vides an opportunity to educate CEOs about the“Full Range of Leadership” model. In order to fos-ter this leadership style, individuals with thepotential to become transformational leaders mustbe identified. Additional understanding of theapplication of Bass’s (1985) model is needed todevelop the sensitivity and interpersonal compe-tence required of CEOs for transformational lead-ership (Bass 1990, 1998). Continued research isnecessary, because if it is possible to identify andmeasure the behavioral components of effectiveleadership, it will be feasible to develop desiredcompetencies in managers.

An integral part of a strategy to improve anorganization’s leadership process is the identifica-tion of individuals who have the capability to beeffective leaders at all levels of an organization.This is critical to improving executive leadershipin the administrative setting, enhance the leader-ship process, and enable transformational leadersto achieve their highest potentials (Bass and Avo-lio 1997).

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Altman, S. 1994. Health system reform: Let’s not miss ourchance. Health Affairs 13 (1): 69–80.

American Hospital Association Resource Center. 2004. FastFacts from AHA Hospital Statistics. http://www.aha.org/aha/resource_center/fastfacts/fast_facts_US_hospitals.html(accessed July 5, 2005).

Arnold, R. 1993. Competitive approaches to health carereform. Illinois Business Review 50 (1): 21–23.

Avolio, B. J., B. M. Bass, and D. I. Jung. 1995. Multifactorleadership questionnaire technical report. Redwood City, CA:Mind Garden.

———. 1996. Construct validation of the multi-factor leader-ship questionnaire MLQ-Form 5X. Binghamton, NY: Centerfor Leadership Studies.

Barker, A. M. 1991. An emerging leadership paradigm. Nurs-

ing & Health Care 12 (4): 204–07.Bass, B. M. 1985. Leadership & performance beyond expecta-

tions. New York: Free Press.———. 1988. Charismatic leadership: The elusive factor in

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———. 1990. From transactional to transformational leader-ship: Learning to share the vision. Organizational Dynam-ics 18 (2): 19-31.

———. 1998. Transformational leadership: Industry, militaryand educational impact. Mahway, NJ: Lawrence Erlbaum.

Bass, B. M., and B. J. Avolio. 1990. Developing transforma-tional leadership: 1992 and beyond. Journal of EuropeanIndustrial Training 14 (5): 21–27.

———. 1994. Shatter the glass ceiling: Women may makebetter managers. Human Resources Management 33 (4):549–60.

———. 1995. The Multifactor Leadership Questionnaire Form5X. Palo Alto, CA: Mind Garden.

———. 1997. Full range leadership development: Manual forthe Multifactor Leadership Questionnaire. Redwood City,CA: Mind Garden.

Bently, Q. 1993. The hospital perspective on rising health carecosts. The Southern Business and Economic Journal 16 (4):147–56.

Burns, J. M. 1979. Leadership. New York: Harper & Row.Centers for Medicare and Medicaid Services. 2003. Office of

the Actuary, National Health Statistics Group. http://www.cms.gov/statistics/nhe/default.asp (accessed July 5, 2005).

Hater, J., and B. M. Bass. 1988. Superiors’ and subordinates’perceptions of transformational and transactional leader-ship. Journal of Applied Psychology 73 (4): 695–702.

Kent, T., J. Johnson, and D. Graber. 1996. Leadership in theformation of new health care environments. Health CareSupervisor 51 (1): 27–34.

Kilpatrick, A. O., and P. W. Holsclaw. 1996. Health care inthe new millennium: Implications for executives and man-agers. Public Administration Quarterly 20 (3): 365–80.

Lowe, K. B., K. G. Lroeck, and N. Sivasubramaniam. 1996.Effectiveness correlates of transformational and transac-tional leadership: A meta-analytic review of the MLQ liter-ature. Leadership Quarterly 7 (3): 385–425.

Maslow, A. H. 1954. Motivation and personality. New York:Harper & Row.

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Seltzer, J. and B. M. Bass. 1990. Transformation leadership:Beyond initiation and consideration. Journal of Manage-ment 16 (4): 693–703.

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