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“Employees today seek to work for a company and leaders with whom they feel proud to be associated and who treat them like active contributors, not passive producers. They want to work for leaders who appreciate the value they add and rely on their passions and talents to every extent possible.”

–Michael Frisina, Influential Leadership

Chapter Goals

  • Distinguish between transactional leadership and transformational leadership and explain why transformational leadership is essential for transforming culture.

  • Describe the four dimensions of transformational leadership: character, expectations, fellowship, and quest.

  • Explain why transformational leadership and servant leadership are really two different sides of the same coin.

In his Pulitzer Prize–winning book Leadership (1978), James MacGregor Burns described two essentially different models of leadership: transactional and transformational. These are not mutually exclusive categories; the best organizations are blessed with both forms of leadership, and the best leaders display attributes of both and know when and how to use each. One way of looking at it is that transactional leadership is primarily composed of left brain activities while transformational leadership is primarily composed of right brain activities. And as Joe put it in The Florence Prescription, all left brain is boring while all right brain is chaos.

Transactional leadership is focused on creating value; transformational leadership is focused on practicing values. Transactional leadership is concerned with the quality of the products; transformational leadership is concerned with the quality of the people. Transactional leadership is shaped by accountability; transformational leadership is shaped by ownership. Transactional leadership makes procedures and processes more efficient; transformational leadership raises people to higher levels of personal values and expectations.

Because culture does not change unless and until people change, building a Culture of Ownership requires leaders who are committed to transforming people—beginning with themselves.


In a transactional leadership model, the leader-follower relationship is structured like an economic exchange: Both parties understand the costs and expectations, and neither gives more than is required. It is a barter system—a day’s wages for a day’s work, an A+ grade for a perfect score. Transactional leaders offer incentives (awards, promotions, pay raises, quarterly bonuses) to motivate productivity, or threaten punishment (performance improvement plans, disciplinary actions, and in the worst cases bullying and public humiliation) to motivate baseline compliance. But both the carrot and the stick are extrinsic motivators.

This kind of culture and structure is a poor fit for healthcare organizations. Federal regulations and inspections aren’t going away any time soon, of course, nor are standards of practice and accreditation procedures laid down by professional organizations. But the existence of safe, high-quality, low-cost care cannot be ensured by the board, senior management, or select members of the medical staff acting alone. To be a great organization in today’s world not only takes a village, the organization must be a village where ...

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