Int. j. econ. manag. soc. sci., Vol(3), No (8), August, 2014. pp.

464-469

TI Journals

International Journal of Economy, Management and Social Sciences

www.tijournals.com

ISSN:
2306-7276

Copyright 2014. All rights reserved for TI Journals.

The Effects of Transformational and Interactional Leadership Styles of

bank managers on Employee's Job Satisfaction
(A Case Study of Agriculture Bank Branches in Ahwaz)
Ali Shabanzadeh *
M.A.Islamic Azad University,Boroujerd Branch,Iran.

Mohammadreza Jaberansari
ph.D. Islamic Azad University,Boroujerd Branch,Iran.
*Corresponding author: alish.5027@yahoo.com

Keywords

Abstract

Transformational leadership
Interactional leadership
Job satisfaction

This study aims to evaluate effect of transformational and interactional leadership styles of bank managers
on employee's job satisfaction of Agriculture Bank of Ahwaz. This study is of causative-descriptive type. It
is applied in terms of purpose and its sample consists of 21 branches of Agriculture bank of Ahwaz with 128
employees. For sampling, after statistical assessment and specifying sample volume, 96 employees of
Ahwaz Agriculture Bank were selected by simple sampling method. Data collection instrument was a
questionnaire consisted of two standard questionnaires: a) transformational and interactional leadership
survey and b) job satisfaction survey, whose Cronbach alpha coefficients were estimated by the author 0.94
and 0.91 respectively. Inferential and descriptive statistic methods were used to analyze data. To evaluate
model fitness, constructive equations were applied using LISREL software. To test hypotheses, correlation
method was applied using SPSS software.
Research findings showed that transformational leadership has positive and significant effect on job
satisfaction but interactional leadership has no effect on job satisfaction.

1.

Introduction

Humans and workforce are among the most essential factors of effectiveness, growth and development of organizations and can play a
determinant role in organizations by relying on their knowledge, specialties, skills and capabilities. Indeed, unlike traditional management
thoughts about human, human not only are not means for serving organizations, but they themselves also have their own emotions, feelings,
values and needs ignoring which there can't be any argument about effectiveness of organization. Nevertheless, research show that employees'
dissatisfaction of state of affairs in their organizations is one the major causes of destruction and disintegration of organizations. For example,
Burke (2002), by reviewing literature concerning change in organizations, concludes that of 100 successful companies throughout the world in
1917 only 39 companies remained and 69 remaining companies had been totally bankrupted in 1978 and more interesting, only 18 of 39
remaining companies were still among world's 100 successful companies. In analysis of causes of this issue, human areas can be considered
(Burke, 2002).
Today's world has various stress sources and some of these stresses are characteristic of work place. Conflict with coworkers or clients,
deprivation from rewards, being late on work and pressures from board of directors or organization chairmen are some of stresses of workplace.
If employees leave organization because of job dissatisfaction, organization will be compromised significantly. In other words, acquiring capable
and efficient workforce is a restricted, time-taking and costly process. In this regard, directors should note that effective management can't be
achieved without considering mental health of employees and to do this, mental health fundamentals should be applied in organizations. Human
relationships are indicative of value of humans and a constructive, encouraging and promising factor of social behavior of human groups.
Among all happiness factors, perhaps favorable human communications is the most important factor of happiness and achievement of humans.
Such organizations as banks also need leaders that can provide necessary satisfaction for employees by their extraordinary attraction and
personality characteristics, high influence potential and wide perspective, commitment and enthusiasm and move toward organizational goals
along with employees. Thus, leadership style of managers of bank branches can influence job satisfaction of employees. Issues of mental health
domain influence nature and goals of organization both in competitive market and exclusive conditions. Iran's Agriculture Bank, like other
organizations, is involved with such issues in its human resources domain and, for planning development of human resources, its managers
should seek answers to such questions as why behavior of employees is different in identical conditions and how can motivation and satisfaction
be provided for them. Employees are human capital of organizations. All organizations, regardless of their missions, should assign most of their
facilities and sources to training in various dimensions. Therefore, regular and continuous approach of matching suitable person to suitable hob
in right time, which involves two concepts of job satisfaction and productivity, is considered an important issue. Job satisfaction and
dissatisfaction include individual's positive or negative attitude his/her job and are influenced by numerous factors such as wage and salary,
communications, policies, procedures, job dimensions, work regulation and personal characteristics of employees. Job satisfaction influences
organizational behavior, delay, absence and turnover of employees. Thus, providing job satisfaction results in success and effectiveness of
employees. This research wants to answer the question how do transformational and international leadership styles of Agriculture Bank
managers of Ahwaz influence employee's job satisfaction?

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The Effects of Transformational and Interactional Leadership Styles of bank managers on Employees Job Satisfaction A Case Study of Agriculture ...
International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

2.

Methodology

Since results of the present study can be used by Agriculture bank managers throughout the province and country, it is an applied study. Data
collection method of this research is descriptive- survey because its variables are studied without manipulation and based on existing state. In
descriptive research, researcher examines status of topic which includes collection of information for hypothesis test or answering questions
about current status of studied topic. Survey is a branch of descriptive research and a data collection method in which a given group of
individuals are asked to reply to a number of questions. Survey describes attitude and behavior of a population based on selection of a random
and representative sample from that population and their answers to a series of questions. Researchers try to clarify phenomenon using survey
rather than relying only on their description (Khaki, 1382).
Statistical universe of this study consists of all employees of branches of Agriculture Bank of Ahwaz where there are 21 branches whose
employees are 149. Sampling method is of simple random type. Since research variables have interval or proportional scale and universe volume
is limited, sample volume is calculated by the following formula (it should be mentioned that sample volume includes employees of branches
and 21 employees who were managers of branches have been excluded from total number of employees):

( 1) +

To collect data from sample, a questionnaire was used which consisted of two standard questionnaires: a) transformational and interactional
leadership using standard Multifactor Leadership Questionnaire (MLQ) designed by Buss and Olive, and b) job satisfaction questionnaire
prepared based on standard Overall Job Satisfaction (OJS) questionnaire of Field and Roth. Formal validity was used for measuring
questionnaire validity and Cronbach Alpha coefficient was used to determine its reliability which was 0.94 and 0.91 for interactional and
transformational leadership styles, respectively.

3.

Literature view

3-1 Transformational and Interactional Leadership

Transformational leader is a person who provides high performance for organizations via change and revision. This can be achieved by vision of
possessing leader and acceptance of this vision by followers. That is, vision makes organizational life meaningful and promotes emotions of
employees (Neil Synder, 1994 cited in Amir Kabiri, 1385).
Therefore, transformational leadership is process of intentional influence on individuals or groups to create discontinuous change and evolution
in existing state and functions of organization. Transformational leader has a strong influence on his/her followers and creates significant change
in society through his/her statements and actions. In this research, four components of transformation leadership based on theory of Avilio et al
are investigated:
1.
2.
3.

4.

Ideal Influence: this component includes ideal characteristics and behaviors of leader. It is honor, charisma, respect and loyalty of
followers that transfer ideal sense.
Inspiring Motivation: this motivation involves stimulating followers using their feelings and emphasizes on feelings and internal
motives rather than daily exchanges between leader and followers.
Mental Encouragement: this component includes stimulating followers via leadership in order to invent new solutions and rethinking
about solution of organizational problems by followers. Indeed, leader creates a challenge for followers to make them attempt again
and think about what can be done.
Individual considerations: that is, considering individual differences of followers, communicating with each of them and stimulating
them through assignment of responsibilities in order for them to learn and make experiences. Individuals are supported by leaders and
leaders have concerns about their feelings and needs.

Interactional leadership style is defined as one in which everything is evaluated based on gain it has for individuals and relationship of leader and
followers is based on exchange of one thing with another (Burns, 1978 cited in Moghely, 1383). Interactional leadership requires relationship
based on mutual exchanges of leaders and followers. According to this theory and considering studies of Avilio et al about interactional
leadership, in this research two components are considered for interactional leadership:
1-Contingent Reward: leaders are committed to give suitable rewards for good performance according to contract.
2-Management by exception: this management is performed in active and passive manners. In active management, leaders ensure that tasks are
done according to standards and regulations and tend to do corrective actions in case there is deviation. In passive or inactive management, to
influence behavior, leader uses correction or punishment method in response to unacceptable performance or when standards are not met.
3-2 Job Satisfaction
Importance of job satisfaction is due to the fact that most people spend about half of their wakefulness hours in work place. Holland (1985)
considers satisfaction, progress and stability in job as based on homogeneity of personality and environment of individual. Greenberg (1990)
considers job satisfaction as negative and positive feelings, beliefs and attitudes of every individual towards his job or, in other words, value,
perceptional and cognitive reactions of individuals (Mirsepasi, 1375).
What has always been noticed by psychologists and social thinkers is job satisfaction of individuals and its effects on their moods and job
efficiencies. If someone is interested in his/her job, his/her creativity and talent will flourish and he never gets tired and depressed. Conversely, if
someone is not satisfied with his/her job, he/she will get depressed and his/her work will be useless.
Considering the above discussion, it can be said that "job satisfaction means pleasure and contentment one has in relation to his/her job and
thereby get interested in his/her jib. Job satisfaction is a favorable, emotional and positive state resulting from assessment of job or job

Ali Shabanzadeh *, Mohammadreza Jaberansari

466

International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

experiences. Since some jobs are more satisfying than the others, the author examines feelings and reactions of employees in relation to their
jobs and measures job satisfaction instead of measuring various occupational components.

4.

Research background

Numerous studies have been done about the topic of this research which will be reviewed in this section:
A research titled "evaluation of effect of transformational and interactional leadership style on work ethic of teachers" was done by Niaaz Azari
et al by descriptive method in 1389. They concluded that there is no significant difference between interactionist and transformational leadership
style of women and men and education level, work history and work ethic of women and men are the same and there is a significant difference
in work ethic between women and men.
A research titled "evaluation of relationship between interactional and transformational leadership and organizational commitment of teachers"
was performed by Mohammad Javedani, PHD student of Shiraz University, in 1388. After data collection and analysis, it was revealed that there
is a positive and significant relation between transformational managers and organizational commitment of teachers. But there is no significant
relation between interactional managers and organizational commitment of teachers and interaction of transformational and interactional
managers has no significant effect on teachers' organizational commitment. In addition, regression analysis showed that charismatic leadership
(one of the dimensions of evolutionist leadership) influences teachers' organizational commitment more than other styles of leadership.
Kik-bakht et al performed a research titled "relationship between leadership styles and knowledge management among managers of academic
departments from viewpoint of faculty members of Medicine University of Isfahan in" in 1389. Findings of this research suggest that there is a
significant relationship between components of knowledge management and transformational leadership style but there is no significant
relationship between knowledge management and interactional and non-interventionist leadership.
Heller et al reported that Hersi and Blanchard studied relationship between leadership styles (commanding, participative and delegation of
authority) and job satisfaction of teachers and found that 42 percent of 339 teachers said they were not satisfied with their jobs. They also found
that job satisfaction of teachers is more increased by colleagues group than by salary and benefits. In this research, job satisfaction of teachers
had no significant correlation with leadership style.
Alenkov performed a study to evaluate effects of transformational and interactional leadership behaviors on employees' performance, modified
effects of innovation support on relation between transformational leadership behavior and organizational performance and effect of team group
on transformational behaviors in Russia. Analysis of results shows that, by influencing organizational commitment, interactionist and
transformational leadership behaviors result in high performance of employees of Russian firms. Findings also show that relations between
studied variables and interactional leadership are weaker than those between studied variables and transformational leadership (Alipoor Raad,
1388).
Munevver Cetin et al (2012) performed a research titled "effect of transformational, interactional and individualist leadership styles and
communication competencies of bank managers on employee's job satisfaction " in Turkey in 2012. Findings of this study suggest that there is a
strong and significant relationship between interactional leadership and communication competencies of bank managers and employee's job
satisfaction while transformational and interactional leadership styles have had no evident effect on employee's job satisfaction of Turkey banks.

5.

Research hypotheses

H1)Transformational leadership of Agriculture Bank managers of Ahwaz influences on employee's job satisfaction.
H2)Interactional leadership of Agriculture Bank managers of Ahwaz influences on employee's job satisfaction.
Given the theoretical framework of the research and results obtained from studies performed on research variables, the following model is
presented based on which research hypotheses are formulated.

Transformational leadership style

Ideal influence

Inspiring motivation

Mental encouragement

job satisfaction

Individual considerations

Interactional leadership style

Contingent reward

Management by
exception

Figure 1: research model

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The Effects of Transformational and Interactional Leadership Styles of bank managers on Employees Job Satisfaction A Case Study of Agriculture ...
International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

6.

Data Analysis

Inferential-descriptive statistic method was used to analyze data and constructive equations were used via LISREL software to examine model
fitness. For hypothesis test, correlation method was used using SPSS software.
a) Normal Distribution of Research Data
Colmogrov-Smirnov Test was used to examine normal distribution of research data at 95% level and results of this analysis are presented in the
following table and suggest normality of all variables.

Table 1: results of Colmogrov-Smirnov Test for research variables

Statistical indices
Test result
Insignificant test
Insignificant test
Insignificant test
Insignificant test
Insignificant test
Insignificant test
Insignificant test
Insignificant test

Significance level
0/064
0/114
0/14
0/304
0/140
0/101
0/217
0/361

Z statistic of Colmogrov-Smirnov Test

1/312
1/197
1/153
0/970
1/153
1/11
1/053
0/924

Variable
Ideal characteristics
Ideal behavior
Inspiring motivation
Mental encouragement
Individual considerations
Contingent reward
Active management by exception
Passive management by exception

b) Assessment of Relationship between Research Components

Pearson Correlation coefficient was used to examine relationship between components studied.
Hypothesis1: Transformational leadership style of bank managers influences employee's job satisfaction.
H0: Transformational leadership style does not influence employee's job satisfaction.
H1: Transformational leadership style influences employee's job satisfaction.

Table 2: results of Correlation Coefficient Test of two variables: "transformational leadership" and "job satisfaction"
Statistical index
Sample number (n)
439/0
361/0
259/0
262/0
299/0

Significance level (p)

000/0
000/0
011/0
010/0
003/0

Correlation coefficient (r)

439/0
361/0
259/0
262/0
299/0

Predictive variable

Criterion variable

Ideal characteristics
Ideal behavior
Inspiring motivation
Mental encouragement
Individual considerations

Job satisfaction
Job satisfaction
Job satisfaction
Job satisfaction
Job satisfaction

In above table, correlation coefficient and significance level are calculated. Since significance level is 0.000 which is lower than test significance
level (0.05), null hypothesis is rejected and it is concluded that there is a significant relationship between job satisfaction and transformational
leadership style.
Hypothesis 2: Interactional leadership style of bank managers influences employee's job satisfaction.
H0: Interactional leadership style does not influence employee's job satisfaction.
H1: Interactional leadership style influences employee's job satisfaction.

Table 3: results of Correlation Coefficient Test of two variables: "interactional leadership" and "job satisfaction"
Statistical index
Sample (n)
274/0
153/0
017/0

Significance level (p)

007/0
136/0
871/0

Correlation coefficient (r)

274/0
153/0
017/0

Predictive variable

Criterion variable

Contingent reward
Active management by exception
Passive management by exception

Job satisfaction
Job satisfaction
Job satisfaction

In table 3, correlation coefficient and significance level are calculated. Since significance level is higher than test significance level (0.05) except
for contingent reward, null hypothesis is accepted. Thus, there is no significant relationship between job satisfaction and interactional leadership
style.

Ali Shabanzadeh *, Mohammadreza Jaberansari

468

International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

c) Evaluation of model fitness

Ideal characteristic
0/65

Ideal behavior

Inspiring motivation

0/47

0/58

transformational
leadership
0/48

Mental
encouragement

0/76
0/52

Individual
considerations

job satisfaction

Contingent reward

0/12
0/67

Active Management

interactional
leadership

0/48

Passive management

0/65

Figure 2: Path analysis and path coefficients of confirmed model from LISREL software in desired mode

Ideal
characteristic

Ideal behavior

Inspiring
motivation

5/32

4/25

5/63

transformational
leadership

0/4
8

Mental
encouragement

0/76
0/10

job satisfaction

Individual
considerations

0/57

Contingent
reward
Active
Management
Passive
management

7/1

interactional
leadership

0/3
6
6/9
5

Figure 3: Path analysis and path coefficients of confirmed model from LISREL software in significance number mode

Table 4: fitness indices of model

Overal fit indices
X=34.47
Df=19
NFI=.96
GFI=.90
AGFI=.95
CFI=.92
RMSEA=.0303
RMR=.043

COEFFICIENT
Transformational leadership style

B
0/76

t-value
7/19

P-value
0/001

Interactional leadership style

0/12

1/57

0/23

Table 4 shows standard coefficient (causal path coefficients) for research variables in the main pattern based on output of LISREL software.

469

The Effects of Transformational and Interactional Leadership Styles of bank managers on Employees Job Satisfaction A Case Study of Agriculture ...
International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

Table 5: results of path analysis for research variables

Result

t-value

Hypothesis is confirmed

7/19

0/76

Hypothesis is rejected

1/57

0/12

Path

Hypotheses

Transformational leadership style job

satisfaction
Interactional leadership style job
satisfaction

Hypothesis 1: transformational leadership style influences

job satisfaction
Hypothesis 2: interactional leadership style influences job
satisfaction

p<0.05

7.

Conclusions

Job satisfaction is one the most essential factors that leaders and managers should seek to create. So, the present study examined factors
influencing job satisfaction. To do this, two components, transformational and interactional leadership styles, were considered essential
components and employees of Agriculture Bank were asked to reply to a questionnaire designed for this purpose. The following findings are the
most important findings of this research.
Findings showed that transformational leadership style has a positive and significant effect on job satisfaction and the latter can be increased by
improving the former. These findings were not consistent with findings of Heller et al about research of Hersi and Blanchard on leadership styles
(commanding, participative and delegation of authority) and job satisfaction of teachers. In that research, 42 percent of 339 teachers reported
their dissatisfaction with their jobs. It was indicated that colleagues group influence job satisfaction of teachers more than wage and salary. So,
job satisfaction of teachers had no significant correlation with leadership style. Results of this research differ from findings of Munervver Cetin
et al in Turkey in 2012, in terms of transformational leadership style. They performed a study titled "effect of transformational, interactional and
individual leadership styles and communication competencies of bank managers on employee's job satisfaction ". Their findings suggested that
there was no strong and significant relationship between transformational leadership style of bank managers and employees job satisfaction.
Interactional leadership style has no significant effect on job satisfaction but this coefficient is positive and job satisfaction can be increased by
improving interactional leadership style. Results of this research for interactional leadership are different from findings of Munervver Cetin et al
in Turkey in 2012. They performed a study titled "effect of transformational, interactional and individual leadership styles and communication
competencies of bank managers on employee's job satisfaction ". Their findings suggested that there was no strong and significant relationship
between interactional leadership style of bank managers and employee's job satisfaction.

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