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CMA Foundation · Fundamentals of Business Economics and Management · Planning, Organizing, Staffing and Leading

A leader in a Hyderabad firm raises her team's motivation by communicating an inspiring vision, offering individual coaching and encouraging employees to look beyond self-interest for organisational goals. Which leadership approach is this, and how does it differ from a transactional leader?

This is transformational leadership. The leader inspires followers with a vision, coaches individuals and urges them to put organisational goals above self-interest. A transactional leader, by contrast, works through exchange, rewarding good performance and penalising shortfalls against agreed standards rather than seeking deeper change.

  1. ATransformational; it inspires change through vision, whereas a transactional leader relies on rewards and penalties for performanceCorrect
  2. BTransformational; it relies on rewards and penalties, whereas a transactional leader inspires through vision
  3. CTransactional; it inspires through vision, whereas a transformational leader relies on routine rewards
  4. DLaissez-faire; it avoids involvement, whereas a transactional leader gives vision

Explanation

Vision, individual attention and encouraging people to transcend self-interest define transformational leadership. Transactional leaders exchange rewards or punishments for performance against set standards. The other options reverse or confuse these roles.

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