CMA Foundation · Fundamentals of Business Economics and Management · Leadership and Motivation - Concepts and Theories
At Sharma Textiles, the production head Mr. Iyer sets clear targets, rewards workers who meet them, and penalises those who do not, while making few changes to existing systems. Which leadership style does this reflect?
This is transactional leadership. The leader works through an exchange: clear targets, rewards for achieving them and penalties for failure, while keeping existing systems largely unchanged. It differs from transformational leadership, which inspires followers with a vision and aims at changing the organisation.
- ATransformational leadership
- BTransactional leadershipCorrect
- CLaissez-faire leadership
- DCharismatic leadership
Explanation
Transactional leadership is based on exchange: rewards for meeting agreed targets and corrective action or penalties for failing. It maintains the status quo. Transformational leadership, in contrast, inspires followers to go beyond self-interest and drives change, so option A is wrong.
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