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ACCA Strategic Professional · Strategic Business Leader · Qualities of leadership

Brightwater Council has stable services, strict regulations and detailed procedures. A new director, Tomas, wants to improve consistency of service. He uses contingent rewards for meeting service standards and intervenes only when performance deviates from them. Staff attrition is low, but a consultant says innovation is absent. Which conclusion is best supported by leadership theory?

Tomas's transactional style suits the stable, regulated context and delivers consistent service, but it does little to encourage innovation. Theory sees transformational behaviours as augmenting rather than replacing transactional ones, so he should add vision and intellectual stimulation while retaining the rewards and exception-based controls that secure efficiency.

  1. ATomas should abandon all contingent rewards, since transactional leadership has no place in stable environments
  2. BTomas's style fits the stable context and delivers efficiency, but adding transformational elements would be needed to stimulate innovationCorrect
  3. CTomas is already a transformational leader because staff attrition is low
  4. DTomas's style is charismatic because staff comply with his standards

Explanation

Contingent reward plus management by exception is transactional, which is effective for stable, routine conditions and delivers consistency. It does not stimulate innovation, which requires transformational behaviours such as intellectual stimulation. Transformational leadership is seen as augmenting, not replacing, transactional leadership. Low attrition does not show transformation, and compliance with standards is not charisma.

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