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ACCA Strategic Professional · Strategic Business Leader · Qualities of leadership

Marisol Foods' new chief executive has replaced the old system of rewards with a clear set of monthly sales targets. Managers who hit target receive a fixed bonus and those who miss it receive a formal warning. She spends little time discussing the company's longer-term vision. Which leadership style does this approach best illustrate?

This is transactional leadership. The chief executive exchanges fixed bonuses and warnings for hitting or missing clear monthly targets, which is contingent reward and management by sanction. She does not articulate an inspiring vision or rely on personal magnetism, so transformational and charismatic styles do not fit the case.

  1. ATransactional leadership, based on exchanging rewards and sanctions for performance against agreed targetsCorrect
  2. BTransformational leadership, based on inspiring followers to look beyond self-interest to a shared vision
  3. CCharismatic leadership, based on personal magnetism and emotional attachment of followers
  4. DLaissez-faire leadership, based on leaving followers to decide how work is done

Explanation

The chief executive uses contingent rewards and sanctions tied to targets, which is the core of transactional leadership. There is no emphasis on vision or inspiration, so transformational is wrong. Nothing in the case suggests personal magnetism, and the leader is clearly directive rather than hands-off.

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