Which leadership style uses contingent rewards and management by exception?

• A. Transformational leadership
• B. Transactional leadership
• C. Laissez-faire leadership
• D. Servant leadership

Answer: (B)

This question tests how leaders motivate and control through rewards and corrective actions tied to performance. Contingent rewards mean setting clear expectations and linking outcomes to rewards for meeting them. Management by exception involves monitoring performance and stepping in only to correct deviations, either actively (intervening as issues arise) or passively (taking action when problems become serious). These elements together define transactional leadership, making it the best fit. Transformational leadership centers on inspiring change and developing followers, laissez-faire is a hands-off approach, and servant leadership focuses on serving and empowering others rather than closely managing performance for rewards and exceptions.