Management by Exception-Passive refers to:

Management by Exception-Passive emphasizes a hands-off approach to leadership, where a manager only steps in when there are noticeable problems or deviations from expected performance. This method allows teams to operate autonomously and encourages self-management among members. The manager monitors performance indicators and only intervenes when these indicators signal that something is amiss, thus avoiding unnecessary micromanagement.

The other options reflect different management styles. Direct involvement in all issues represents an active management approach where the leader is constantly engaged with every detail, which contradicts the essence of passive management. Active encouragement of team members suggests a proactive engagement that fosters motivation and support, which is not characteristic of a passive approach. Completely avoiding management responsibilities describes a lack of involvement altogether, which is not the same as selectively intervening only when necessary.