Final answer:
The Social Identity Theory is the contemporary theory of leadership that relates to social categorization and how managers and employees interact within an organization.
Step-by-step explanation:
The contemporary theory of leadership that has ties to social categorization in how managers and employees interact is known as the Social Identity Theory. This theory suggests that people classify themselves and others into various social categories, such as organizational membership, job title, or work group affiliations. These categories define norms and behavior for individuals in management and team interactions, influencing leadership styles and dynamics between leaders and followers.
While the other theories mentioned, such as Trait Theory, Behavioral Theory, and Contingency Theory, have contributed valuable insights into leadership, they do not specifically address social categorization. It is the Social Identity Theory that closely examines the influence of group affiliations and social constructs on leadership and management practices.