Business leadership can take many forms and each of them has its own pros and cons. However, one aspect that cannot be ignored is that good leadership is vital to business success. Without good leadership, businesses will find that their work productivity and worker retention decrease.
We know that:
- Leadership is important: A 2021 study on escape rooms found that groups that elected leaders completed the task much faster (63% of those with leaders completed the task within an hour, as opposed to only 44% of those without a leader).
- The quality of leadership matters: A 2021 academic paper mentioned by the Economist magazine found that the gap between having a good manager and a bad one is equivalent to adding another member to a 9-person team.
So, with this in mind, let’s discuss some of the most common leadership styles and work out the best way to find yours.
Table of Contents
Authoritative (or autocratic) leadership
Democratic (or participative) leadership
Transformational (or visionary) leadership
Laissez-faire (or delegative) leadership
Choosing the best leadership style for you and your business
Final notes on important personality traits for leadership
Conclusion
Authoritative (or autocratic) leadership
Authoritative leadership consists of an environment where employees are expected to follow directions without much hesitancy. The leader will have a clear vision, clear objectives, and usually targets to meet. They will establish a clear path and give directions to the workforce to achieve that task.
This style of leadership is often used in fast-paced environments where growth is expected. However, to be a good leader in this environment it is of paramount importance that the leader be clear, knowledgeable, and consistent. Otherwise, as with any authoritarian rule, there will eventually be dissent — which will hamper business productivity.
The pros
This type of leadership, when delivered correctly, can deliver consistent and efficient results. Additionally, as there is no time needed for discussion, this type of leadership saves time and resources.
The cons
Although authoritative leadership saves time, it can lead to discontentment as employees feel unheard and that they have no part to play in decision-making. This lack of participation can also be of detriment to the company, as you may miss out on valuable insight and creativity from lower-level employees. Additionally, it can be very easy for a leader to abuse this position, leading to the loss of workforce as employees quit.
Type of leader needed
This type of leadership requires a confident, ambitious, and results-driven individual. Being an authoritarian ruler can be tough, and you may need to make (and stick by) difficult and unpopular decisions.
Democratic (or participative) leadership
As the opposite (as much as possible) to authoritative leadership, democratic leadership encourages democracy in the workplace. This is done by asking for employee input before decisions are finalized. However, the final say remains with the leader.
This style of leadership is often used in growing companies, such as start-ups, where there is more flexibility and employees are encouraged to give their ideas for the business’ development.
The pros
Democratic leadership allows for more creativity from a wider pool of people (with different backgrounds and mindsets) and subsequently helps companies stay up to date with the times. Past jobs may also mean your workers have experiences you do not, such as in creating winning marketing strategies or tricks on how to negotiate with suppliers, for example.
The additional time taken to make decisions through this leadership style can also help leaders and companies further assess the pros, cons, and dangers of a strategy or task. This method also gives company workers a voice, creating better working relationships between employers and employees, and increasing retention.
The cons
The cons of this leadership style are that it takes longer to make decisions. Additionally, depending on the dynamic and the team members, clashing personality types can have a negative impact on decision-making.
Type of leader needed
This type of leadership requires a knowledgeable, confident, and strong leader who will not be afraid to take charge when necessary — it can be a difficult line to tread.
Transformational (or visionary) leadership
Transformational leadership is used when a company is in need of long-term direction. It is the style of leadership that champions the idea of setting long-term goals and structuring a path to achieve them over a period of time. Transformational leaders aim to transform both the company and the workers by encouraging employees to try new things and develop themselves. They also encourage employees to give their thoughts on the company’s direction so as to work together on that.
The pros
This kind of leadership is amazing for creating loyal employees who feel they truly get something out of their work and are developing their careers by working with you. Additionally, having a long-term vision and a worker base that shares the belief in those common goals (as they have participated in creating them) can drive growth faster and more efficiently. Transformational leadership is a great way to create a business that thinks of itself (no matter how small or large) as a family.
The cons
This kind of leadership style looks to the future, meaning that some smaller task details can be missed, resulting in hold-ups. In addition, some issues that come up and are considered present-day issues may be sacrificed in the name of the “bigger picture.” This can be problematic as it can lead to employees seeing the company as valuing the end result (the goal) over the current employees (the journey).
Type of leader needed
This type of leadership requires an empathetic person who is also very organized, consistent, and results-driven. It is important to maintain the business’ development at the forefront of your mind, but pushing employees past their boundaries can be complex — it is easy to push too hard.
Laissez-faire (or delegative) leadership
This type of leadership is used by those working with more experienced and professional teams. It requires the leader to completely trust their workers, as they will often let them make key decisions and work on projects without much (sometimes no) interference from them.
The pros
This leadership style can be ideal for those who work well alone, as they have the chance to make executive decisions without feeling the pressure of their leader breathing down their neck. Thanks to this, projects can often develop differently, allowing for more creativity and sometimes better results. In addition, this type of leadership frees up the leader to focus their attention where most needed. Workers can also feel valued and trusted, which can help them feel more comfortable in a company and can promote long-term employment.
The cons
Although some employees value being left alone, when this leadership style goes to the extent where they forget who the leader is, it can become detrimental. Workers can feel they lack direction and support, which can lead to decreased performance and confusion. Additionally, when there is no interaction between the leader and the employees, issues can go unnoticed until the last minute — meaning that big problems can explode onto the scene from seemingly nowhere.
Type of leader needed
This type of leadership style requires someone who can completely trust their employees. They should be calm but also professional and skilled. Specifically, they should be able to deal with issues in a high-pressure environment, such as when a big issue is only highlighted at the last minute. This type of leadership can only work with a highly-skilled, professional, and self-starting team.
Choosing the best leadership style for you and your business
Regardless of whether you run (or are working for) a small to medium enterprise (SME) or a large multi-million dollar corporation, the best leadership style for you is dependent on your personality, your employees, and your business and its goals.
Know yourself
Before choosing your leadership style, ask yourself how you interact with others. Do you prefer to get everyone together to talk things through and then make a decision? Do you prefer to make a plan, inform everyone of said plan, and then coordinate it? Do you like the idea of empowering others to take the reigns — knowing that one day they may be a better leader than you?
Try out a few scenarios with your friends and family to see how they make you feel, as well as how they respond to your leadership. Be sure to also assess how the plan went — was it efficient?
Know your business goals
Time and profits are also key things to consider when choosing your leadership style. Is time of the essence? Are you focused on quick profits, or are you happy to grow your profits over time, focusing on employee retention or your company’s transformation instead? Asking yourself these questions (and putting these questions to your boss, if you have one) will help you assess the best leadership style to choose — remember that your personality may not be right for the leadership style required, and this could be an issue that needs to be resolved first.
Know your employees
Your employees are the driving force behind your business. Not only do workers get the tasks done that enable your business to be carried out, but keeping them on board means a more knowledgeable and efficient workforce — meaning faster work and less money spent on training new employees.
When choosing your leadership style, consider what personality types your employees have — do they want to be involved in the decision-making process? Do they simply want direction and are happy for you to make the decisions?
You can also consider your business goals here — do you want employee input in shaping your company? Are your employees creative? Do you think they can apport new, valuable ideas to develop the company?
Final notes on important personality traits for leadership
A good leader inspires, and a bad leader orders. This might seem simple, but the reality is much more nuanced — there is a fine line between being respected and being walked all over.
There are multiple effective leadership styles, and each has its own function. However, to avoid being walked all over and to ensure you have the respect of your employees, there are two main character traits to maintain:
- Authenticity: Multiple psychological studies have found that “…authentic leadership is positively correlated with a more positive work environment, including increased self-esteem, a better sense of well-being, increased friendliness, and better work performance.”
- Consistency: No matter the style of leadership you choose, your workers will be much more efficient if they are not treading on eggshells trying to work out what type of leader you will be today — choose the one that best suits your purposes and develop it in the best way for the business.
Conclusion
Leadership styles are personal choices that often come down to individual personality traits and self-awareness. however, the business’ health should always come first — and this encompasses employee retention and contentment too. If you feel that you are not ready to be an effective leader, fear not, as leadership skills can be developed over time. Find the leadership style that suits you and then work on gaining knowledge, trust, and respect through consistent, good business results and a happy workforce.
