What are the Different Types of Leadership Styles?
Do you know that companies with strong leadership are 2.3 times more likely to outperform competitors financially? Not only that, but 82% of employees think that poor leadership leads to disengagement, pushing them to quit their jobs.
While having a leader to guide a team is a blessing, the individual can be a challenge if their leadership approach doesn't sit well with the company's human resource. This is why it is important to understand different leadership styles to evaluate which one would work wonders with the goals and practices of a business.
If you are planning to lead or are looking for a leader, read this article to find various leadership styles that can help achieve your business objectives.
Why Does an Appropriate Leadership Style Matter?
Imagine having a team working in a negative work environment and minimal productivity. They aren't aware of your company’s goals and have no idea about how to work together. This is a disaster and is usually a result of poor leadership.
A leader needs to guide the team and keep them informed of all the goals that they aim to achieve with them. However, they have to make sure that their leadership style complements the business environment and the requirements of the tasks to enhance productivity.
An appropriate leadership style is quite crucial because it has a significant impact on employee communication, engagement, team effectiveness, and organizational success. Effective leadership helps boost employee morale, elevate productivity, and foster a positive work environment.
A leader's style has a positive effect on how decisions are made. Additionally, according to a Harvard Business Review study by Daniel Goleman, a leader’s leadership style has a direct impact on 30% of the company's bottom-line profitability.
Different Types of Leadership Styles
Here are some of the most popular leadership styles to choose from.
Autocratic Leadership
An autocratic leader makes all decisions themselves with little or no input from their team members. This leader has a clear direction and high control, helping them make quick decisions.
This style works best when working with inexperienced teams. Also, an autocratic leadership style is perfect to handle critical situations. According to reports, Steve Jobs often exhibited an autocratic leadership style to maintain full control of product development.
In a 2019 survey on the style of their ideal leader, 21% of respondents shared that they prefer being led by someone who makes the final decision or is autocratic in nature.
Democratic Leadership
With a democratic leadership style, a leader encourages team involvement when it comes to decision-making. However, the final say remains with the leader. This is why according to a report, 76% of people prefer working for businesses that promote democracy.
The key traits of this style are empowerment, collaboration, and inclusiveness. The leadership style practiced at Google is often democratic. The culture involves employees in decision-making processes via open forums and surveys.
Transformational Leadership
Transformational leaders are equipped to motivate and inspire people to drive change. They are visionary and forward-thinking. As per a study in Global Science Research Journals, transformational leadership is a lot higher in successful companies than in unsuccessful ones because of the large number of motivated workers.
There is no better example of a transformational leader than Nelson Mandela. His vision inspired a nation to make a change for themselves.
Transactional Leadership
Leaders who follow a transactional leadership style are more focused on structure and rewards. They are goal-oriented and have a performance-driven attitude.
Many military leaders follow a transactional style. They significantly rely on clear expectations and reward/punishment systems to ensure discipline and performance in their teams.
Laissez-Faire Leadership
Leaders following this style allow their employees to make all the decisions. They offer minimal supervision and hold immense trust in team autonomy.
Warren Buffett, for instance, is popularly known for allowing the managers of Berkshire Hathaway to run their businesses independently. However, according to studies, this leadership style often leads to the lowest productivity. It should be practiced smartly with continuous feedback and supervision.
Things to Consider When Opting for a Leadership Style
When considering a leadership style for yourself or a potential leader, you must consider factors such as:
Personality and Values
A leadership style should align with the natural preferences, values, and strengths of the leader. It should complement a leader’s personality but, at the same time, must adapt to the situation and needs of the team.
Nature of the Team
When selecting a leadership style, it is imperative to put your team first. You must evaluate their experience and capabilities to select the appropriate level of autonomy and guidance.
It is important to understand what motivates your team and what leadership approach best supports their needs. You should be aware that not all team members may have the same response to a particular leadership style. In that case, you may have to switch your approach to cater to them.
Goals and Context
An ideal leadership style should support the goals of the company. It should also consider the complexity of the task.
For instance, for more complex tasks, you might require a hands-on leadership approach, while with simpler tasks, you may have to adapt to a laissez-faire style.
Before adapting to a leadership style, it is best to ask the following questions.
Do I value goals or relationships?
Is freedom of choice more important than structure?
Should decisions be made individually or collectively?
Should a leader focus on long-term or short-term goals?
Is motivation a product of empowerment or direction?
Answers to these questions can help one choose a leadership style that easily complements the values and requirements of the team.
Wrapping Up
Now that you understand different leadership styles, which one is appropriate for your business? Before you come up with an answer, make sure to analyze the overall environment of your business, your team's needs, business culture and norms, and the complexity of the tasks at hand.
You may have to practice different styles for varying situations to meet the ultimate goals, so ensure to do an analysis properly.
