What kind of leadership style do you use in the workplace, and is it best suited to your team?

As a business owner or senior executive, it’s important to know what kind of leader you are. This will help you identify your strengths and weaknesses and give you a clear idea of how to improve, hone or (in some cases) replace your leadership style.

In a previous article, we discussed different ways business owners might run their organisations. Some will be technicians or entrepreneurs, while others will be managers or leaders.

Suppose you run your business as a leader. Our previous article would have given you a broad overview of the advantages and potential growth barriers you may encounter. But now it’s time to get down to the details and know more about your leadership style.

Even if being a leader isn’t the predominant way you run your business, and you’re more comfortable as a technician or entrepreneur, it’s still important for you and your senior executives to understand your respective leadership styles.

7 types of leadership styles

We shortlist seven leadership styles, highlighting their pros and cons, and how to use your preferred style to your advantage. 

1. Autocratic leadership

Autocratic leadership, also known as authoritarian leadership, involves making decisions based solely on the leader’s judgement and ideas and rarely includes others in the decision-making process.

While the autocratic style does get a bad reputation, wherein leaders are often seen as bossy or dictatorial, it has its benefits and drawbacks like any leadership style. The authoritarian leadership style can be beneficial depending on the situation, the type of task being worked on and even the personalities of the team members.

Key characteristics of autocratic leadership include:

• Requires leaders to make almost all of the decisions
• Provides leaders with the ability to dictate work methods and processes
• Tends to create highly structured and very rigid environments
• Discourages creativity and out-of-the-box thinking
• Establishes rules and tends to be clearly outlined and communicated

The autocratic leadership style allows for quick decision-making and offers a clear chain of command, which can be incredibly useful in stressful situations and crises. However, it can also discourage team input and lower morale, which can hinder the team from generating creative solutions and innovative ideas.

If this is your predominant leadership style, it’s important to recognise these weaknesses and surround yourself with senior executives with different leadership styles. This will keep your leadership style in check and prevent you from being too autocratic.

2. Democratic leadership 

Democratic leadership, known as participative leadership, is the opposite of the autocratic style. Decision-making is shared among all team members and is based on the idea that everyone’s input is valuable and that the whole team is more important than just one individual. 

Key characteristics of democratic leadership include:

• Encourages participation
• Facilitates discussions
• Adaptability to change
• Open communication
• Empowers team members

Democratic leaders promote inclusivity in the workplace and foster a culture of accountability by allowing team members to have a voice in decision-making. This also makes democratic leaders more open and receptive to new ideas and feedback, which enables them to pivot and adapt when necessary.

However, this comes with its challenges. Because democratic leaders prioritise the input of every individual in the team, they might have a hard time taking decisive action. By the same token, democratic leaders might struggle with delegating tasks and managing people effectively, which can lead to inefficiencies and confusion.

The democratic leadership style is effective in positively impacting organisational performance and team motivation, but it’s important to be aware of its potential disadvantages so that it doesn’t hinder you and your team from achieving your goals. 

3. Transactional leadership

Transactional leadership is a results-driven approach that works best with self-motivated employees. It is a leadership style that relies on attaining goals through structure, supervision and a system of rewards and punishments.

This leadership style is ideal for achieving short-term goals while maintaining conformity and unity within the company. The rewards and punishments serve as the “transactions” under this leadership style, hence the name.

Key characteristics of transactional leadership include:

• Prioritisation of corporate structure and hierarchy
• Rigid day-to-day operations
• Maintains the company status quo
• Motivation by self-interest
• Practical decision-making based on existing constraints 

Transactional leadership facilitates the achievement of short-term goals, and enforcing a rewards system can motivate employees to meet their quotas and deadlines. This leadership style is effective in well-established organisations, favouring company systems and processes. It is also useful in establishing concrete measures of success because transactional leaders set clear guidelines for achieving goals.

However, transactional leadership is not ideal if you want to make significant organisational changes or improvements. Because of its focus on short-term goals, transactional leaders can struggle with developing and achieving long-term objectives. The rigid structure of transactional leadership can also stifle innovation and creativity, limiting team members’ growth.

Supplementing this style with other leadership approaches can help you overcome the challenges that come with transactional leadership, and ultimately help you become a better leader in the long run.

4. Transformational leadership

Transformational leadership focuses on conveying a clear vision for the organisation and how each member can contribute in making these long-term goals into reality. Transformational leaders are enthusiastic, passionate and outgoing. Their energy is infectious, inspiring their team to follow in their footsteps. This type of leader also tends to excel in effective communication and focus on instilling purpose in employees and customers alike. 

Key characteristics of transformational leadership include:

• Encourages team members to participate and communicate
• Uses active listening skills
• Proactive problem solvers
• Encourages creativity and innovation
• Willingness to take well-informed risks

Transformational leaders motivate their teams to be change makers through the words they speak and the example they set. A transformational leader understands that each member of their team is important to making their vision a reality, which encourages this type of leader to develop high-performing team cultures. 

While the transformational leadership style is considered one of the best approaches to leadership, that doesn’t mean it’s the right one to use in every situation. If a task or situation calls for creativity and innovation, then transformational leadership can be beneficial. But if you need to accomplish short-term goals and provide more guidance and structure to your team, then transactional leadership might be more appropriate.

5. Servant leadership

According to the Society for Human Resource Management, servant leadership, also known as people-first leadership, prioritises the growth, well-being, and empowerment of employees. 

The servant leadership theory was popularised by Robert K. Greenleaf in the 1970s, proposing that servant leadership required an “I serve” mentality based on the premises: “I serve because I am the leader,” and “I am the leader because I serve.”  

Key characteristics of servant leadership include:

• Maintains integrity and values
• Helps employees meet their goals and grow within the organisation
• Communicates and listens effectively
• Strengthens work relationships and bonds
• Establishes high standards and fosters a culture of accountability

People-first leaders aim to create a work environment where employees can thrive as their authentic selves. This leadership style prioritises great ethical standards and helps leaders create a positive work atmosphere where employees are highly motivated and satisfied with their jobs. Servant leaders place a heavy emphasis on learning and growth, which enables them to nurture and challenge the staff members under their wing, helping employees achieve their full potential.

Servant leaders need to be aware of the potential drawbacks of this leadership style. Being compassionate, selfless and humble can potentially lead to passivity if you have difficulty taking a firm stance or making difficult decisions. Because servant leaders also give more autonomy and decision-making power to their staff, this can limit their control in the overall direction of the company and make it more difficult to achieve organisational goals. 

Balancing a people-first leadership style with another approach, such as transactional leadership, can make you a more well-rounded leader.

6. Laissez-faire leadership

Laissez-faire leadership comes from the French term that roughly translates as “let it be.” As the name implies, this is a hands-off style that gives employees freedom and autonomy over their work.  

This approach allows employees to work independently, with minimal interference or supervision from the leader. From the perspective of laissez-faire leaders, their team has the ability and skills to make the right decisions and complete their work effectively without the leader’s input.

Key characteristics of laissez-faire leadership include:

• Effective delegation of roles and responsibilities
• Abundance of resources and tools
• Prioritises autonomy and freedom of choice
• Employees make decisions
• Accountability falls to the leader

A laissez-faire leadership style can encourage personal growth and self-motivation for employees and foster a creative and innovative work environment because of their freedom to explore new ideas and generate creative solutions.

However, laissez-faire leadership is not suitable for every work environment, situation or employee. Some individuals and industries will need more structure, guidance and support from the leader’s end. A laissez-faire leadership style can also risk neglecting a member’s needs, given the hands-off work environment. Regular check-ins can mitigate this.

7. Charismatic leadership

Similar to transformational leadership, charismatic leaders are driven to see their vision become a reality. 

Charismatic leadership involves a combination of charm, interpersonal connections and persuasiveness to motivate team members. 

Key characteristics of charismatic leadership include:

• Motivates others through emotional connections
• Great oratory skills
• High emotional intelligence
• Self-awareness
• Effectively manages different social situations

Charismatic leaders inspire loyalty and encourage motivation in their team members. They create a sense of community and shared identity in the workplace, which can unite team members as everyone works to achieve organisational goals.

However, this leadership style has the potential to create a group of “yes” men wherein employees stop thinking for themselves and go along with a charismatic leader’s plan even if it’s not beneficial for the company’s long-term growth or success. This also fosters increased dependency on the leader, leaving the team unable to function effectively without them.

Using at least one or two other approaches to complement the charismatic leadership style can help leaders become more effective, well-balanced and focused in managing their teams and growing their organisations.

Each leadership style has its strengths and weaknesses. What’s important is knowing which ones apply to you, and finding ways to improve as a leader.

Contact us and we will help you develop an impactful leadership style.