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Leadership Styles: Which One Suits Your Business?

  • December 23, 2022
  • 380 views
  • 5 minute read
  • Frances
leadership styles
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It doesn’t matter if you’re running a multinational organization or a small business – your leadership style can make or break the company.

Most entrepreneurs draw a line between two primary leadership styles, prestige, and dominance, but these are broad generalizations. In reality, there is an alarming degree of gradation between the two. After all, being a leader is no cakewalk.

Leaders have to meet the expectations of internal and external stakeholders, team members, and investors. Simultaneously, they measure key performance indicators to ensure business operations run smoothly, eliminating obstacles.

With plenty of responsibilities in hand, every leader adopts a leadership style. Some make decisions and inform their teams, while others focus on delegating tasks.

Many leaders also focus on cohesive decision-making to take input from every employee. Even though everyone has a different approach when it comes to leadership, there’s no right or wrong style.

You only have to ensure that your leadership style aligns with organizational needs. In addition, you must keep yourself open to changing leadership styles based on a specific situation. As they say, no one size fits all.

Let’s show you the ropes if you’re new to leadership. Here we have outlined six distinct leadership styles and which one you should adopt.

1.    Democratic Leadership

Have you heard of shared leadership? That’s what we call democratic leadership. It is an open management approach that prioritizes the involvement of every person in the decision-making process.

Democratic leaders conduct lots of collaborative and brainstorming sessions to ensure every team member is on the same page. Likewise, they focus on building a culture that encourages teamwork.

These leaders are more of a teacher coach to the employees, pushing them toward career development, something you’ll also find in educational organizations. This style enables academic leaders and instructors to ensure student success alongside boosting classroom engagement.

Democratic leadership is a great way to capitalize on the workforce’s talents. However, employee involvement in every business matter can be costly and time-consuming, creating delays.

If you cannot reach a consensus or make a wrong decision, it can be impossible to find the person responsible. To combat this, consider rewarding employees for their input to encourage more creative thinking.

2.    Laissez-Faire Leadership

Giving employees more autonomy can lead to satisfaction and low turnover. In such situations, following laissez-faire leadership is the best decision. It is about stepping back and putting faith in employees to run business operations.

Some people also refer to delegation leadership because leaders must delegate massive staff responsibilities.

Furthermore, there’s a greater focus on upskilling and career development in this leadership style. Likewise, it is acceptable for employees to make mistakes, as leaders believe this to be a sign of an innovative work environment.

Thus, any company suffering from high employee turnover and low retention rate can benefit from this style.

3.    Value-Driven Leadership

Value-driven leadership is about instilling a standard set of values in all employees to enhance their willingness to work in a team. Value-driven leaders identify and address blind spots in engaging others and communicating the vision.

Similarly, they look at situations from different viewpoints. It allows them to understand every employee’s worth and leverage their strengths for business tasks.

The ultimate goals of value-driven leaders are to protect the team, take ownership of mistakes, and push praise down. They’re also transparent with their teams and lean on their value system.

These leaders care for their team members and take every opportunity to integrate organizational values into communication. A team-oriented strategy leads to higher employee satisfaction and productivity.

4.    Transformational Leadership

Is your business open to change? Adopting a transformational leadership approach is the best choice. It allows leaders to motivate employees to bring ideas and experiment with new things.

The aim is to inspire their team to achieve exceptional business results. In other words, leaders focus on ambitious goal-setting and high employee accountability.

Another role of transformational leaders is to stimulate their workforce by following a goal-driven approach. For that, you must align their goals with the company’s mission. It will increase staff loyalty and engagement at the organizational level.

Further, this leadership style also accommodates different working decorum. Besides inviting new ideas to the table, it encourages leaders to try alternate strategies and determine what works best for the business.

The only drawback of this leadership style is that it gives employees full power over tasks that might be overwhelming. Therefore, you must keep communication lines open to provide feedback to the team on their progress.

5.    Autocratic Leadership

As an entrepreneur, everyone wants to enjoy autonomy and independence instead of being answerable to anyone. Such people adopt an autocratic leadership style. The leader can dictate policies, procedures, goals, and managerial activities.

In turn, the business has a well-defined strategy and a highly structured environment. After all, it allows business owners to make decisions quickly and with authority.

Believe it or not, it is the ideal leadership style for organizations with smaller teams struggling with bad organization. As only one person is responsible for making decisions, the processes are transparent, and the results are prompt. But an obvious drawback is the lack of team engagement.

Employees might feel their voices are not heard, leading to demotivated staff. For this, you can always take feedback from teammates even if you don’t want to follow their suggestions. It will feel their opinions are valid, leading to higher engagement levels.

6.    Strategic Leadership

Entrepreneurs who focus on results and numbers often adopt a strategic leadership approach. Facts and knowledge are the two primary factors for these leaders.

In addition, strategic leaders always look at the bigger picture, having a long-term approach in their heads. As a result, they have numerous resources dedicated to planning and following a stringent business structure.

One of the strengths of strategic leadership is that employees buy into one shared vision. It encourages cross-collaboration between departments as everyone is working towards the same goals.

However, this leadership is only suitable in more specialized industries such as engineering. This leadership style won’t be appropriate in an environment where trends and tastes change with every passing day.

Final Thoughts

Every company strives for different goals and objectives, requiring a different leadership style. You must understand your business dynamics and adopt leadership accordingly.

A small team will allow you to lead the way by being an autocratic leader, whereas you can adopt a transformational approach to welcome change.

Every leadership style has specific pros and cons; hence, opt for the one that resonates with your business model and work ethic.

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