The Main 3 Leadership Styles in Business
Any company’s success or failure is largely determined by its leadership. Great leadership also has a direct impact on employee engagement and profitability: engaged people may generate 21% more revenue. Leadership and the way they lead teams and people have a big impact on employee engagement. And each effective leader builds a leadership style based on their own personality, ambitions, and business culture, which can be one of three types: authoritarian, democratic, or laissez-faire.
In 1939, Kurt Lewin identified three types of leadership styles in business: autocratic, democratic, and laissez-faire. Each, of course, comes with its own advantages and disadvantages.
1. Autocratic Business Leader
The authoritarian ruler recognises the power of his position. Autocratic leaders are not interested in including the entire group in decision-making. Instead, they choose to carry the burden of leadership entirely on their shoulders. They expect people under their command to carry out their directives.
The fundamental benefit of having an authoritarian boss is that work is streamlined, which increases efficiency and production. They set precise deadlines and have a clear understanding of what is expected of them. This is especially useful in a crisis or while making last-minute judgments. As instructions are transmitted down, this leadership style allows for less misunderstandings.
They frequently have a skewed viewpoint. Because they exclusively draw on their own thoughts and experiences, any input from other team members is likely to go unheard. Those who operate under this leadership style may develop feelings of resentment towards their boss. They feel unappreciated because their contributions are rarely acknowledged. This leader is also more likely to micromanage his or her staff. Autocratic bosses are frequently found at the centre of low staff morale and excessive turnover.
When to be Autocratic
During a crisis, when a leader is most needed, the autocratic style is most effective. To potentially reduce damage, you need someone who can take command and make quick and difficult decisions. Teams value a strong and decisive leader during times of crisis. When team correction is required, autocratic leadership may be useful. Switching styles is generally good when a crisis has passed.
2. Democratic Business Leader
A democratic leader promotes the free exchange of ideas among his or her team members. Every member has a valuable contribution to make, and the leader serves as a spokesperson or facilitator. Democratic leaders rely on everyone in the organisation to participate. They stress the importance and knowledge that each team member brings to the table. Every team member shares the leadership’s freedoms and duties.
The unbridled creativity of the entire group, which allows for open debate of concerns and solutions, is a benefit of democratic leadership. Democratic leadership tends to strengthen team cohesion. This type of environment can make an employee feel valued, accomplished, and vital to the company’s success. Gossip, cliques, and manipulation are all examples of common office politics that are becoming less common. As a result, there is a better working atmosphere and less employee turnover: 63 percent of employees who are recognised for their performance are less likely to look for new jobs.
Deliberation can be a costly luxury under democratic leadership. A democratic team may be unable to adapt and perform under pressure if choices must be made rapidly. Democratic leadership can lead to a lack of clarity about team members’ duties and responsibilities, as well as making it difficult to spot individuals who aren’t pulling their weight.
When to be Democratic
This strategy is the most successful for day-to-day work since it allows the entire group to participate in decision-making. This instils a sense of responsibility in teams over projects, deliverables, and outcomes. Many company leaders consider democratic leadership to be their preferred approach, although it can be ineffective in times of crisis.
3. Laissez-faire Business Leader
Leaders who are hands-off are known as laissez-faire. They delegate responsibilities and provide basic guidance, but they are rarely involved in day-to-day operations. Employees choose the best method for carrying out their obligations. Leaders that believe in the individual place a lot of trust in them. They have faith in their ability to stay self-motivated, focused, and accountable. If problems emerge, these leaders are there to provide guidance, but only if asked. Leaders that are more laissez-faire let each member of their team to succeed or fail on their own merits.
The ability to function without limits or intervention from management is a benefit of laissez-faire leadership. This allows highly talented and self-motivated employees to achieve their full potential.
Without a strong leadership hand to keep things on track, a disadvantage may be a lack of production. This can lead to missed deadlines, procedural omissions, and low-quality work. Team unity may weaken if each team member pursues their own ambitions. Some employees may begin to lose interest in their jobs as a result of distant and disengaged leaders. This could result in huge financial losses for the company. Employee disengagement is expected to cost American firms $450-550 billion each year.
When to be Laissez-faire
Individuals that are able to perform without supervision are best suited for laissez-faire leadership. Make sure each team member has the appropriate skill level and self-direction abilities before adopting this method. They must be able to keep themselves motivated in order to continue working. Otherwise, this strategy can backfire and end up doing more harm than good.
Choose your type of leadership style
Examine the current dynamics of your team. Are they performing well or are they uninterested? If it’s the latter, you should rethink your approach. Determine what should remain the same and what should be changed. The tone of the team is set by the leader. You might find that by changing the way you lead, your team adapts, evolves, and improves.
Which type of business leadership is best for you? You might discover that you don’t quite fit into any of the categories. Those who can switch between leadership styles are the most successful. Effective leadership is, and always has been, about knowing what techniques to use and when.
Self-awareness is the most crucial leadership talent you can develop; understand what works and what doesn’t. You’ll be able to move between these most prevalent corporate leadership styles as needed, and set yourself and your team up for success, if you understand them.