7 Styles of Business Leadership

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7 Styles of Business Leadership

No two business leaders operate in exactly the same manner. Dan Price, Marc Benioff, Arianna Huffington and Ursula Burns might all run exceedingly successful companies — but they do so with notably different leadership styles, which suit the corporate culture of their organizations and help them reach the goals they set out to achieve.

Knowing one’s leadership style is useful because it gives a leader more control over how they influence those around them. Most methods and behaviors required of business leaders fall into the following seven categories of leadership style.

Autocratic

An autocrat is a leader who has absolute power. In the autocratic leadership style, business leaders tend to neither consult nor consider employee input when making decisions. Leaders expect employees to adhere to their decisions, even those requiring a radical change or resulting in negative outcomes.

Rarely do autocratic business leaders find success. Usually, opportunity for innovation is sparse in autocratic systems. What’s more, autocratic leaders tend to alienate their workforce, compelling workers to search elsewhere for positions where their thoughts and opinions will be appreciated. Both low creativity and high employee turnover are bad for business, so autocratic leadership styles are rarely appropriate or effective.

Democratic

A democracy takes input from all members to make decisions. Though democratic leaders retain authority over their teams, they welcome insight from employees, and they give team members equal say on certain issues within an organization.

Democratic leaders often benefit from enhanced engagement and collaboration, which is what makes this leadership style among the most effective. However, there are downsides to democratic leadership styles, such as the time required to coordinate decision-making with team members or bad advice from inexperienced employees. Thus, leaders need to know when to deploy a democratic style and when to leverage a more effective style.

Bureaucratic

It is common business practice to develop a strict company policy, which can help employees understand and maintain proper procedures and conduct. Bureaucratic leaders rely heavily on company policy to make their decisions, though they might receive input from other sources as well.

On one hand, the bureaucratic style allows for continuity of leadership, establishing baseline behavior from leadership that employees can rely on. On the other hand, some bureaucratic leaders are remarkably inflexible and uncreative, much to the detriment of their organizations. Older and more traditional companies tend to suffer from intractably bureaucratic leaders, in part because bureaucracy can be effective at standardizing processes within a large and otherwise unwieldy company.

Laissez-Faire

“Laissez-faire” means “Let them do,” an apt name for a leadership style that transfers almost all authority to their workforce. Laissez-faire leaders might enact or enforce few policies, trusting their employees to make decisions that most benefit the business.

Some employees find laissez-faire leadership to be empowering, but some become distressed at such a significant lack of direction. With established policies and practices, an organization benefits from a cohesive vision and unified drive. Brand-new and especially small organizations might thrive with laissez-faire leadership, but established and large businesses typically need a leader to be more hands-on.

Transformational

As the name suggests, a transformational leader is one who is constantly striving to transform their organization. These leaders push their employees to do more, do better, do faster or do differently as much as possible.

Leaders who take the transformational approach can inspire immense amounts of innovation — but they can also cause their workforce to burn out more than other leadership styles do because creativity requires a large amount of mental and emotional energy from which employees tend to need breaks. Companies in the midst of intensive growth can benefit from transformational leadership, but those companies should know how to offer employees time for rest and recovery between bouts of creative work.

Transactional

The transactional leadership style involves providing workers with rewards for the work they do. When a team finishes a project, reaches a goal or otherwise completes important and valuable work, they gain important attention and accolades from their leader.

Transactional leadership is exceedingly common, for good reason. Employees working under transactional leaders tend to understand their roles and responsibilities. However, incentive programs used by transactional leaders can erode an employee’s internal motivation, ultimately making them less driven and productive.

Coach

An effective, and impactful sports coach identifies the strengths of individual players and nurtures those skills to improve the performance of the team overall. Business leaders can adopt these methods for use in business, leveraging strategies that allow their teams to succeed.

This type of leadership can be difficult, requiring finely honed leadership skills like attention to detail, emotional intelligence, communication and flexibility. A leadership program from a top university can provide leaders the tools to recognize employee strengths and be the coach their teams need.

Leaders come from all types of different backgrounds — and they adopt all manner of style to motivate and manage their workforce. Every one of these leadership styles can be beneficial when deployed at the right moment, and as leaders gain education and experience, they can know when which style fits.