The Three Types of Leadership Styles in Business – Which Is Right for You?

Are you balancing the personal approach to every employee and your business goals?

Every company has business goals corresponding to clients’ needs. No matter how enthusiastic your team is, it needs oversight to follow the strategy, grow, endure hardship, and don’t give up at crucial for your company moments.

Your employees need inspiration and reasonable pay. Moreover, your team wants to feel the making of something great to stay productive. Proper leadership reinforces that culture by motivating, mediating, and supervising. What kind of leader should you be for your organization?

The autocratic business leader

An autocratic leader takes complete control by deciding the company's direction with no input from a team. The approach may lead to success during emergencies or when deep and specific knowledge is needed. Elon Musk's and Mark Zuckerberg's styles are prominent examples of autocracy and how it impacts company culture. Effective managers share responsibilities, remain flexible, and prioritize their personal life, trusting their team's judgment most of the time. Trust empowers employees, and they understand why an organization does not sometimes consider their voice.

Advantages of an autocratic business leader

If a team needs more enthusiasm, a strong leader ensures they know what to do. In a perplexing discord of voices, the loudest one wins. So, what are the advantages?

  • Confident decision-making saves the day when there is no time to meet and brainstorm.
  • Precise directions contribute to achieving goals.
  • No confusion happens under constant supervision.
  • When one person provides all the instructions, the organization offers its employees stability and security.

Disadvantages of autocratic leadership

However beneficial it could be, autocratic leadership can have various negative consequences if it persists – a potential backlash in teams due to excessively demanding rules or lack of enthusiasm. Let’s go through the disadvantages:

  • Never considering employees’ feedback seriously;
  • Lack of creativity and proactivity in teams;
  • Low employee morale, self-worth, and devaluation;
  • It may result in stagnation and lack of development;
  • Team job satisfaction may plummet.

When is it good to exercise an autocratic management style?

The authoritarian leadership style relates to government-regulated industries or healthcare, where employees must follow orders without questions for safety reasons. What else may require single decision-making?

  • Emergency scenarios usually unfold rapidly. There is no time for collaborative decision-making, and autocracy proves effective.
  • Autocracy may push startups in the early stages into growth and prosperity, giving the team members precise orders.

The democratic business leader

People enjoy flexibility at work – they are more effective and successful and committed to what they do in their organization. The democratic model encourages feedback and participation from all team members, resulting in better collaboration, a creativity boost, and efficient communication. Successful leaders like President Eisenhower and innovator Steve Jobs are always open to new ideas, popular among loyal workers as pivotal figures in social interactions.

Advantages of democratic business leadership

Companies with a democratic management style see great relationships in teams and higher levels of job satisfaction. However, that doesn’t always correlate with productivity and profit. What are the advantages?

  • Higher involvement of employees across all departments;
  • Workers come up with creative and helpful ideas often, not fearing criticism;
  • Trust grows;
  • Decisions are often well-balanced and meet no backlash from team members.

Disadvantages of democratic business leaders

The more people participate in decision-making, the longer it takes. Democratic leaders often have their team struggle to reach a consensus, with more steps to take and more parties to satisfy. However, there are more roadblocks such leaders must overcome on their way to success.

  • Every decision consumes much time;
  • Conflicts happen often;
  • Democratic managers sometimes can’t clearly understand the responsibilities, as every process involves many people.

When it is good to be a democratic leader

When working hard, often making personal sacrifices, teams must trust their leaders and clearly understand their goals. Workers must be loyal to a company at this stage - otherwise, discipline falters. If leaders showed democracy at the right time, this would be possible.

  • When companies have to build trust and loyalty;
  • To unleash all the creative potential of a team;
  • To encourage all groups to participate in decision-making processes;
  • To nurture a favorable climate in a company.

The Laissez-Faire business leader

The Laissez-Faire style suggests “letting the situation play out.” Business leaders like Warren Buffett reduce guidance to the minimum possible extent so employees make decisions independently. Teams get a high degree of autonomy and little interference. Managers provide resources and support but do not actively participate in routine processes.

Advantages of Laissez-Faire business leaders

Leaders often don’t have enough time to develop company strategy because of getting stuck in everyday activities and time-consuming tasks. Free up your time and let your employees make some decisions. There are advantages to the Laissez-Faire approach.

  • A higher sense of self-worth and job satisfaction in your team.
  • Your workers try new ideas and develop innovative solutions to tackle problems.
  • More time for strategic planning for leaders.

The disadvantages of Laissez-Faire business leaders

It may be risky to let teams work independently without supervision, yet appealing and innovative. Leaders must be aware of the disadvantages.

  • Lack of direction may confuse;
  • Insufficient communication makes employees feel disconnected and unsupported, which results in low morale;
  • Unclear responsibilities.

When to use this style?

When a leader has built a well-coordinated team with high loyalty and trust in the company, it is time for autonomy. When is it suitable to let the situation develop and soften supervision?

  1. Team members may benefit from a relatively hands-off approach when working on creative tasks and developing innovative methods to enhance the customer experience;
  2. A Laissez-Faire approach lets experienced workers work effectively to the highest potential;
  3. Autonomy at work contributes to team-building;
  4. Resort to a flexible model to boost workers' morale.

Which leadership style to choose?

Consider factors like the nature of your business, your goals, and the current development phase of your company. A democratic leadership style is excellent when collaboration, communication, and teamwork are essential. If a team of motivated employees thrives in a collaborative environment, a democratic model may be your choice.

Autocratic leadership is effective when clear guidance is crucial or quick decisions are needed. However, don’t impair your team morale with excessive control.
A Laissez-Faire model fits a team of experienced, skilled, and self-motivated workers. To build a successful company, you should know your team's peculiarities and combine several styles if needed.

Industry expertise 
Artur Voznenko
March 22, 2023

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