Leadership styles in business: Why are they important and which is right for you?

20 August 2021

Whether you're moving into a leadership position, or you've managed a team or two in your time, there's no one-size-fits-all formula when it comes to leading others. What works for some might not be the right approach for you. But leadership is an ever-changing art form, and there are numerous styles for you to choose and develop on the way to team success.

To help you decide on the best option for you, your team and your organisational goals, we'll see how effective the most established leadership styles are by taking a closer look at their pros and cons below.

Why are leadership styles important?

Leadership styles are a valued part of managing a team. Every style has the potential to significantly affect the way your direct reports approach their work – for better or worse. The right leadership style can boost productivity and timeliness and goes a long way towards promoting healthy company culture.

And remember, you can adapt to certain leadership styles when the moment calls for it. While certain leaders opt for a singular style and apply it to all situations, others might prefer to tailor their leadership approach depending on the situation they or the company find themselves in.

team meeting

Different types of leadership style

Democratic leadership

Also known as participative leadership, democratic leadership allows team members to pitch in when making decisions. Although the leader makes the final call, each team member provides their input and has equal say on a project's direction.

This approach gives employees a degree of authority, mirroring how decisions can be made in company board meetings – making it an incredibly effective leadership style.

The pros of democratic leadership:

  • Collaboration and teamwork are greatly encouraged
  • Allows a variety of opinions and ways of thinking
  • Leads to higher group engagement and productivity
  • Fosters more creative solutions
  • Whatever outcome is reached has majority support

The cons of democratic leadership:

  • The minority opinion could be overridden
  • Since every team is involved, gaps in communication and misunderstandings can be frequent
  • May take longer to reach a decision

Autocratic leadership

Defined by a "my way or the highway" mentality, autocratic leaders make decisions without taking or asking for input from their team. As well as a lack of consideration for others' insights, they expect their decisions to be followed and adhered to by the letter.

An example of an autocratic leadership decision would be when a manager changes the hours of work for multiple employees, without consulting them first.   

The pros of autocratic leadership:

  • Can be efficient where decision-making is involved
  • Maintains a sense of consistency since only one person is in charge
  • Makes individual roles clearer due to delegation of specific duties

The cons of autocratic leadership

  • Hinder creativity, collaboration and innovation
  • Lack of diverse thinking among the team
  • Can lead to disengaged individuals who don't feel valued
  • Doesn't allow for mentorship or professional growth

colleagues talking

Laissez-faire leadership

The very definition of hands-off, laissez-faire leaders give others the freedom to make decisions, practically giving all authority to their employees. Generally seen in creative settings such as ad agencies and start-ups, laissez-faire leaders aren't especially concerned with things like work hours or deadlines. Instead, they put their trust in their employees, while tending to the company’s other needs.

The pros of laissez-faire leadership

  • Empowers individuals to practise their leadership skills
  • Fosters creative thinking and innovation
  • Creates less risk-averse thinking
  • Instils a sense of independence amongst individuals

The cons of laissez-faire leadership

  • Can result in low productivity
  • With no single leader, may lead to conflict amongst among team members
  • Can lead to confusion over roles and responsibilities
  • Generally ineffective in unskilled or unmotivated teams

Transformational leadership

Think of the transformational leader as a visionary, always aiming to improve on the status quo by inspiring and motivating their team. That might mean shortening deadlines and giving individuals more challenging goals as the company grows. For transformational leaders, pushing others outside of their comfort zone is part and parcel of their style.  

The pros of transformational leadership

  • Highly motivational, so it's well suited to growth-minded companies
  • Builds stronger relationships and encourages collaboration
  • Encourages team members to be more autonomous
  • Can lead to more creativity and empathy among teams

The cons of transformational leadership

  • Not the best fit for all organisations
  • Disruption of the status quo can create feelings of instability
  • Leaders must lead by example, which puts additional pressure on themselves

businessman talking to colleagues

Transactional leadership

A commonly used leadership style, transactional leaders reward employees for their efforts. That means bonuses and promotions are used as motivators, often with a standardised incentive plan to go along with your job duties. However, although rewards may sound like the best way to encourage a team, the approach is not without its shortcomings.

The pros of transactional leadership

  • An efficient way to reach short-term goals
  • Clearly defines the expected behaviour from team members
  • Provides structure and stability

 The cons of transformational leadership

  • Hinders creativity, growth and initiative
  • Opposes change of any kind
  • Encourages bare-minimum work since employees know how much their effort is worth

Coaching-style leadership

Focused on bringing out the best in their team, the coaching leader identifies and nurtures the individual strengths of each member. It's similar to democratic leadership, but it emphasises the growth and success of individual employees instead.

As a result, this leader may create a team where each employee has a specific skill or expertise in something different, building a highly skilled, multi-faceted squad of workers who are well-versed in communicating with each other.

The pros of coach-style leadership

  • Encourages communication, collaboration and constructive feedback
  • Fosters greater personal and professional development of team members
  • Focuses on being supportive rather than judgmental 

The cons of coach-style leadership

  • Requires a lot of time, so can be resource-intensive
  • Not the fastest or most efficient way of achieving results
  • Not always the best choice for high-pressure or results-driven companies

team meeting

Bureaucratic leadership

Driven by hierarchy and order, the bureaucratic leader does things by the book. Commonly found in larger or more traditional companies, bureaucratic leaders might take on others' insights, but their tendency towards strict regulations and company policy generally means they'll stick with what's worked before instead.

The pros of bureaucratic leadership

  • Generally stable as far as job security and outcomes go
  • Removes favouritism from the team
  • Clear roles, responsibilities and expectations
  • Highly visible set of processes and regulations

The cons of bureaucratic leadership

  • A chain of command creates inefficiencies
  • Doesn't encourage personal or professional growth
  • Deters innovation and creative thinking
  • Not suited to ambitious companies
  • Doesn't respond well to change

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The views, opinions and positions expressed within this article are those of our third-party content providers alone and do not represent those of Gazprom Energy. The accuracy, completeness and validity of any statements made within this article are not guaranteed. Gazprom Energy accepts no liability for any errors, omissions or representations.


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