The 7 Leadership Styles For Running a Business
October 14, 2021
What are some leadership styles for running a business?
- Autocratic Leadership
- Democratic Leadership
- Laissez-Faire Leadership
- Bureaucratic Leadership
- Transactional Leadership
- Charismatic Leadership
- Transformational Leadership
What makes a good leader? This question is one that always gets asked but has many different answers. A good leader could be any of several types depending on the context. For our purpose, we will be looking at some leadership styles for businesses.
Being the right type of leader is crucial for starting and maintaining your own business. Check out the following list of leadership styles to see which type of leader you are and if it fits your business!
Autocratic Leadership
Also known as authoritarian leadership, this style puts the leader in charge of everything. There is less room for the team members’ inputs, and what the leader says, goes. It’s a very straightforward hierarchy where one person has complete authority.
How it can affect your business:
Autocratic leadership can be efficient, maximizing its potential when quick decision-making is needed. Small businesses might find it limiting, as creativity is oftentimes restricted. If your leader is the only expert in the team, then this style might work for you. Businesses that need creativity and innovation should try other leadership styles.
Democratic Leadership
Democratic leadership gets the team members involved in most decision-making. As opposed to autocratic leadership, this style puts value on each member’s input. There would often be an interchange of ideas between leader and member, making them feel like a valuable part of the team.
How it can affect your business:
This style of leadership will yield more creative solutions from your team. However, in making decisions, the majority will be followed. This can either be good or bad, depending on the situation. A small business will get good results from this leadership style as it keeps all members of the team engaged. With increased creativity and productivity, your business will most likely flourish.
Laissez-Faire Leadership
This leadership style gives a lot of freedom to the team members. With its name roughly translating to “let it be”, laissez-faire leadership is very hands-off. The leader will provide the team with everything that they need to succeed, but will mostly stay out of their way.
How it can affect your business:
If you are starting a creative business and you have faith in your team, then this leadership style might work for you. Your team members will feel empowered, their leadership skills will be developed, and they would become independent. However, be wary of possible conflicts, confusion, and low productivity.
Bureaucratic Leadership
Bureaucratic leaders set up a clear chain of command, a comprehensive set of rules, and make proper procedures for everything. This arguably stiff style of leadership is stable, and everyone’s roles are well-defined.
How it can affect your business:
Processes are often slow with the bureaucratic style of leadership because it has to undergo the whole chain of command. It also doesn’t provide much individual growth, nor does it promote innovations. Changes in your business won’t work well with this style, but if it is routine-heavy, then bureaucracy could be a good fit for you.
Transactional Leadership
This leadership style is another straightforward one. Its main premise is that good work reaps good rewards and bad work reaps the opposite. Similar to a transaction, rewards and punishments are used as extrinsic motivation for the members.
How it can affect your business:
For short-term goals, this type of leadership would quickly give you results. However, motivation is short-lived, and growth, creativity, and innovation are again not encouraged as much. If your business would flourish despite this, then perhaps a transactional leader would be effective.
Charismatic Leadership
A charismatic leader is good with people. They are often confident, have good communication skills, are very likable, and are persuasive. Their connection with their team members is deep, and they hold their leader in high regard. In a crisis, a charismatic leader can easily turn things around.
How it can affect your business:
Charismatic leaders can inspire good relations within the team. Motivation would almost always be high. But these leaders might start to become self-serving, and charisma is not directly proportional to competence. Your business could benefit from a charismatic leader, but make sure that your operations are going well.
Transformational Leadership
Transformational leadership is an effective style that embraces change for the better. This type of leader focuses on making constant improvements to anything that needs it. They inspire their members and they all work towards a singular vision.
How it can affect your business:
Out of all the styles, this is the one I would recommend the most. Motivation, creativity, growth, and independence are all encouraged for the whole team. If the leader can take the pressure of leading by example, then this leadership style is the best bet for leading your business to success.
Key Takeaway
Leading is a complicated matter. Each business has its own needs and requirements for success. While these leadership styles for business also have their merits, not all of them could fit any business.
Do you want to learn more about business leadership? Send me a message here so I can help you learn about leadership and what style would be best for your business. Let’s talk!