Business Leadership Today

The 5 Leadership Styles Most Commonly Utilized


Matt Tenney, Author of Inspire Greatness: How to Motivate Employees with a Simple, Repeatable, Scalable Process

Different leadership styles affect employees in different ways and focus on different outcomes. Most of us in leadership positions tailor our leadership style to suit the situation in which we are leading, and how we lead is informed by our employees’ needs. 

The longer we are in the role of leader and the more we engage with and get to know our employees and their strengths and weaknesses, the more we adapt our leadership style to yield the results we want.

Being a good leader means being able to assess the teams we lead and what we ultimately want them to achieve. Do we want to focus on day-to-day operational duties or do we want to focus primarily on where we want to go in the future?

While there are many different styles of leadership, there are five that are the most commonly utilized in business. 

The five leadership styles most commonly utilized are authoritarian (autocratic), participative (democratic), delegative (laissez-faire), transactional (managerial), and transformational leadership (visionary). Each style takes a different approach to leading others and has its own strengths and weaknesses. 

Some are more focused on autonomy, flexibility, and trust. Some rely more on coercion or positional authority. In this article, I’ll discuss these common styles of leadership, identify their advantages and disadvantages, and give you my take on the best style of leadership. 

1. Authoritarian (Autocratic)

In this style of leadership, leaders have all the decision-making power, typically excluding employees from the decision-making process and dictating work processes and goals. 

These leaders exert complete control over subordinates and place an emphasis on obedience and enforcement of rules and policies to control employees. Loyalty is built through coercion, control, and, sometimes, fear. 

Because they do not seek input from those they are leading, authoritarian leaders can make decisions quickly and with a great deal of authority and confidence. 

This style of leadership is sometimes considered effective in situations where an organization needs a decisive leader to guide it through a crisis. There is an emphasis on a clear chain of command, which leaves little doubt for employees about what is expected of them.

However, these kinds of decisions can often have unforeseen consequences because making decisions in this way stifles innovation and creativity. It often demoralizes employees, leading to highly toxic work environments. Leading in this way is not conducive to a positive employee experience, engagement, or job satisfaction either. 

2. Participative (Democratic)

Participative leaders value input from their teams and invite employees to be a part of the decision-making process. One of the salient features of the participative leadership style is listening—participative leaders really listen to those they lead.

Participative leaders create environments of open-minded communication, collaboration, and transparency. Excellent communication skills, an inclusive mindset, and a high degree of emotional intelligence are prerequisites of this style of leadership.

Types of participative leadership include collective leadership, democratic leadership, laissez-faire leadership, and consensus decision-making, with autocratic leadership at the lowest end of the participative leadership spectrum. 

In collective leadership, also known as group decision-making or collaborative decision-making, all members of the organization help to make decisions, meaning no single individual is responsible for outcomes. 

This kind of decision-making has proven to be one of the most successful in creating buy-in from other stakeholders, building consensus, and inspiring creativity, and it allows leaders to capitalize on an organization’s intellectual assets and employee expertise.

Democratic leadership falls somewhere between autocratic leadership and collective leadership. Employees are allowed to give input but final decisions are made by leaders. 

Laissez-faire leadership is a more hands-off approach to leadership that delegates tasks to subordinates. 

Consensus decision-making allows employees to provide feedback on decisions, with leaders facilitating the process. Leaders and their subordinates have an equal role in decision-making and can veto or block decisions.

Autocratic leadership is at the lowest end of the participative leadership scale. In this style of leadership, employees lack the authority to either make or overrule decisions. 

Participative leadership can be a great leadership style because it includes team members in the decision-making process, which makes them feel heard and valued. It can foster a more positive, more collaborative work environment.

However, it can be a difficult leadership style to maintain when fast decision-making and quick turnaround are priorities in an organization.

3. Delegative (Laissez-Faire)

Delegative leadership is considered to be one of the least intrusive forms of leadership. It is often referred to as “laissez-faire,” the literal translation of which is “let them do.” This leadership style avoids micromanagement and delegates initiatives to employees. 

Delegative leaders are strong proponents of autonomy and flexibility. As workers increasingly want more autonomy and flexibility with less micromanagement in today’s workplace, the greater freedom this leadership style provides can be a plus when the people being managed are highly skilled, knowledgeable about their jobs, and able to work well with little supervision. It can be particularly efficient in remote work environments. 

Delegative leaders expect their employees to take ownership of their duties and responsibility for their actions. Warren Buffett, the CEO of Berkshire Hathaway, is known to practice this style of leadership. He invests in companies but does not interfere in operational or strategic decision-making. 

These types of leaders create and support the conditions necessary for an autonomous culture by offering little guidance and a lot of mentoring, complete creative and decision-making freedom for employees, and the resources employees need to do their jobs with independence. 

This leadership style can make good use of the expertise and experience of teams and can lead to high levels of employee satisfaction. Its focus on intrinsic motivation can lead to better performance.

But it can also rely too heavily on self-motivation, lead to stagnation, and create scenarios where teams are slow to react and adapt to change. In some cases, delegative leaders may avoid their responsibilities by handing most of them off to subordinates.

4. Transactional (Managerial)

The transactional style of leadership adheres to the ideas many have about the role of traditional managers, with an emphasis on organization, supervision, performance, compliance, and meeting goals, and utilizes rewards and penalties to motivate people. 

Transactional leadership has three distinct characteristics: contingent reward, active management by exception, and passive management by exception.

Contingent reward refers to the use of recognition and rewards to motivate employees, with leaders closely monitoring worker performance and offering rewards when they meet goals. 

Active management by exception includes monitoring workers’ performance to identify errors, mistakes, and failures to meet performance expectations and taking corrective action as needed. It doesn’t emphasize good performance.

In passive management by exception, leaders closely monitor workers’ performance but refrain from taking corrective action until they absolutely have to. Obviously, this kind of delayed response can create many issues in a work setting. 

Transactional leadership has the advantage of producing consistent, predictable results. Employees working under this style of leadership can see the impact of their work when their goals are tied to the growth and success of the organization. 

It has a rewards/penalties system that is easy for employees to follow and understand, reduces confusion about expectations, and can create a sense of fairness amongst employees who are equally rewarded for doing good work and punished for doing bad work.

While compliance and meeting targets are an important part of managing others, this style of leadership does not tend to inspire greatness. 

This is because the transactional leadership style leaves very little, if any, room for creativity and innovation. It does not focus on relationship building, can discourage creativity and innovation, leads to micromanagement, and may lack a cohesive long-term vision or big-picture view. 

It eliminates individuality and tends to create more followers than leaders, which can be a problem when lower-level employees try to move into management positions or when they are tasked with managing projects. 

It is also a very rigid style of leadership that does not value empathy, listening or input from subordinates. This can have a negative impact on performance, engagement, and retention, all of which can hurt the chances for the long-term success of an organization. 

5. Transformational (Visionary)

Transformational leaders are all about the vision. These leaders are focused on getting their teams to buy into the vision and unite over a shared sense of purpose. 

These leaders are supportive of their employees and use empathy, recognition, and empowerment to energize their teams, help them achieve set goals and positive outcomes, and motivate them to go above and beyond to achieve a shared vision. 

There are four pillars of transformational leadership known as the “four I’s”: idealized influence, inspirational motivation, intellectual stimulation, and individual consideration.

Idealized Influence
Idealized influence describes leaders who are good role models for employees who trust them to make good decisions for the organization.

Inspirational Motivation
Inspirational motivation describes leaders who motivate employees to commit to the organization’s vision and inspire them to reach goals that lead to increased profits and growth.

Intellectual Stimulation
Intellectual stimulation describes leaders who encourage and foster creativity and  innovation by challenging the norms and views of the group by promoting critical thinking.

Individual Consideration
Individual consideration describes leaders who coach employees to strive for and achieve goals that help them and the organization.

There is a high level of trust, motivation, and commitment in this leadership style and the potential to inspire great work, high performance, and positive outcomes. It provides a clear vision and coaches employees to achieve that vision. This can strengthen loyalty, which can reduce turnover. 

It can, however, place more emphasis on long-term goals at the expense of day-to-day operations and short-term goals. It can also slow decision making and lead to employee burnout.

Which Style Is Best?

Different aspects of each leadership style can be beneficial in certain industries under certain circumstances. 

Some leadership styles are more effective than others in situations where quick decision-making and meeting deadlines are most important. Others are better suited to teams that can work with autonomy with little oversight or in organizations that value innovation and creativity. 

It’s always important to assess your current reality and your team’s abilities and needs to determine which style works best. But, by far, the best way to lead people in any situation is with kindness and understanding. 

The most effective leadership styles tend to involve a high degree of self-awareness on the part of the leader, participation by employees in decision-making, and focus on developing individuals by forging strong relationships with team members and inspiring them to do well. 

The best leaders care about their employees. They help them to thrive. And the best leadership style is one that demonstrates care toward employees and an investment in their success. 

If a leader’s primary job is to inspire their teams to do great work (and we at Business Leadership Today think it is), the best style of leadership is servant leadership. 

Servant leadership is a non-traditional style of leadership that is closely aligned with participative leadership. This style of leadership places an emphasis on fostering the growth of individuals. 

Servant leaders achieve this through listening, empathy, healing, awareness, persuasion, conceptualization, foresight, stewardship, commitment to the growth of people, and community building.

The goal of servant leadership is to build authority and influence through supporting and serving employees and avoids the potentially toxic, more controlling tactics employed in some leadership styles and the hands-off approach of others.

Authenticity is central to servant leadership. Servant leaders work continuously to build strong, authentic relationships with their followers. This can create a tremendous amount of cultural buy-in and contributes to a positive employee experience, high employee engagement, and high employee satisfaction. 

With the record-high turnover of The Great Resignation and the burnout many workers experienced during the pandemic, we think there’s never been a better time for the servant leader. 

Matt Tenney has been working to help organizations develop leaders who improve employee engagement and performance since 2012. He is the author of three leadership books, including the groundbreaking, highly acclaimed book Inspire Greatness: How to Motivate Employees with a Simple, Repeatable, Scalable Process.

Matt’s ideas have been featured in major media outlets and his clients include numerous national associations and Fortune 500 companies.

He is often invited to deliver keynote speeches at conferences and leadership meetings, and is known for delivering valuable, actionable insights in a way that is memorable and deeply inspiring.

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