What is the most effective leadership style in business?

Leadership

7 minute read ⏱

Last update: August 2022

Throughout history, great leaders have emerged each with particular leadership styles

Leadership in itself is a somewhat fluid principle. Generally, most leaders adapt their leadership styles to suit their situation. This is particularly true the longer they lead, as they learn and engage with their employees they adapt their leadership style.

In order to become a more successful leader, leaders have to understand where they are currently. In this article, we’ll explain what leadership styles are, then look at 5 of the most common leadership styles and how effective they are.

The 5 most common leadership styles are:

1. Transformational Leadership
2. Delegative Leadership
3. Authoritative Leadership
4. Transactional Leadership
5. Participative Leadership

What is a leadership style?

A leadership style refers to a leader’s methods, characteristics and behaviors when directing, motivating, and managing their teams.

Their leadership style is also the determining factor in how leaders develop their strategy, implement plans and respond to changes, whilst managing the expectations of stakeholders and the wellbeing of their team.

As you start to consider some of the people who you think of as great leaders, you can immediately see that there are often vast differences in how each person leads.

Why is it important to know your own leadership style?

As a leader, understanding your own leadership style is critically important. When you do understand your own leadership style you are able to determine the affect this has on those that you directly influence. It also helps you find your leadership strengths and define which leadership skills to develop.

Some leaders are already able to categorize their current leadership style, recognizing whether this makes them an effective leader? Or how their employees see them. But it is not always so defined. It is usually the case that leaders can categorize their style, however often tend to exhibit traits of many other leadership styles also.

One easy way to know what your leadership style is involved feedback. Asking those who you lead to provide you with open and honest feedback is a helpful exercise. Doing so will allow you to adapt your style’s characteristics within your day-to-day responsibilities as a leader.

Ready to discover your leadership style? 🚀

1. Transformational Leadership

We’ve likely all been in a group situation where someone took control, communicating with the group and creating a shared vision. Creating a unity, developing bonds, creating energy and instilling passion. This person is very likely to be considered a transformational leader.

Transformational leadership is a leadership style that places emphasis on change and transformation. Leaders who adopt this approach strive to inspire their followers to achieve more than they ever thought possible by tapping into their individual potential. This type of leadership can be extremely effective in organizations that are looking to make major changes or transformations.

Some of the key characteristics of transformational leadership include:

A focus on the future: Transformational leaders are always looking ahead and thinking about what needs to be done in order to achieve the organization’s goals. They inspire their followers to do the same.

A focus on change: Transformational leaders are comfortable with change and understand that it is necessary for organizational success. They work to ensure that their followers are also comfortable with change and are able to adapt to it.

A focus on people: Transformational leaders see the potential in each and every one of their followers. They strive to develop their followers’ individual strengths and abilities so that they can reach their full potential.

2. Delegative Leadership

Often referred to as “laissez-faire”, a delegative leadership style focuses on delegating initiative to team members. This is generally known as one of the least intrusive forms of leadership, this literally translates to “let them do”. This is therefore considered a very hand-off leadership style.

Leaders who adopt this style have trust, relying on their employees to do their jobs. They don’t micromanage or get too involved in providing feedback or guidance. Instead delegative leaders give their employees the freedom to utilize their creativity, resources, and experience to help them meet their goals.

This can be a successful leadership strategy if team members are competent and take responsibility for their work. However, delegative leadership can also lead to disagreements among team members may split or divide a group.

It can be particularly difficult for newcomers to adapt to this style of leadership, or staff members to develop an understanding of who is ultimately in charge and responsible for outcomes. Therefore, it’s important that this leadership style is kept in check.

3. Authoritative Leadership

Authoritative leaders are often referred to a visionary. Leaders who adopt this style consider themselves mentors to their followers. Not to be confused with authoritarian leadership, authoritative leadership places more emphasis on a “follow me” approach. In this way leaders chart a course and encourage those around them to follow.

Leaders who display authoritative traits tend to motivate and inspire those around them. As they provide overall direction, they also provide guidance, feedback and motivation to their teams. This promotes a sense of accomplishment, or achievement.

The authoritative leadership style relies heavily on getting to know each member of a team. This allows a leader to provide guidance and feedback on a more personalized level, helping individuals to succeed. This means authoritative leaders need to be able to adapt, particularly as the size of their team grows.

Authoritative leadership is clearly very hands-on, but leaders must exercise caution not to micromanage. This is a tendency with this style, which can be overbearing for team members and creative negative sentiments.

4. Transactional Leadership

Transactional leadership, often referred to as managerial leadership, is a leadership style that relies on rewards and punishments. This leadership style has a clear emphasis on structure, assuming individuals may not possess the motivation needed to complete their tasks.

With this reward based system a leader sets out clear goals, or tasks for their teams. Leaders also make it clear how their teams will be rewarded (or punished) for their work. Rewards can take many formats, but typically will involve financial recompense, such as pay, or a bonus.

This “give and take” leadership style is more concerned with following established routines and procedures in an efficient manner, than with making any transformational changes to an organization.

Transactional leadership establishes roles and responsibilities for each employee. However, it can lead to diminishing returns if employees are always aware of how much their effort is worth. Therefore it is important that incentives are consistent with company goals and supported by additional gestures of appreciation.

5. Participative Leadership

Sometimes referred to as democratic leadership, participative leadership is a leadership style encouraging leaders to listen to their employees and involve them in decision-making process. This leadership style requires leaders to be inclusive, utilize good communication skills and crucially, be able to share power/responsibility.

When a leader adopts a participative style of leadership this encourages collaboration, through accountability. This often leads to a collective effort of a team to identify problems and develop solutions, as opposed to assigning individual blame.

This leadership style has historically been very common, utilized by a wide range of leaders in many organizations. However, as working habits have changed (accelerated by the COVID-19 pandemic) and teams have become more decentralized it makes this leadership style more difficult.

Spontaneous, open and candid communication are often associated with a participative leadership style. Remote working, or virtual teams can make this particularly challenging to maintain.

Participative leadership is often favored as it helps to build trust with employees. Empowering them and encouraging them to share their ideas on important matters, demonstrating their value to a team.