Leadership style is essential because effective leaders can drive both the members and the organization to grow further.
However, it may seem a daunting task to know which leadership style is most effective in driving your company’s growth.
This article will help you decide what is the best leadership style for the welfare of your team and business.
Before exploring the specific leadership styles, it is important to take a look at some general leadership principles.
- Know Yourself
You cannot be a truly effective leader without an understanding of yourself. You need to be aware of where your knowledge ends and what you don’t know. With this knowledge, you can leverage your strengths and mitigate your weaknesses.
An effective guideline here is not to stimulate great leaders but to seek the same knowledge and understanding that outstanding leaders looked for. This way, you can identify the best aspects of different leadership styles and strive to acquire the most effective leadership qualities.
- Know Your Team
As important as how you lead is who you are leading.
A good leader takes the time to get to know their team. When you know your team, their personalities, and motivations, you are much more able to implement effective leadership strategies to get the best out of your team. In turn, this drives the growth of your organization.
Knowing your team requires good communication skills. A good leader will always monitor the way they communicate the effects of their communication style to the team members. By assessing the effectiveness of your communication, you can adapt your methods to achieve greater results.
Without a proper understanding of your team, you could attempt to lead them using a leadership style that is not suitable for your organization. This will suppress growth and potentially cause friction. Knowing your team will allow you to adopt the most effective leadership style to boost performance and motivation.
Know Your Business
A good leader understands the nature of their particular business. If you are in the financial industry and your team is highly-skilled and analytical, then your leadership style should reflect the rapidly changing nature of your industry. Generally, more rapidly changing industries require less micro-management but more skilled team members.
Part of knowing your business is knowing where your business is in its growth. Leadership style is not a “one-size fit all” solution. As such, a small, newly emerging business may be better served by a different leadership style than a large organization.
Every business is different, and it’s important to develop a leadership style that works for you, your employees, and your business goals.
Leader of Leaders
As a business grows, the nature of its leadership should change too. A simplified three-tier view can provide a guide to this changing nature of leadership.
A small company often has one leader. When a company is new or small, one leader can effectively oversee the entire company.
As a business grows and the staff within departments becomes larger, then department heads themselves become leaders. At this stage, the company leader becomes a leader of leaders. By cultivating good secondary leaders the company leader can remain focused on the overall goals of the organization.
Very large organizations require that the company leader relies on an increasing number of leaders directly beneath them. The increasingly complex structure of very large organizations means greater reliance is placed on other leaders. By becoming a coach of leaders, the company leader will avoid unnecessary involvement in aspects that should be delegated to the leaders under them.
What you may have begun to suspect is that there is no single answer to the question of what is the best leadership style to skyrocket business growth.
You need to consider your own strengths and weaknesses, your team, the size of your organization, and the nature of your industry. As these elements develop and change so should your leadership style.
Leadership Styles for Businesses
Now that we have had a look at some of the general leadership principles we will examine some specific leadership styles and their uses.
Authoritarian leadership style is characterized by a leader having full control of the team. They direct and control all activities without participation from group members and decide what goals are to be achieved.
With leadership decisions made by a single person or small group of senior management, autocratic leadership allows decisions to be made quickly. Autocratic leaders are also effective in crisis situations, as decisive action by a strong leader is reassuring to employees.
Additionally, autocratic leaders are effective with an inexperienced team that can benefit and develop under the direction provided.
There are, however, numerous drawbacks to this leadership style. Under this leadership style, many employees feel as though they have no voice. This can have a direct impact on both motivation and productivity. It has also been found that the more skilled or creative employees are, the less receptive they are to this style of leadership.
Despite the negatives, an autocratic style of leadership can often be effective in the short term, particularly when an organization is facing a crisis.
Democratic leadership is one of the most common forms of leadership in the corporate world today. This style of leadership can be seen to be on the other end of the leadership spectrum from autocratic leadership.
Under democratic leadership, employees are given a voice in all important decisions even though the leader retains the final say. By including employees in the decision-making process, there is often an increase in motivation and buy-in to the organization’s strategies and policies.
The diversity of insights that can be gained under this leadership style can result in more effective decisions.
A possible negative effect of the democratic style of leadership includes the time taken for decisions. The increased amount of time taken to gather input and reach consensus can result in missed opportunities, especially if the nature of the business is fast-paced.
Democratic leaders need to be aware of the level of skill and expertise of their employees. If a team’s proficiency is unknown or unestablished, well-informed input cannot be provided. This may negatively affect the company’s growth.
Often seen as unorthodox, laissez-faire leadership grants employees the greatest amount of freedom.
Under this leadership style, employees are provided with goals, resources, and support and leave the method of achieving the goals to the employees.
Laissez-faire leadership encourages creativity and can increase employee motivation.
The downside is that inexperienced employees often need more direction and supervision than are provided under this leadership style. Another drawback to this relaxed leadership style is that many employees will not be able to see and encompass the larger goals of the company, which may hinder the achievement of these goals.
Transactional leadership sees all interactions as a transaction. This leadership style is structured around reward and punishment for the achievement or failure of set tasks. Transactional leadership focuses on performance.
Transactional leadership has been found to be most effective with highly self-motivated employees, as long as the rewards offered are in line with employee motivations.
With its focus on performance, transactional leadership can result in lower employee motivation and job satisfaction because of its lack of attention to the emotional needs of the employees. Another drawback is that this leadership style often suppresses creative thinking, particularly when it doesn’t fit within the existing reward framework.
Transformational leadership can be particularly effective in creative fields and in industries where rapid innovation is paramount. Transformational leaders actively promote innovation and adoption and cultivate new ideas and methods to achieve company goals.
This style of leadership is excellent for promoting collaboration between teams and team members and for finding new ways to do things.
You will probably find that transformational leadership is most effective in small doses. Utilize this style of leadership to come up with the ideas and then shift to a different leadership style to bring those ideas into effect.
A danger of transformational leadership is that you can get caught up in the creative process without adequate follow-through and implementation. Another is that you may erode your organization’s stability by trying to transform too much.
Strategic leadership is sometimes seen as one of the more difficult leadership styles to implement. This leadership style uses elements from several other styles and seeks to strategically blend them into a cohesive and functional whole.
The strategic leader’s vision is seen as the primary guide for this leadership style. Clearly communicating their vision and finding ways to engage their employees in that vision are important aspects of this style.
Getting employee commitment involves strategically incorporating employee input and providing suitable reward programs. Another important aspect of strategic leadership is cultivating strong relationships with employees to build their trust in the leader, organization, and the company vision.
By strategically balancing the needs and goals of the organization with those of the employees, effective strategic leadership can produce excellent growth results.
Strategic leadership can be difficult because you cannot please everyone all the time and somewhere along the line, either the company or the employees are going to have to compromise.
The Bottom Line
To skyrocket the growth of your business, the best leadership style depends on the circumstances. The leadership style that you use should change with the times and be flexible too.
Particular challenges are best met with certain leadership styles. Once those challenges are overcome, other styles can be adopted. Trying to stick to only a single leadership style in our rapidly changing world will not be of any benefit to your business.
Stay aware of your industry. Remain open to innovation and change. Know when to change and when to stick with what is working.
In a nutshell, the best leadership style to skyrocket business growth is to use a variety of styles depending on the situation. By developing your knowledge of the different styles, you can pick and choose the appropriate action to ensure the ideal reaction. This adaptability will help you retain your top employees and skyrocket the growth of your business.