Types of leadership style: Importance and impact on employees

“Leadership is the art of giving people a platform for spreading ideas that work."

— Seth Godin

The success of any company or team comes down to the quality of the person leading it. A leader is like an architect who draws up a blueprint to inspire employees, bring out the best in them, and keep morale high, enabling them to perform at their best.

However, different leaders have their own unique styles of leadership. These different styles have unique advantages and give companies a competitive edge.

Leadership styles and common types

A leadership style is a unique approach to leading a company or a group of employees. This comes from experience, exposure, and the urge to drive innovation and success.

Below are some common leadership styles. Let's discuss what they are, their advantages, and the challenges they pose.

Autocratic

This leader becomes a dictator by making decisions independently and enforcing them on their team without input from others. It's mostly considered a negative leadership style in most situations. The autocratic leadership style is more about having control and being direct.

Pros

• Allows no room for mistakes since the leader has complete control.

• Comes in clutch for high-stakes projects.

• Eliminates corporate red tape with a single decision maker.

Cons

• Stifles creativity in the team.

• Lowers team morale due to an overbearing leader.

• Creates a culture of working without a purpose.

Democratic

This leadership style is in stark contrast with the previous one. Team input, collaboration, and everyone's participation are highly valued by the leader here. A democratic leadership style is a morale booster for the team since it makes them feel heard and valued, stimulating innovation and building trust.

Pros

• Increases team morale and builds trust.

• Allows fresh ideas and initiatives to flourish.

• Keeps everyone in the loop about goals and objectives.

Cons

• Results in delays with decision-making.

• Decreases productivity by being overly collaborative.

• Makes some people unhappy with certain decisions.

Transactional

This type of leadership is based on the carrot-and-stick approach. This leader will lay down the goals and objectives to be completed by their employees to earn a reward. Failure to do so will result in punishment for the responsible person. This can be fair and effective in certain situations.

Pros

• Reduces confusion since the goal is set by the leader.

• Promotes productivity by defining an incentive to complete tasks.

• Treats employees fairly by rewarding top performers.

Cons

• Creates an environment of burnout in the workplace.

• Prioritizes rigid work culture above innovation and creativity.

• Increases employee attrition due to less job satisfaction.

Laissez-faire

Letting the team fly on autopilot instead of monitoring their every move is the crux of the laissez-faire leadership style. This leader sets clear expectations, provides the team with all the necessary resources, and steps back, trusting their team to get the job done. Creative and self-motivated people thrive under this leadership style.

Pros

• Creates a happy workforce by avoiding micromanagement.

• Promotes creativity in a team by allowing independent ideas.

• Enables leadership to focus on high-priority company milestones.

 Cons  

• Hinders the growth of new joiners who require guidance.

• Reduces accountability without any leadership oversight.

• Paves the way for team fragmentation with people working in silos.

Transformational

Transformational leaders always strive to go one step above—both in their own work and the work of their team. As the name suggests, this leadership style pushes the employees to reach their full potential, creating high value for their company.

Pros

• Makes employees more skilled and increases their value.

• Facilitates company growth due to the drive for constant improvement.

• Converts more employees to leaders and creates a dynamic workforce.

Cons

• Puts more workload on the employees and becomes overwhelming.

• Opens the door for micromanagement since the leader demands more.

• Creates unrealistic expectations, which can kill team morale.

Visionary

Here, the leader considers themselves less of a leader and more of a mentor to their team members. This leader draws the road map for the entire project by forecasting upcoming blocks and expecting the team to follow. These leaders are always thinking ahead, which is inspiring for their team.

Pros

• Reduces room for miscommunication with clear objectives.

• Negates any unexpected delays by predicting potential roadblocks.

• Creates a motivated and inspired workforce that drives value.

Cons

• Prioritizes long-term goals and neglects immediate requirements.

• Ignores ideas from individuals that can be valuable to the company.

• Poses a problem due to over-reliance when the leader leaves suddenly.

Real-life examples of different leaders and their styles

All the leadership styles we saw above seem good in theory, but how do they fare in the real world, where it matters the most? Let's find out by taking a look at various business tycoons across the globe who are driving innovation with their unique leadership styles.

Jeff Bezos

Amazon is a household name now because it changed the retail industry forever under the leadership of Jeff Bezos. With his transformational leadership style, where he inspires his employees to work toward a common vision, he converted an online bookstore into the ultimate online shopping destination it is now.

Anthony Tan

The co-founder of Grab, a leading ride-hailing solution, exhibits a visionary leadership style. Anthony Tan was able to foresee the demand for taxi bookings in the South Asian region and come up with a solution for it. This became a huge success and now has diversified into food delivery and mobile payment solutions.

Khaldoon Al Mubarak

As an Emirati government official and business leader, Khaldoon Al Mubarak's laissez-faire leadership approach empowers his employees to play to their strengths without him controlling their moves. The success of his football club, Manchester City, is a perfect example; the team's manager, Pep Guardiola, is given the freedom to execute his vision.

The importance of an effective leader in the workplace

Trying to run a workplace without an effective leader is like trying to construct a building without a blueprint: It can be built, but not without inefficiency, chaos, and a lack of direction that results in a subpar output. Effective leaders bring order and calmness to their company and team.

Significant aspects of an effective leader in the workplace include:

Creating a positive culture: An effective leader exhibits empathy and solves any differences that arise with ease. This builds a thriving workplace where everyone is happy—and a happy workplace creates innovative teams.

Helping with employee retention: Employee attrition is a big threat to organizational stability. An effective leader can reduce this by keeping the motivation and morale of their team high. A workplace where everyone feels valued fosters retention.

Providing a vision for the future: In a dynamic business landscape, having a vision for the future is paramount. A leader with an eye for long-term goals can inspire their team to think outside the box and help them hit those milestones.

Improving collaboration: It's no secret that collaborative teams flourish. A leader can nurture this trait in their team by keeping everyone on the same page and making sure no one is working in silos. A collaborative team is a winning team.

Making crucial decisions: Decision-making could be the saving grace during turbulent times. A potent leader can think on their feet by providing direction and taking calculated risks. A leader with quick thinking can avert a crisis.

The impact of leaders on employees

We saw the positive impact of an effective leader on a company, but how much of an impact do they have on their employees?

They empower their team: An important trait of an effective leader is to empower their workforce. By delegating task ownership and trusting their employees, they create a sense of autonomy and encourage people to take ownership of their work.

They create innovative people: A leader who practices active listening and accepts diverse ideas from their employees creates an environment of being heard. This encourages employees to come up with innovative ideas and new thoughts.

They increase team productivity: Keeping team morale high is a sure way to increase productivity, but it's not an easy task. A capable leader can help their team perform at their best with good conflict resolution skills, boosting their output.

Summing up

Every leader is different with a unique leadership style that makes them effective. This heavily influences the output of their team and helps them meet company goals. Finding which style works and embracing it is pivotal in creating a workforce that's productive, innovative, and happy.