A small chalkboard sits on a table displaying a ven diagram with the words “empower,” “inspiration,” “vision,” and “change” connected by “leadership.”

Different Types of Leadership Styles and Situations Where Each Is Most Effective

Business success requires strong leadership, but that doesn’t mean there’s a one-size-fits-all strategy to guide an organization effectively. Most leaders choose one of a handful of the most popular leadership styles to make their own, taking an approach that best fits the situation.

The variety of leadership style choices is a relatively new development. A top-down, authoritarian approach became the preferred style of many business leaders in the 20th century. It has given way to other types of leadership that are more inclusive and emphasize communication and mentoring.

Students in online business degree programs study these various leadership techniques, helping them understand which style works best in different situations. Understanding these styles also helps students learn the difference between providing leadership and working as a manager.

Important Leadership Concepts to Keep in Mind

Before making the right choice among the various types of leadership, business students and professionals must first understand the differences between leadership and management. While the two words are sometimes used interchangeably, they refer to different roles in the workplace.

Many who work as managers aspire to leadership. However, their current role in management typically involves maintaining the status quo, keeping operations running as efficiently as possible, and controlling the work of those they oversee. On the other hand, leaders seek out challenges to solve, think about long-term strategy, and have influence across an entire organization. They focus less on day-to-day operations and more on motivating the workforce to achieve ambitious future goals.

Transactional vs. Transformational Leadership Style

Another important concept to remember is the difference between transactional and transformational leadership.

Transactional leadership is more managerial and focuses on a philosophy of reinforcement and exchanges. Transactional leaders typically maintain a prosperous status quo. They work best with self-motivated employees and in established companies.

Transformative leaders seek to inspire and motivate employees to achieve ambitious business goals, often creating distinctive work cultures that employees adopt as their own. They tend to lead organizations that promote creativity and encourage employees to take new approaches to solve challenges in their areas of responsibility.

Three of the Most Popular Types of Leadership

The following provides an overview of three of the most popular leadership styles and the situations where they are most and least effective. Many leaders blend aspects of these leadership styles to fit their specific situation better.

Autocratic Leadership Style

For decades, people associated successful leadership with an autocratic style. Business leaders such as Steve Jobs, Donald Trump, and Anna Wintour offer examples of this type of leadership, where one person has complete control over the decision-making process. Employees do not second-guess decisions or even offer input (unless asked). Autocratic leaders typically manage employees through a series of rigid rules.

Autocratic leadership works best when consistent, predictable results are critical to business success. This includes heavily regulated industries where employees must adhere to strict guidelines governing the development of products and services. It also works well with younger or inexperienced employees who need guidance or in situations that require making decisions quickly.

Autocratic leaders typically do not work well with skilled veterans who do not require dictates from the top of the organization to do their job. In such cases, autocratic leadership can stifle creativity and innovation.

Democratic Leadership Style

Under this leadership style, leaders allow all team members to have a voice in decision-making. Consensus is built by having everyone participate in discussions about direction and strategy. While leaders using the democratic style still have the final say, they encourage group participation in a dialogue on important issues, helping foster more “buy-in” from employees no matter the final outcome.

A democratic leadership style works well in situations where leaders want employees to feel a sense of ownership in the outcomes of the business, which can result in motivating employees to higher production levels. A democratic style also allows leaders to benefit from the creativity and innovation that every employee may bring to find solutions or decide on some aspect of business strategy.

Democratic leadership styles do not work well when results are needed quickly, as building consensus takes time.

Laissez-Faire Leadership Style

Taken from the French term (laissez-faire translates to “allow to do”), this type of leadership involves delegating tasks to subordinate department heads and team leaders. Leaders provide resources and support but otherwise offer minimum guidance to employees. Managers and leaders expect employees to seek advice when needed. Otherwise, a laissez-faire leader expects employees to handle tasks independently but will monitor their efforts and supply regular work evaluations.

A laissez-faire approach is increasingly popular with businesses that decentralize operations, often hiring contractors for specific, skilled work. It works well when employees are highly trained self-starters with a strong track record of completing projects and tasks.

A laissez-faire approach does not work well in business environments where young or inexperienced employees who require guidance and structure. Laissez-faire leaders must also ensure that expectations and tasks are clear, or they may see a dip in productivity as their skilled workers struggle with their role in the operation.

Touro University Worldwide Online Business Degrees

Touro University Worldwide offers business degrees where students learn about the various types of leadership and the hard and soft skills needed for business success. All degree programs are 100% online, allowing students to earn a degree on their terms.

Degrees in the business program include an online Bachelor of Science in Business Administration (BSBA). The BSBA provides students an opportunity to advance their careers by learning management concepts and techniques as well as organizing, motivating, and leading individuals in diverse public and private business organizations.

TUW also offers an online Master of Business Administration (MBA) featuring a curriculum designed by scholar-practitioners. Students hone business skills, including communication, management across cultures, ethics, accounting, and strategic planning.

The online Doctor of Management degree from TUW is geared toward working senior executives and top management. The program offers experienced professionals the chance to learn advanced theoretical analysis, research, and application skills. Students also develop the ability to critically understand and assess research reports in their areas of expertise.

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