Great leaders do not tell you what to do, they show you how it's done. 

Leadership Leadership

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Table of contents

    - Dr. Ivan Misner

    Have you ever wondered what makes good leaders stand out? Let's take a look at the various types of leadership style to find out.

    Leadership is the ability to influence and guide others. In a business context, a person who has a managerial position needs leadership skills and qualities in order to manage others. Leadership skills and qualities include persuasion, charisma, and problem-solving.

    What are the key leadership styles?

    This section will cover the five main leadership styles in business. These are:

    • Democratic leadership

    • Authoritarian leadership

    • Laissez-faire leadership

    • Transactional leadership

    • Transformational leadership

    Democratic leadership

    The democratic leadership style is when a leader works collectively with employees to make decisions. All employees in the organisation or department are encouraged to participate in the decision-making process by sharing knowledge, views and opinions. This leadership style is also known as participative leadership.

    An example of a democratic leadership style is when a leader holds group discussions to make decisions. For instance, a leader in the marketing department holds a meeting with team members to make decisions regarding a new marketing campaign strategy for the upcoming season.

    Authoritarian leadership

    The authoritarian leadership style is the opposite of the democratic leadership style. In authoritarian leadership, the leader makes all the decisions themselves without discussion with employees.

    In a bureaucratic organisation, the CEO or board directors hold the authority and make decisions without discussion with employees.

    When a large enterprise adopts an authoritarian leadership style, employees at the middle or bottom levels may not be aware of the decisions made in the organisation.

    An authoritarian leadership style usually exists in organisations with rigid hierarchies.

    Laissez-faire leadership

    The laissez-faire leadership style is also known as delegative leadership. In this leadership style, group members are delegated to make decisions and take initiative. The leader's responsibility is to train employees to make sure they have the knowledge and skills to make the right decisions.

    A good example is handling customer complaints in a cafe. Employees can make their own decisions about how to deal with customer complaints after they have been trained by the supervisor. This can help employers be more independent.

    Mistakes may be unavoidable when following a laissez-faire leadership style, but it is seen as a learning process.

    Transactional leadership

    The transactional leadership style involves leaders using 'transactions' between themselves and their employees. The leader sets targets and goals that they want their employees to achieve. Reward or punishment systems are implemented based on how well employees achieve those targets.

    The transactional leadership style occurs in less creative and hierarchical organisations in which employees have a set of written guidelines. Employee performance is then measured against these guidelines and employees are either given monetary or non-monetary rewards or punished with, for example, a warning or loss of bonus.

    Transformational leadership

    Transformational leadership is the opposite of transactional leadership. The goal of this leadership style is to provide employees with knowledge and training so that they can become future leaders. A leader is a role model for their employees.

    The transformational leadership style occurs in organisations which concentrate on employee development and progression within the organisation. These organisations usually have a low staff turnover rate as employees will likely concentrate on the progression of their careers and stay loyal to the organisation.

    Leadership style theories

    There are a couple of leadership style theories. The key theories are the Tannenbaum Shmidt continuum and the Blake Mouton grid.

    The Tannenbaum Shmidt continuum

    The main idea of the Tannenbaum Shmidt continuum leadership theory is that leadership styles are influenced by a variety of factors. These factors include:

    • The characteristics of the leader,

    • The qualities of the followers,

    • Situational factors that can include urgency in the decision making etc.

    Additionally, the Tannenbaum Shmidt continuum leadership style theory focuses on finding the middle ground between two extreme leadership styles: the authoritarian and delegative leadership styles.

    On the left of the diagram are managers who exhibit authoritarian leadership qualities and on the right are managers who exhibit laissez-faire leadership qualities (see Figure 1 below).

    Leadership, Tannenbaum Shmidt continuum leadership style theory, StudySmarterFigure 1. Tannenbaum Schmidt continuum leadership style theory, StudySmarter

    The Blake Mouton grid

    The Blake Mouton grid leadership theory acknowledges that there are two leadership style behaviours, either task-oriented or people-oriented.

    The task-oriented manager's main concern is productivity and completing tasks, which means that these types of managers only focus on production, and spend a lot of time planning and communicating the work to employees with set deadlines.

    On the other hand, the people-oriented manager's main concern is relationships, meaning that these managers focus on building trust and relationships with employees. They respect subordinates' ideas and encourage teamwork.

    Blake and Mouton have implemented a 1 to 9 scoring system to measure the task-oriented and people-oriented behaviours of managers; 1 is low and 9 is high. Based on these scores, different management styles are identified.

    Leadership, Blake Mouton grid leadership theory, StudySmarterFigure 2 Blake Mouton grid leadership theory, StudySmarter

    The different leadership styles are identified based on the scoring system, as shown in Figure 2. They include:

    Impoverished management - This leadership style occurs when managers score low on both concern for people and concern for productivity. This leadership style shows that managers will not put a lot of effort into getting tasks done on time, nor on building relationships with subordinates.

    Country club management - Managers implementing this leadership style score low on concern for productivity but score high regarding the concern for people. Managers mainly focus on people rather than on production as they believe that when managers prioritise employee well-being it increases their motivation, productivity and retention.

    Authority compliance management - This management style is when managers put less emphasis on people but more emphasis on productivity. Managers following this leadership style usually ignore employees' feelings and focus on getting the job done within a set time. Monetary incentives may be used to increase employee efficiency and negative incentives such as punishment used to motivate employees to perform better.

    Middle-of-the-road management - In this leadership style managers have medium concerns for productivity and subordinates. Managers try to keep relatively good relationships with their subordinates and get them to complete set tasks on time without putting too much pressure on employees.

    Team management - managers are concerned with both productivity and people. The main focus is for managers to build good relationships with their subordinates as well as accomplish tasks beyond set targets. This leadership style is seen as the most effective.

    McGregor's leadership style theory

    McGregor's leadership style theory consists of two leadership style theories. These are:

    Theory X

    According to McGregor's theory, Theory X should be used in situations where managers believe that employees are unmotivated, need to be controlled, and do not want to take responsibility. This involves the implementation of an authoritarian leadership style. This means that the manager will be in control of employees by micromanaging them and making all the decisions without consultation with employees. This approach can be used to get the 'work done'.

    Theory Y

    On the other hand, if managers believe that employees are motivated to take on challenges, are self-motivated and interested in career progression, then McGreggor suggests using Theory Y. This includes the implementation of a democratic leadership style. Since managers will have trust in employees, they will involve them in decision making and take responsibility in the organisation.

    Leadership, McGregor's leadership style theory, StudySmarterFigure 3 McGregor's leadership style theory, StudySmarter

    Leadership skills

    Previous sections have shown that there are very different leadership styles, but what they all have in common are leadership skills. Regardless of the leadership style, a good leader must have certain skills. This section identifies three main leadership skills.


    Every leader faces problems. Therefore, a leader must be able to identify the problem, understand its cause, and come up with possible solutions. After identifying a suitable solution, the leader must reflect on how to avoid this problem in the future.

    For example, a restaurant has received complaints about the quality of its seafood. A leader with excellent problem-solving skills should identify the problem, and find its cause. This could be fridge temperature, suppliers, or the delivery method. After analysing the cause, the leader should identify possible solutions, such as regularly checking fridge temperatures, contacting suppliers, and changing the delivery method. They should monitor the changes made and continue to check the quality of the seafood. A solution for the customers who complained could be to apologise to them and offer them a free meal or a voucher for their next meal.


    Empathy is an important leadership skill as leaders need to give employees an example to follow. Leaders must be able to put themselves in someone else's shoes.

    For example, the marketing managers of Company A chose to use a democratic leadership style as they have noticed that the marketing department employees enjoy discussion before making decisions. The authoritarian leadership style may not fit as employees can feel that they did not have a chance to state their opinion, which might make them feel disappointed and demotivated.

    Empathy can help managers choose a leadership style that will fit with employees.


    Persuasion is a skill that every leader should have. Every leader has to persuading others to believe in the company vision or be motivated to do certain tasks. To have good persuasion skills, a leader must master communication, emotional intelligence, negotiation and more. The leader must communicate ideas clearly and negotiate if there is any disagreement.

    For example, a department manager believes that weekly collaboration between the marketing and IT departments will bring significant benefits to the organisation. The IT department can help with new technical innovations that digital marketers may want to implement. At first, followers may be skeptical. However, a leader can use their skills of persuasion to explain clearly how this idea will benefit the company and contribute to the organisation's vision. By using persuasion, leaders can influence employee behaviour and mindset.

    Leadership qualities

    Leadership qualities can overlap with skills. This means that certain qualities can be defined as skills and vice versa. The main difference between those two terms is that leadership skills are abilities that leaders are able to develop through learning and practice. On the other hand, qualities are certain character qualities that are usually natural features but can also be developed over time. The key leadership qualities include:

    Self-confidence and self-belief

    Good leaders must have confidence when making decisions and setting business goals. They must be able to believe in themselves that they can achieve their goals and bring success to the business.


    Good leaders must be intelligent as this allows them to:

    • Determine a direction that is realistic and achievable for a business to succeed.

    • Distinguish between unrealistic, impossible and achievable ideas.

    • Have the ability to solve problems of high complexity.

    • Set priorities.


    A good leader must be creative and come up with innovative ideas for the business. As the business environment becomes more competitive, the business that has the most innovative ideas will be the one leading the competition.


    A good leader must have a personality that makes others believe in them and follow them. A charismatic leader can motivate others to work along with them towards the business vision by achieving set goals and objectives.

    Leadership - Key takeaways

    • Leadership is a person's ability to influence and guide others. In business, leadership is usually undertaken by a manager or someone who is in charge of a team, project or department.
    • There are quite a few leadership styles. The five main ones are Authoritarian leadership, Participative leadership, Delegative leadership, Transformational and Transactional leadership styles.
    • There are three key leadership style theories. They are the Tannenbaum Shmidt continuum, the Blake Mouton grid, and McGregor's leadership style theory.
    • Leadership skills are what makes a leader skilful and knowledgeable to lead others. For example, empathy allows leaders to understand their followers and problem-solving skills helps leaders solve problems that occur in daily organisational operations effectively.
    • The key leadership qualities include 1) Self-confidence and self-belief 2) Intelligence 3) Creativity 4) Charisma.
    Leadership Leadership
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    Frequently Asked Questions about Leadership

    What is the definition of leadership?

    Leadership is the ability to influence and guide others. 

    what is leadership?

    Leadership is the ability to influence and guide others. Leadership skills and qualities include persuasion, charisma, and problem-solving. 

    What are leadership skills?

    Leadership skills and qualities include persuasion, charisma, and problem-solving. 

    What are different types of leadership?

    The five main leadership styles in business are:

    • Democratic leadership

    • Authoritarian leadership

    • Laissez-faire leadership

    • Transactional leadership

    • Transformational leadership

    What is transformational leadership?

    Transformational leadership is to provide employees with knowledge and training so that they can become future leaders.  

    Test your knowledge with multiple choice flashcards

    This leadership style is when a leader works collectively with employees to make decisions. What style is it?

    In this leadership style, group members are delegated to make decisions and take initiative. The leader's responsibility is to train employees to make sure they have the knowledge and skills to make the right decisions. What leadership style is it?

    This leadership style involves leaders using 'transactions' between themselves and their employees. What style of leadership is it?

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