Different types of business leaders: Which boss are you?
Marc L. Goldberg
Leadership is the cornerstone of any successful small business. The style in which a leader guides their team can have a profound impact on the company’s culture, employee satisfaction, and overall success. Various leadership styles can be applied, each with its unique approach and effectiveness. Today’s column will delve into some prominent leadership styles suitable for small businesses, supported by sources.
Transformational leadership
Transformational leadership is characterized by leaders who inspire and motivate their team members to exceed their own expectations and achieve their full potential. This style involves creating a vision for the future and rallying the team around that vision, encouraging innovation and fostering a positive work environment.
In the context of small businesses, transformational leadership can drive significant growth and cultivate a culture of continuous improvement. By inspiring their team and promoting a shared vision, transformational leaders can create a motivated and engaged workforce committed to the company’s success.
The key traits are: Inspirational and motivational, visionary and forward-thinking, supportive and encouraging, focus on employee
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An example is: A small tech startup leader who inspires their team to innovate and develop cutting-edge solutions while providing regular feedback and support.
Servant leadership
Servant leadership is based on the philosophy that leaders should prioritize the needs of their team members and help them develop and perform to their best abilities. Servant leaders focus on serving their employees, removing obstacles, and creating an environment where everyone can thrive.
For small businesses, servant leadership can lead to high levels of employee satisfaction and loyalty. By putting their team’s needs first, servant leaders build strong relationships and create a supportive and collaborative work culture.
Key traits are: Empathetic and compassionate, focused on employee well-being, Collaborative and supportive, Prioritize team development
Example: A small-business owner who actively listens to their employees’ concerns and works to create a positive and supportive work environment.
Autocratic leadership
Autocratic leadership is a more traditional style where the leader makes decisions unilaterally and expects employees to follow their directives without question. This style is characterized by a top-down approach, with the leader maintaining strict control over all aspects of the business.
While autocratic leadership can be effective in certain situations, such as during a crisis or when quick decisions are needed, it can also lead to low employee morale and a lack of creativity. In small businesses, this style may be suitable for short-term projects or specific tasks that require clear direction and control.
The key traits are: Decisive and authoritative, high level of control, clear and direct communication, focus on efficiency and results
Example: A small landscaping business owner who sets strict production targets (number of lawns per day) and closely monitors employees to ensure they meet deadlines.
Democratic leadership
Democratic Leadership also known as participative leadership, involves the leader seeking input and feedback from their team members before making decisions. This style promotes collaboration and values the opinions and expertise of employees.
For small businesses, democratic leadership can lead to increased employee engagement and a sense of ownership over the company’s success. By involving their team in decision-making processes, democratic leaders foster a collaborative and innovative work environment.
The key traits are: Inclusive and collaborative, open to feedback and input, encourages employee participation, values diverse perspectives.
Example: A small marketing agency leader who holds regular team meetings to gather input on new campaigns and strategies.
Laissez-faire leadership
Laissez-faire leadership is a hands-off approach where the leader provides minimal direction and allows employees to take the lead on their tasks and projects. This style relies on the team members’ self-motivation and expertise to achieve their goals.In small businesses, laissez-faire leadership can be effective when employees are highly skilled and capable of working independently. However, it may lead to a lack of direction and accountability if not managed properly.
Key traits: Trusts employees’ abilities, minimal supervision, encourages autonomy and independence, supports self-motivation
Example: A small design studio owner who allows their creative team to work independently on projects, trusting their expertise and creativity.
Transactional leadership
Transactional leadership is based on a system of rewards and punishments to motivate employees. Leaders who adopt this style set clear goals and expectations, and employees are rewarded for meeting or exceeding these targets. Conversely, failure to meet expectations results in consequences. For small businesses, transactional leadership can be effective in maintaining structure and achieving short-term goals. However, it may not be as effective in fostering long-term employee engagement and satisfaction.
Key traits: Clear expectations and goals, reward and punishment system, focus on performance and results, structured and organized
Example: A small sales company leader who sets monthly sales targets and rewards top performers with bonuses and incentives.
The effectiveness of each leadership style depends on various factors, including the business’ goals, the team’s dynamics, and the industry in which the business operates. Small-business leaders should consider adopting a flexible approach, combining elements from different styles to suit their unique needs and situations. By understanding and applying the appropriate leadership style, small business owners can create a positive and productive work environment that drives success and growth.
There are other forms of leadership that offer insight into how great leaders can adapt their styles to meet the needs of their organizations. Some are amalgamations of several styles.
Contributed by Marc L. Goldberg, Certified Mentor, SCORE Cape Cod & the Islands, www.score.org/capecod, 508/775-4884. Free and Confidential Mentoring and Educational Webinars. Source: 10 Business Leadership Styles, Sammi Caramela, US Chamber of Commerce, What Kind of Leader are You? 9 Types and Strengths, Skye Schooley, Business Daily News, 10/23/23.
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