Newfound research shows that leadership style is the biggest driver of workplace culture, whether great, good, or bad. And 70 percent of the variance between the least inspiring and the most inspiring work cultures comes down to the skillset and talent of the manager – not of their team members. So, entrepreneurs who are attempting to hire the people who will make their work culture shine may need to look inward instead. Different businesses need different leadership styles to thrive – and you’re the only person who can manage the way that you lead.
But which leadership style is best for you and your business?
Here, Scott Dylan, the key partner and co-founder of capital investment agency Fresh Thinking Group, delves into the advantages of six leadership styles (and the drawbacks you need to be aware of) to help you find the right one for your business.
1. Visionary Leadership
Visionary leadership is ideal for small, fast-growing businesses. These leaders unify their teams and encourage them to work towards common goals. This often means they’re great at inspiring employees and upholding a strong organisational bond. Visionary leaders usually focus on the bigger picture, meaning they adopt a hands-off approach and allow their employees to plan and manage their own work. A visionary leader can do a great job motivating a team to improve productivity and accelerate business growth. Employees usually feel valued and driven, which can improve job satisfaction.
However, it can be easy for visionary leaders to miss important smaller details if they are too focused on the bigger picture. This can cause challenges in the company’s everyday operations.
2. Autocratic Leadership
Autocratic leaders are confident decision-makers. They tend to make choices without consulting their teams, who they usually expect to comply with these decisions (and their associated timelines). Scott Dylan explains that this can lead to little autonomy in a team, but less input from employees can enable quick decision making for time-pressured matters. Plus, direct communication and delegation can streamline productivity while saving employees the stress that often comes with decision making.
That said, making all the decisions can be stressful for a business leader. And a lack of employee engagement can contribute to a poor workplace culture. This may result in low employee satisfaction, and team members may be more likely to leave.
3. Laissez-Faire Leadership
Laissez-faire leadership best suits experienced, highly trained teams. This style promotes creativity and accountability, all while fostering a relaxed work environment, which can improve employee retention. Laissez-faire leaders delegate tasks to team members and allow them free rein over how they approach these tasks.
Though these leaders provide resources and support, they don’t usually get involved in the company’s day-to-day tasks. Therefore, laissez-faire leadership often isn’t ideal for new employees who need more hands-on guidance. The leadership style can also lack structure, which can slow a team’s progress towards company goals.
4. Democratic Leadership
Democratic leaders involve team members in decision-making processes, often considering every employee’s point of view before making a final call. Scott Dylan considers this type of leadership amongst the most effective because it encourages staff engagement at all levels and makes team members feel valued. Not only do leaders consider diverse perspectives to come to knowledgable decisions, but employees tend to be productive and satisfied in their roles.
However, balancing many opinions can make decision making a time-consuming process, and some employees might not have the experience or expertise to make well-informed suggestions.
5. Coach-Style Leadership
Like democratic leaders, coach-style leaders help their employees develop their skills and strengths in the workplace. These leaders take it upon themselves to help their teams uncover and develop their talents. Coach-style leadership usually results in teams that are great at communicating and celebrating each other’s skills. These teams are always learning and typically have strong relationships with their employers.
However, coach-style leadership can be time-consuming for managers. It’s not ideal for fast-paced environments where teams frequently work on time-sensitive projects.
6. Transactional Leadership
Transactional leaders often use one structured reward system to motivate employees. For example, they might offer a commission system. Results-focused management can be great for self-motivated employees and can create clear, established roles in the workplace. When employees receive recognition and rewards, they may be even more motivated, which can improve both productivity and customer satisfaction.
However, assuming that all employees will feel motivated by the same reward system can leave leaders neglecting their team’s emotional needs. Scott Dylan emphasises that this can cause low job satisfaction, especially as many transactional leaders have set ways of managing their companies and aren’t always open to outside-the-box solutions from team members.
Adopting Your Leadership Style
Hopefully, these six ideas will get you thinking about which leadership style will best suit your business and motivate your team. You might even aim for a blend of two styles. When deciding which leadership style to adopt, consider the size of your business, how your team members like to work, and how you want them to meet your business goals.
If you can lead well, a flourishing work culture will follow.
Pick up more tips from Scott Dylan on his blog.
About Scott Dylan
Scott Dylan is an entrepreneur, mentor, and investor who oversees the progress and strategic direction of Fresh Thinking Group’s acquisitions. The private equity disruptor provides the guidance and funding that healthy businesses need to grow, distressed companies need to recover, and start-ups need to make a mark on their industries. Fresh Thinking Group also funds several groups, including Inc & Co, Inc & Co Property, and Orb.
Before launching Fresh Thinking Group in 2018, Scott Dylan successfully developed and transformed many businesses. As an accomplished private equity and distressed M&A investor, he is particularly well known for the £20 million growth and exit plan that he completed within three years. Some of the companies Scott Dylan has led digital applications for include the UK Ministry of Defence and Microsoft. He is also a member of Forbes Business Council and contributes to the business magazine.