Which leadership style involves managers and employees working together to make decisions?

Foundations for Business Leadership

Successfully navigate the complexity of general management

For professionals wanting to develop cross-functional business skills to become an effective general manager/ business leader. Typical profiles include: Country Manager, Regional Manager, Business Lead, Functional…

Every person is unique, so it follows that every manager's approach to leading a team is unique. Typically, how an individual approaches management stems from their personality. Some leaders are strict, while others are lenient, some are mellow while others are high-strung. According to IMD.org, leadership styles in business can be categorized according to the leaders’ personality traits.

Leadership styles in business can be organized into five categories:

• Autocratic
• Democratic
• Laissez-Faire
• Transactional
• Transformational 

Each of these leadership styles has its benefits and its drawbacks, and each is more effective in certain workplace types than others. Sometimes, the most effective leadership style for a workplace depends on the mix of employee personalities present or the mix of experience levels in the workplace.

Autocratic leadership, also known as authoritarian leadership, is a leadership style where the boss has absolute control over decisions in the workplace. Team members are not asked for input; they are expected to comply with all decisions and orders made by their leader.

Autocratic leadership, like all the other leadership styles in management, has its benefits as well as its drawbacks. Benefits of autocratic leadership include saving time on the decision-making process, every member of the team knowing exactly what is expected of them and how they are to perform, and fewer strategy implementation errors because there are fewer people involved in the strategic planning process. Drawbacks include employees feeling like they are not personally valued, reduced motivation among team members and an increased risk of employee rebellion.

In certain workplaces, an autocratic leader is the ideal type of leader, according to St. Thomas University. These workplaces include high-stakes environments where human error can mean a safety or security risk, like the military. In other environments, like education and creative services, an autocratic leader can hinder their team and ultimately, undermine their organization’s success.

In many ways, democratic leadership is the opposite of autocratic leadership. Democratic leadership, also sometimes known as participative leadership, is a leadership style characterized by the leader’s choice to involve team members in the decision-making process. In all decisions, the leader has the final say, but they make decisions according to the input they receive from his team.

Benefits of democratic leadership include:

• Employees feel motivated to participate in decision-making
• Employees feel like their input is valued
• Leaders have a diverse set of perspectives to consider

Democratic leadership is not the perfect leadership style, though. Drawbacks include a time-consuming decision-making process, as well as the potential for poor choices if the employees do not have the experience necessary to provide well-informed input. A democratic leadership style can be a great choice for a smaller team or a team composed of similarly skilled members.

Perhaps the easiest way to understand laissez-faire leadership is this: If democratic leadership is the moderate opposite of autocratic leadership, laissez-faire leadership is the extreme opposite of autocratic leadership. Laissez-faire leadership is, essentially, the lack of a clear leader role. While one individual may be the leader in title, the reality in this type of workplace dynamic is that everybody is an equal decision-maker and every piece of input from the team is considered equally.

Rather than gathering team members’ input and then considering it when making a decision, a laissez-faire leader leaves the decision-making up to their team members. This can lead to feelings of importance among every member of the team, but it can also lead to confusion and bottlenecks in strategic processes.

A laissez-faire leadership style can be a very effective way to lead a team composed of highly skilled, highly specialized individuals. In this kind of environment, each team member can take the lead in situations that require their expertise and trust their colleagues to make effective choices when they are in the “driver’s seat.”

According to St. Thomas University, a transactional leader’s primary goals are order and structure in the workplace. Under a transactional leader, self-motivated employees tend to be most successful because the leader has created a structured, rigid environment where they use clear rewards and punishments to drive employee performance. For example, a transactional leader might require each member of the sales team to speak with five prospective customers each day, offering catered lunch on Friday for every team member who met this goal Monday through Thursday.

Benefits of transactional leadership include:

• Clearly defined short- and long-term goals 
• Clearly defined rewards and consequences for meeting or not meeting those goals
• A streamlined, efficient chain of command
• Employee security in knowing there are no surprises regarding expectations and outcomes

Transactional leadership can also have drawbacks. These include:

• Little room for flexibility or adaptability
• Employees feel like followers, rather than innovators or leaders
• Personal initiative is not rewarded or valued
• Employees can feel stifled by their work environment

Among all the recognized leadership styles in business, transformational leadership is perhaps the most focused on the leader’s personality. With this type of leader, employees are guided by a clearly defined vision for success, which may be the leader’s personal vision or the company’s mission statement. According to Northeastern University, this kind of leadership inspires innovation and generally creates a positive workplace culture.

Transformational leadership is characterized by:

• The leader acting as a role model to employees
• Close, consistent focus on the company vision 
• A high value on interpersonal relationships
• Inspiration as a tool to motivate employees

Like the other leadership styles, there are benefits and drawbacks to transformational leadership. A transformational leader can inspire employees to try to be their best selves, create a workplace where mutual respect is highly valued and encourage employees to think critically about the values they hold. But this type of workplace can also become a cult of personality or create an environment where gaining the leader’s approval becomes a priority for employees, diverting their focus from performing their jobs well or supporting each other.

No two leaders approach management exactly the same way. Although managers can have similar styles, and individuals often emulate their mentors, there are as many leadership styles in management as there are people in management.

As an employee – or supervisor of somebody tasked with managing a team – recognizing a team leader’s management style can help you understand their mindset, the reasons behind their decisions and how best to communicate with them. It is not uncommon for an individual to exhibit characteristics from two or more management styles, like a leader who embraces transformational ideas and puts them into action through democratic methods. In fact, very few leaders can be classified into any one leadership category 100 percent.

It is also not uncommon for a leader’s management style to evolve as their career progresses (or as their team members progress). For example, a leader managing a fairly young, inexperienced team might need to take a blended autocratic and transformational approach to leading them because they are not ready to take more active roles in leadership.

But as time goes on and the individual team members become more experienced in their roles and their industry, their manager might switch to a more democratic approach to heading their projects.