Several thought leaders have referred to 2020 as the year of great reset. But if you want to be really strict about it, most of the biggest business shifts started way back at the onset of the 21st century.
Traditional business leaders who are banking on traditional business leadership styles in this new century needlessly risk losing their business to unhealthy age-old leadership practices.
The pandemic just helped reiterate the need for business leaders to change the way they approach business problems primarily due to the following reasons:
- New technologies
- Pace of change
- Changing demographics and employee expectations
- Changing customer expectations
The chart below gives you a better glimpse of the reasons why there is a difference in the requirements for the kind of leaders we need to have in this era. Data depicted is from Deloitte’s Human Capital Trends Survey.
What are these particular requirements? According to the same study by Deloitte, business leaders need to have the following abilities to:
- lead through more complexity and ambiguity
- lead through influence
- manage on a remote basis
- manage a workforce with a combination of humans and machines
- lead more quickly
See this second figure below.
According to Forbes, there are three notable leadership skill shifts for 2021 and these are the following:
- Communication to Empathy
- Emotional Intelligence to Emotional Agility
- Time Management to Context Management
Leaders are expected to be effective communicators, but the shift is now focused on empathy as a priority for business leaders this year. The Management Research Group found empathy to be the leading positive leadership competency and one of the biggest predictors of senior executive effectiveness. This makes a lot of sense especially now that the recent challenges brought about by the pandemic have highlighted the value of caring while communicating.
Emotional intelligence to emotional agility is another important shift. Susan David, a psychologist and the author of the book “Emotional Agility: Get Unstuck, Embrace Change, and Thrive in Work and Life” describes emotionally agile people to be the type of people who are not only aware of their feelings but also know how to navigate through them.
Now the shift from time management to context management gives emphasis on how the change of the context of how and where we work requires realignment in managing our time and designing our days around how we work.
While these are several leadership styles and the specific strategies vary depending on the field or industry, the concepts are basically the same. Let’s take note of these leadership skill shifts mentioned earlier in studying how we can better tailor the different leadership styles to suit the changing times.
The following are six of the different leadership styles we will tackle further:
- Autocratic Leadership Style
- Democratic Leadership Style
- Laissez-Faire Leadership Style
- Situational leadership style
- Transactional Leadership Style
- Transformational Leadership Style
First off, let’s start with the traditional business leadership styles.
1. Autocratic Leadership Style
Case Study: Howell Raines of The New York Times
The New York Times under Howell Raines as the Executive Editor decided at one point to only put resources on the stories that he deemed as worth-covering. While this led to The New York Times winning a record-breaking seven Pulitzer awards in a single year, several staff members got demoralized.
There is no known theorist behind autocratic leadership so it is considered as an organic leadership style that has developed over the course of time that it has been used.
Basically, an autocratic leader is the type of leader who would make decisions without proper consultation. You may think that this leadership style is unacceptable for who decides on his own especially if the decision concerns an entire organization, right?
But, Cleverism articulates three situations where the autocratic leadership style can be used and these are the following:
- The situation requires fast and immediate decision-making
- There is no clarity in the process of the procedure and pushing ahead might only lead people to danger
- There are more inexperienced people in the group and most of them are demotivated
The tendency of most businesses with an autocratic leader is that the subordinates will become passive and mediocre, or conflicts may arise.
In these situations where a business leader must step up and use the autocratic leadership style, it is important to take note of communicating openly and regarding others with respect the entire time.
2. Democratic Leadership Style
Founders Sergey Brin and Larry Page hired Eric Schmidt to jump-start the Internet search engine. Blending autocratic, laissez-faire and democratic leadership styles, they allowed someone knowledgeable and experienced into Google which would then lead to more democratic teams composed of experienced talent.
Also known as the participative leadership style, the democratic leadership style in business management is often characterized as the style that encourages collaboration with their fellow leaders and team members. In other words, everyone is allowed to participate in the decision-making process.
While this style of leadership is very motivating for most people as compared to the autocratic leadership style, it works best for businesses that employ experts into their departments so little supervision is required.
According to St. Thomas University, the following organizations can take advantage of this:
- Biotech R&D divisions
- Housing construction sites
- Information technology companies
Furthermore, the university lists down the following as the disadvantages of this leadership style:
- Business leaders may become too dependent on their subordinates
- Getting everyone’s input may take a lot of time
- Missed deadlines are possible
- Consulting with people who lack accurate data or sufficient knowledge
- Too much burden for business leaders to oversee collaboration
The democratic leadership style can bring forth massive business growth if business leaders are willing to take responsibility for the decisions made and provide support and expertise during collaborations.
Such requires highly productive leaders who know what they do and will take action.
3. Laissez-Faire Leadership Style
Case Study: Warren Buffett of Berkshire Hathaway
Warren Buffett is known for exemplifying the laissez-faire leadership style as he allows people he works with to do their jobs without his supervision or intervention. His great success over several years has been attributed to his style of leadership that allows a culture of motivation and confidence. He, however, sees to it that he only hires people he can trust to do their jobs.
The laissez-faire leadership style emerged from the French word laissez-faire which means “leave alone”. Also called the hands-off approach, this style is based on the concept that leaders can leave their employees or teams alone in coming up with ideas or decisions for the business departments they are part of.
This used to be a very popular style before the 19th century, but as modernization started, more and more business leaders find the disadvantages of leading teams with no supervision to be detrimental. This is particularly possible for companies that lack expert talent.
What business leaders who employ this leadership style should note is that assuming that subordinates must be free from accountability. This only encourages the company’s people to be complacent.
The business leader must ensure that teams are composed of highly-skilled individuals who can be reliable in achieving business goals under their responsibility.
At this point, we’ve already discussed the three leadership styles that can be highly traditional unless approached with a fresh perspective that takes into account the new leadership needs and skill shifts.
How these three business leadership styles work is illustrated below.
Which leadership style can you resonate with the most?
We now have what we call as modern leadership styles or approaches. These styles have emerged as a response to the traditional styles that do not allow much room for innovation.
Although most of these new approaches are modified versions of the traditional leadership styles, they are identified mainly based on the following types of categories:
- Situational leadership
- Transactional leadership
- Transformational leadership
- Innovative leadership
4. Situational Leadership Style
This leadership style follows the contingency-based leadership model when responding to situations or making decisions. Business leaders who employ this style are flexible and would normally use varying leadership strategies depending on the situation.
Goleman believes that a situational leader must be able to incorporate the six specific leadership styles given the right circumstances.
5. Transactional Leadership Style
Also known as managerial leadership, transactional leadership is a style that focuses on supervision, organization, and group performance.
Business leaders under this style use rewards and punishments to motivate subordinates in a given task.
According to Verywell Mind, the basic assumptions of transactional leadership are the following:
- When the chain of command is clear, your workforce perform their best
- Rewards and punishments are effective agents of motivation
- Obeying the leader is the most important goal of the subordinates
- Careful monitoring is a must
When giving assignments, the business leader must be clear when it comes to the instructions, rewards and consequences, as well as giving feedback.
6. Transformational Leadership Style
Business leaders who subscribe to the transformational leadership style serve as inspirations to their subordinates.
They inspire as they lead by example and as they cultivate an environment that welcomes creativity and innovation. This suits employees who have entrepreneurial minds as transformational business leaders seek to inspire just the right amount of intellectual independence in the workplace.
In a roundup article, Harvard Business Review lists down the following as the best examples of transformational leadership:
- Jeff Bezos, Amazon
- Reed Hastings, Netflix
- Jeff Boyd and Glenn Fogel, Priceline
- Steve Jobs and Tim Cook, Apple
- Mark Bertolini, Aetna
- Kent Thiry, DaVita
- Satya Nadella, Microsoft
- Emmanuel Faber, Danone
- Heinrich Hiesinger, ThyssenKrupp
The Harvard Business Review refers to this group as the Transformation 10 for exemplifying transformational leadership.
Strengthening Your Leadership Mindset
60% of the executives who participated in the 2021 Deloitte Global Human Capital Trends said that what prepared them for the unknown is leadership. This is the kind of leadership that takes into account the unpredictable and incorporates strategies surrounding that through coaching, teaming, and fostering.
But did you know that based on the research of the Corporate Executive Board, about 50%-70% of the new business executives or leaders fail within the first 18 months? Unless you have the right leadership mindset and you solidify that mindset, you will become part of this figure.
Whenever a major business problem happens, you can either succumb to the pressure and give up, or find a solution to the problem. The most successful business leaders try their hardest to never give up.
Most business leaders would rather grind than get back to their regular jobs of 9-to-5.
In 1519, a Spanish explorer and conquistador Hernán Cortés pursued the treasures of the Aztecs with 11 ships and a crew of 100 sailors and 500 soldiers. His army was vastly outnumbered and some soldiers tried to escape. Cortés gave an order to burn the ships and left no choice but to fight until their last breath.
That wasn’t the end for everyone. Part of the army survived and they got a hold of the treasure.
At first, calmness is a myth. People are emotional by nature and react to any deviations of their plan. With time, those who choose to be in the captain’s spot until the end see problems that have to be solved and suppress the emotional part that is dragging them down.
The role of a business leader isn’t easy in the first place. Constant changes and surprises are not abnormal and at some point, they become a daily routine.
Plenty of problems appear to be critical, but in the end, they should be solved. You don’t run away from them. You step up as a business leader and inspire your teams to follow through.
The most effective leadership style for business is the leadership that inspires.