Leadership Styles (CIE IGCSE Business)

• Leadership is about having a vision, sharing that vision with others and providing direction
  
• Leadership is necessary in many different contexts
  • A leader in sport could be the captain of a national football or basketball team
  • A political leader could be a president, prime minister of leader of a political group
     
• Leaders can inspire and motivate others to work towards a common goal
  • This contributes to the meeting of aims and objectives and supports the development of a motivated workforce

Leadership Styles

• Leadership styles reflect the behaviours and attitudes of a leader towards their team members and influence the organisational culture, productivity and performance of a business
• A successful leader will be able to use a variety of leadership styles, depending on the situation, to achieve the best results for their business

Diagram: Different Leadership Styles

Most leaders operate using an autocratic, democratic or laissez-faire leadership style
  

Autocratic Leadership

• An autocratic leader holds absolute power and authority within a business
  • Leaders set the direction and goals of the business and makes decisions without seeking input or agreement from others
  • The opinions, ideas or expertise of team members are not generally considered
  • Decisions are generally not open for discussion or debate
  • Strict obedience and compliance is expected from subordinates
  • Communication in business is mainly one-way: downward or 'top-down'

 

Advantages & Disadvantages of Autocratic Leadership

Advantages	Disadvantages
Autocratic leaders can make swift decisions without the need for lengthy discussions Speeds up decision-making Can be crucial in emergency situations   Coordination and efficiency may be improved as roles and tasks are clearly stated	Reduced employee morale as workers have no input into decision-making Lack of input from team members limits ideas for problem-solving and innovation   Limited creativity as employees are required to follow strict instructions and are closely monitored

 

Democratic Leadership

• Democratic leaders actively involve employees in the decision-making process and encourage discussion, though they have the final say
  • Consultation, collaboration, delegation and teamwork are common features 
  • It is most effective in organisations with skilled and experienced employees
    
  • It works well in creative industries when managers give workers responsibility to work on projects together and manage their own time
     
• James Parker, the ex CEO of Southwestern Airlines, is well-known for his democratic style of leadership. In his book Do the Right Thing he states “I’ve always tried to expect the best of people and to trust them, and I have almost never been disappointed. Part of trusting people is empowering them to make decisions”
   

Advantages and Disadvantages of Democratic Leadership

Advantages

Disadvantages

Encouraging participation from employees in decision-making processes Can lead to higher levels of employee engagement and job satisfaction Individuals feel valued and empowered when their opinions and ideas are considered   Encourages creativity and innovation within a business Employees are more likely to share ideas and think outside the box when they have a say in decision-making

Decision-making can be time-consuming as consensus or majority agreement is sought Competitive advantage may be lost as decisions take longer than rivals Making compromises may cause further delays  Conflicts and disagreements may arise when different views are sought Resolving conflicts can be challenging and time-consuming Leaders need to possess strong conflict resolution skills to ensure that disagreements do not escalate

 

Laissez-Faire Leadership

• Laissez-faire leaders play a minimal role in managing subordinates or business teams
  
  • Leaders provide little guidance, direction or supervision to employees
  • Employees have significant autonomy and freedom in making decisions and completing tasks
    
  • Laissez-faire leadership is most appropriate where leaders are working with a highly skilled and self-motivated team that requires minimal supervision
  • Communication may suffer in this type of organisation as clear direction is not given
       

Advantages and Disadvantages of Laissez-faire Leadership

Advantages

Disadvantages

Laissez-faire leadership can encourage creativity and innovation within the business Employees have the freedom to explore ideas and make decisions independently This allows for diverse perspectives and fresh approaches to problem-solving Employees are empowered because they have autonomy and ownership over their work Team members feel trusted and valued This enhances job satisfaction, motivation, and a sense of responsibility

Some employees may struggle with decision-making  This can lead to inefficiency and a lack of coordination within the team Productivity may fall as individuals struggle to prioritise tasks or make informed decisions   Without clear guidelines or standards there is a risk of inconsistency in the quality of output Different employees may have varying approaches This may lead to a lack of cohesion and potential conflicts in the team

• The choice of leadership style can be influenced by a range of factors
  • Business circumstances including the nature and size of the business
  • Aims and objectives to be achieved
  • Personality, experience and skills of the leader
    
    
• In particular, the skills and abilities of the workforce and the nature of the competitive business environment will impact upon the style of leadership adopted

Diagram: Appropriate Leadership Styles

The leadership style adopted will depend on the skills of workers and the environment in which a business operates 

Choosing the most appropriate style 

• When a business faces a crisis situation and its workers are unskilled, autocratic leadership is likely to be most appropriate
  • However, if the workers are highly skilled, a democratic approach would be more effective
     
• When a business operates in a stable environment and its workers are unskilled, a democratic approach is likely to be most appropriate
  • However, if the workers are highly skilled, a laissez-faire approach would be more effective
    
    
• When a business operates in a high growth/challenging environment and its workers are unskilled, an autocratic approach is likely to be most appropriate
  • However, if the workers are highly skilled, a democratic approach would be more effective