Your Wealthy Mind

How do different styles of leadership affect businesses

*Contributed by Cathy Baylis.

Entrepreneurship is a highly sensitive process in which many elements contribute to the overall success or failure. But the style of leadership makes a crucial impact in that regard and sets preconditions for the fruitful business. That’s why almost 60% of organizations claim their top priority is to close leadership skill gaps.

In such circumstances, it is necessary for you to learn more about the leadership styles and the way they influence businesses. Organizational communication and structure actually constitute a whole science, but we decided to cut the long story short and explain the most important ideas in this article.

How do different styles of leadership affect businesses

7 leadership styles and their qualities

How you act as the senior manager affects your business in a number of ways. It shapes relations with your employees, increases or reduces their productivity, and influences retention rates – to name but a few aspects. According to HR specialists at Assignment Masters, leadership is only 10% of talent and 90% of skills that you learn, so check out these 7 styles of leadership and the qualities they possess.


The first model on our list is the so-called authoritarian leadership. In this type of organization, superiors take responsibility for all decisions and reduce the influence of their subordinates to the minimum. They are also known as the autocrats who think that if they need to do something well, they have to do it alone.

Such individuals enjoy working under pressure and don’t get scared when they ought to bring important decisions concerning the future of the company. This is very good in case you need to come up with a quick solution but it doesn’t really encourage employee participation. Your business will be productive in the short or mid-term but you will not establish a proper corporate culture this way.


On the other side of the spectrum, there is the democratic style of leadership. Just like democracy is rule by the people, the so-called participative leadership is rule by the employees. In this case, managers are here to give general instructions to their subordinates and guide them through the work process.

However, employees are free to make small decisions on a daily basis. They are allowed to create and shape the business within their reach of influence. Of course, heads of teams have the right to overrule their decisions or to adjust the proposed solutions. But they also give clear instructions to the workers and expect the appropriate input. This is important as recent surveys proved that communicating clear expectations and goals is the essential leadership quality.


Communicating your objectives and expectations is even more important in the transformational style of leadership. It is completely dependent on successful communication between the senior managers and their team members. In this case, you need to encourage employees to be creative, productive, and more efficient. Managers who nurture the transformational style rely on transparent communication.

They need to be involved in everyday duties and monitor the situation in their teams. It is ideal for smaller organizations because it is much easier to track progress and maintain close relationships with all employees individually. If you are able to dedicate enough time to one-on-one discussions and consultations with your workers, the transformational style will probably do well for your business.


The affiliate style of leadership is not regarded as the best model of work but some people still use it to strengthen the feeling of trust in their companies. This method is making the best results if you really need to establish an emotional connection among employees in order to make them more engaged and productive.

Doing so, you will boost their enthusiasm, especially in the post-stress periods. For instance, you might want to adopt this style of leadership following a big business failure or a loss of one of the most important clients. However, don’t stick to the affiliate style for too long – employees will lose focus and won’t know what to do in the long run.


The transactional style of leadership is strict and bureaucratic, with the goal-oriented approach. Since more than a third or organizations claim that their leadership practices are below average or poor, the transactional style might be a good solution to boost the efficiency. The principle is plain: employees get one or more tasks and receive rewards or punishments after completion, based on the achieved results.

Since the duties are a product of the mutual agreement between the leader and his team members, the procedure is strictly professional. The manager gets to analyze their work and decide about the bonuses, incentives, or sanctions.


Charismatic leaders have the ability to generate business breakthroughs and inspire employees to live their dreams. They are able to initiate some sort of professional revolutions, thus changing the traditional set of values and business practices. This doesn’t mean that charismatic managers lack knowledge or professional expertise.

On the contrary, they are even more skillful and intuitive than their peers, which is exactly what makes them so avant-garde. Such leaders are very rare and you won’t meet the new Elon Musk or Steve Jobs each week. This type of leadership is great for newly-established businesses.


People usually save the best for last but we decided to explain the least productive leadership style at the end. The delegative style, also known as the laissez-faire leadership, gives room to teams to make decisions as groups. It is a valuable approach if you manage a unit of well-experienced and trustworthy employees. However, this is almost never the case.

Leaders who delegate their primary function – making decisions, not to leave any doubts – to subordinates undermine their own credibility. It can make the team confused and undermotivated. For that reason, you should avoid this kind of leadership behavior and use it only in special cases where you might need help from narrowly-specialized colleagues.

Various leadership styles have the power to boost the business or make it less productive and efficient. That’s why you need to learn about these models, determine which one suits your business the most, and accept its qualities to improve the company’s results. In this article, we explained 7 styles of leadership and their most important features. Feel free to analyze them more thoroughly and let us know in comments which one you consider the best.


BIO: With a passion for helping students with assignments, Cathy Baylis is a freelancer blogger specializing in personal growth, career development, leadership and motivation. Cathy also works as a freelance ghost writer of blogs and articles with a particular interest in little-known facts and stories.