Are you an authoritarian or a collaborator? There are as many leadership styles as there are business models. Here’s a breakdown of some of the main types of leadership you’ll encounter in small business management, along with their pros and cons.
1. Strategic leadership
All business involves strategy, so many managers are naturally strategic in their thinking. Strategic leadership styles focus on looking at the bigger picture. They work and lead their team with long-term goals and visions in mind, involving employees at all levels to help them achieve these goals. This type of leadership offers the opposite of micromanagement. The focus is on the vision rather than the finer details along the way.
Advantages of strategic leadership include higher levels of employee engagement, strong communication, and teamwork. By sharing the brand’s goals, employees feel as if they’re a part of the business journey which boosts motivation on the job.
This type of management doesn’t work as well if your team isn’t good at filling in the blanks with project management. You’ll need detail-oriented team members who can take your vision and run with it, or the project can fall to pieces.
2. Democratic leadership
The second of our leadership models is a democratic style of management. Democratic leaders involve team members throughout the decision-making process. While the process may not extend as far as casting votes, leaders take all viewpoints on board before having their final say.
Benefits include increased motivation from employees who feel like they play a valuable role in the business. Leaders benefit from a wide range of different viewpoints.
Drawbacks include a convoluted decision-making process if the proper systems aren’t put in place to gather input. If employees don’t have all the required facts, their input may not necessarily be helpful in every instance.
3. Authoritative leadership
The opposite of these democratic types of leadership is a more authoritative style. An authoritative manager is the primary decision-maker in the business, with the experience and skills to match. Managers direct their employees and expect their instructions to be followed.
Benefits of this management style is that it is focused on getting results, quickly. It’s well-suited to more traditional business models and fast-paced environments where time is of the essence.
The downside is that employees may feel undervalued, with a lack of diversity in viewpoints. There’s little space for input.
4. Transformational leadership
One of the most popular leadership models is transformational management. This style is fluid and agile, making it well-suited to dynamic or creative environments including tech start-ups. Transformation managers accept that the business world is always changing, and that businesses must be ready to innovate.
Benefits include adaptability, which can help any business get ahead particularly in tech-oriented industries. The leader must act as a role model, focusing on the company vision and building strong relationships with team members.
The downside is that constantly switching up procedures can leave employees confused. You’ll have to choose a similarly transformational team to navigate changes to systems and processes on the fly.
5. Collaborative leadership
The collaborative management style is related to democratic leadership, but it goes a step further. While democratic managers ask for input from employees, collaborative managers work alongside them every step of the way. You’ll often see these different leadership styles in start-up environments with small, tight-knit teams.
Benefits include a positive atmosphere where all team members feel equally valued. It also fosters a creative environment with free-flowing ideas, which can spark innovation.
The downside is that sometimes a manager will need to squash employee ideas that don’t fit into the wider vision, which is harder to do when working so closely together.
Choosing the best small business management style
With many different leadership styles, how do you know which is best for you? There’s no one-size-fits-all-solution. You’ll need to consider your core values, your own personality type, and the needs of your team members to find an answer. For small, creative teams, the best leadership models will be democratic or collaborative. By contrast, for a larger service-based team in a traditional sector, an authoritative management style might work best.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.