Leadership Styles

In 1939, Kurt Lewin, a distinguished German-American psychologist known as one of the father’s of modern social, organizational, and applied psychology, determined that there were three distinct leadership styles: autocratic, democratic, and laissez-faire. These three leadership styles remain the basis for many modern-day variations of leadership style. Each of Lewin’s style’s has unique advantages and disadvantages, and each is good in specific situations.

Autocratic Style

This style is defined by leaders expecting authority and those to do what they say, i.e., “Do what I say.†This style is a control-oriented approach and relies almost exclusively on the knowledge and expertise of the leader. Autocratic leaders specify the goals, deadlines, and approach, making decisions throughout the process with little to no input from the team. In today’s business world this style is generally not an effective long-term approach, however, remains useful as a temporary style when facing difficult decisions and/or distressed situations necessitating precise and timely execution. For example:

• Performance improvement plans or turn-around initiatives
• High-risk situations or transactions
• Decision urgency or pressure
• Material conflict resolution
• Significant, unforeseen disruptions

Democratic Style

In stark contrast to the autocratic style, the democratic or participative style is known for actively encouraging the free exchange of ideas within the group. Leaders share ideas, values, priorities, and visions and then, with input from the team, make decisions, i.e., “What do you think?†Team members have an equal voice; the leader listens and encourages team input, obtains “buy-in”, and actively participates in execution. This style is useful in the following situations: 

• Developing team culture
• Fostering an environment of trust
• Encouraging growth and development
• Encouraging new ideas and innovation
• Competitive situations

Laissez-faire Style

In this approach, a leader trusts the group or team(s) to make the decisions under minimal direction or supervision, i.e., “DO what you think is best.†Once an objective or task is assigned, the leader takes a step back and has faith and trust in the group to solve and execute. The team is given the authority to set their own goals, agendas, schedules, and approach. The laissez-faire style depends on the knowledge and skills of the team, rather than the leader. This style is most effective in the following situations:

• The team is experienced, knowledgeable, and confident
• Team effort is more useful than individual productivity
• Trust is high 
• Goals are consistent

Understanding these three basic leadership styles and knowing the benefits and downsides of each is essential to deploying the most effective approach for a particular situation.

References
Advanced Controller and CFO Skills: Leadership Styles; Change Management. e-book, Durham,
NC, Association of International Certified Public Accountants, 2021.