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Leadership In Business

Updated on April 21, 2020
AbdulWasay107 profile image

I have studied business management and relations during my study of chartered accountancy and have good knowledge about it.

Leadership is the matter of aligning people towards the achievements of common goals and empowering them to take actions needed to achieve those goals. Leader is someone who has the ability to motivate others.

Effective leadership within business involves:

  • Making best use of skills, talents and knowledge of all workers within the entity,
  • Guiding and directing the workers towards the effective completion of tasks,
  • Develop further skills and knowledge within the people in the entity.

If the leader is effective and motivated then, work will be done effectively and better results will be achieved.


There are different theories presented by different philosophers about effective leadership, some of them are as follows:


In 1938/1939 Lippitt and White carried out an investigation into leadership style, using a group of school children. They made three groups of children and assigned them different styles of leaders and gave them an arts and crafts project to do.

The three different styles of leaders were:

  • Authoritarian
  • Democratic
  • Laissez-faire

Following were the results:


The authoritarian leader did not offer any consultation and just gave orders, he expected the children to follow his orders as told and as a result children constantly demanded attention from the leader and blamed each other, when things went wrong. The quality of work done was low, however, the quantity of work done was higher than the democratic leader’s group. The motivation among the children was very low as their ideas were not given importance.


The democratic leader offered guidance and encouragement to children, and also took part in the process himself and as a result the morale of children was high, good relationship were formed between all members of the team and the leader, the quality of work was the highest than all the groups, but the quantity was less than the authoritarian style leader’s group. There was originality and uniqueness in their work.


In laissez-faire style, the leader just gave the knowledge to the children of what needs to be done, but the leader himself did not involve in the process. As a result his group was the worst performing group, the quality as well as quantity of the work was the lowest, group members did not cooperate with each other. Children did not know how to complete the work effectively as there was no firm support from the leader.

The conclusion from this theory was that, democratic style leadership is the best, providing high quality of output, originality and cooperation. However in some cases authoritarian style can also be used.

These are the situations which are new to the subordinates, they have no idea about what to do so leader must tell them exactly what to do.


A research team in Ashridge College in the UK identified and explained four types of leadership styles,

  • Tells
  • Sells
  • Consults
  • joins


This style of leadership is dictatorial, the leader makes all the decisions and imposes them on his subordinates. He expects all of his subordinates to obey his orders without questions.

The advantages of this style is that, there is quick decision making also this style is effective when subordinates are inexperienced.

However disadvantages of this style is that,

  • The view of subordinates are ignored
  • There is too much dependence on one person
  • Talents and skills of subordinates are not utilized effectively


In this style of leadership the leader is autocratic, he makes the decisions himself but he also tries to sells his decision to the subordinates.

The leader tries to convince his subordinates that his decision is the best in the situation, he tells subordinates the reason for his decision, but does whatever he decides.

Advantages of this style is that subordinates at least know why certain decisions are taken by the leader, also leader is not dictatorial in this style of leadership.

Disadvantages of this style are as “tells style” of leadership.


In this style of leadership, the leader asks for comments from subordinates before making a decision, comments from subordinates might change his decisions and his views. In this style leader is democratic, he takes into account the ideas the views of subordinates.

Advantages of this style are:

  • Greater interest and involvement of subordinates.
  • Higher motivation among subordinates
  • Skills and talents of subordinates are properly utilized

However some disadvantages are as follows:

  • Subordinates might not have proper knowledge or experience
  • Decision making process might be slowed down


This style of leadership is also called as laissez-faire style by some theorist, in this style the subordinates are allowed to get along with their work and do whatever they likes, within established guidelines and constraints.

Advantage of this style includes high motivation and commitment from subordinates

However disadvantages includes:

  • Coordination among subordinates might be poor
  • Actions pf subordinates might exceed authority given to them by the leader
  • Subordinates might lack experience needed to complete the task effectively

Conclusion from this study was that, consults style of leadership is the most effective, as increases the motivation among the subordinates and allow them to represent their ideas.


In 1960s Rensis Likert identified different types of leadership style, he focused on the types of motivation given by the leader to make subordinates work properly, whether it was positive motivation or negative.

Some of the styles identified were as follows:


In this style the leader has low concerns for the people, he uses threats and fear based methods to get the work done, communication is entirely from leader to subordinates, if work is not done properly threats becomes reality. Threats might include loss of job, reduction in salary etc.


In this style the leader is concerned about the people as well as completion of task, he uses rewards and other positive motivations to encourage people to get the work done properly.

He also listens to the concerns of people, but do whatever he decides.

Benevolent authoritative style of leadership is more effective as compared to exploitive authoritative style. As subordinates are then focused on getting the work done properly, instead of fear of threats.

According to the theories and studies mentioned above, and also so many other theories, the best style of leadership is the one in which the leader consults with his subordinates and take into consideration their ideas and views, he give positive motivation to the subordinates and make them feel that, their role in completing the task effectively is very important. He is concerned about the people as well as the task. He is democratic in nature.


According to Ronald Heifetz, there are two types of challenges for leaders in business.

  • Technical problems: these are the problems which can be solved by applying simple knowledge, the have relatively simple solutions. They are usually everyday tasks.
  • Adaptive problems: these are the problems where the answer involves need for people to change. People are resistant to change therefore leader must have the ability to make people learn new ways.

The leader must observe changes happening, he must know what response in needed in the situation, leader must then generate a right amount of distress among other people so that everyone can understand the need to change, the leader must get conflict out in the open and use it as a source of creativity, concerns of subordinates must be heard and change must be implemented in a right pace.


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