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How does leadership styles impact the performance of an organisation?

Managers and other business leaders may not always realise and recognise it, but they are the ones who drive employee performance in an organisation. Part of the job description is driving team success, ensuring a positive work environment, being able to answer employee questions, and solve their problems. Many managers are able to do this, but when a crisis appears or they are put under pressure, the performance of the organisation may suffer if their leadership style does not suit the situation.

What are the different types of leadership styles?

  • Autocratic leadership: This type of leadership style creates a clear boundary between the manager or business leader and the employees. The person in power makes all the decisions and the employees are meant to agree with the decision and follow the instructions given.
  • Democratic leadership: This type of leadership style sees the manager or business leader consult the employees or specific team members for input or feedback. Although decisions take longer to form, they are made after careful consideration aiming to make the best decision.
  • Participative leadership: This type of leadership style operates when the manager or business leader allows specific team members to make most of the decisions. The manager or business leader is still present and provides guidance, but the employees make decisions based on their capabilities and skills.

    Participative leadership
    Many managers or business leaders tend to blend certain leadership styles depending on the specific situation. If the situation is extremely stressful or important, the manager may choose to use the autocratic leadership style. If the situation is less stressful and can be discussed to be developed, they might use the democratic leadership style.

Which leadership style generates optimal performance?

No leadership style is perfect or generates optimal performance at all times. Specific situations require the manager to assess the situation, locate the goals, and determine which leadership style/styles are necessary.

The autocratic leadership style is best for improving short-term performance. It was also found that when new employees are involved, or when new teams are created, an authoritarian leadership style is best seeing that the employees still need to find their feet. Managers will then be able to give clear instructions which will likely be welcomed by the employee.

Which leadership style generates optimal performance?

Leadership best practices may offer better results than leadership styles

Although specific leadership styles work for specific situations, it has been found that certain leadership best practices provide high rates of employee and organisation performance. The VAE model has been created to outline a three-step process to achieve this. VAE stands for:

  • Creating a Vision
  • Building Alignment around the vision
  • Championing Execution

‘Creating vision’ means determining the goal or place the organisation or team needs to reach. Although this is the manager’s job, many choose to consult the team seeing that the team will be the ones achieving the vision.

‘Building alignment around the vision’ is achieved when the manager gains buy-in from their organisation and/or team. Managers must consistently communicate and motivate their team as to what the vision is and why it is important to reach.

‘Championing execution’ happens when the manager ensures that the vision materialises. Managers need to ensure that the plan is being executed and that processes are fixed or tweaked if they are not providing the desired results. Managers also need to celebrate their team and offer praise when specific milestones are reached, to boost morale and maintain engagement.