The quality of leadership is one of the most important factors driving business and organisational success. According to the Institute of Community Directors Australia, “A true leader has the ability to inspire and gain respect while setting and achieving goals.”

Leadership takes various forms: There are diverse ways to lead, numerous types of leaders and a wide range of situations that require leadership.

This has led to the development of numerous leadership models and styles, six of which stand out as being highly relevant and widely used in today’s workplaces.

What are leadership styles?

Leadership styles are the methods and behaviours that leaders use to direct and manage groups of people. They’re generally derived from theoretical models developed within the field of leadership studies but also include the personal characteristics and techniques of individual leaders.

Understanding leadership styles has been the subject of much research over the years – indeed, the concept of leadership dates back to the earliest days of human history. Modern leadership studies originated during the 19th century and there has been significant evolution in this field ever since.

German-American psychologist Kurt Lewin’s groundbreaking study in 1939 defined three distinct leadership styles that are still commonly applied in today’s business world: autocratic, democratic and laissez-faire.

Other important leadership styles defined by researchers at later dates include the servant, transformational and transactional models.

It’s important to note that models such as these make up only part of an individual’s leadership style. The other components are more personal, including a leader’s own vision, values, qualities and attributes, and how each of these is put into action in the workplace.

Why is understanding different leadership styles important?

Good leadership is a critical factor in building employee engagement, which has a major impact on business outcomes, according to Jeff Shao, Associate Professor at Deakin Business School.

“Leadership styles shape employee motivation, team collaboration and overall organisational effectiveness,” Shao says. “The right leadership styles can increase employee engagement, foster team cohesion and enhance organisational culture. Effective leaders adapt their style to meet team needs and situational demands.”

Recent research by Gallup shows that workplaces with high employee engagement are 23 per cent more profitable and 18 per cent more productive in sales.

In addition, the 2023 Edelman Australian Trust Barometer report revealed that over three-quarters of Australians trust their employers more than businesses, government, media and NGOs.

The report also emphasised that Australians increasingly look to CEOs as leaders to drive change and take a stand on important issues such as employee treatment, discrimination, wealth inequality, climate change and immigration.

Without quality leadership and well-functioning teams of people working towards a shared vision, organisations can struggle to achieve their goals and realise their true potential. Understanding and being able to apply and adapt different leadership styles is a fundamental part of both strong leadership and business success.

6 types of leadership styles with examples

The characteristics of six important leadership styles, including their advantages and disadvantages, as well as examples of leaders who apply them, are outlined below.

1. Autocratic leadership

In the autocratic leadership style, the leader alone has complete control over decision-making and the actions of the group. Autocratic leaders expect their employees to follow orders and workers are not invited to participate in leadership processes.

• Advantages: Rapid decision-making, consistent messaging and clear allocation of responsibilities can result in efficient and productive operations.
• Disadvantages: Separation between employees and managers, little room for alternative viewpoints, and the potential for resentment towards leaders.
• Example: Elon Musk is known for setting ambitious goals, driving his team hard and being deeply involved in every aspect of his business ventures. His intense leadership style has led to incredible achievements, such as SpaceX, but his demanding approach has also generated some controversy.

2. Democratic leadership

The democratic leadership style is participatory and collaborative in nature. The leader facilitates group processes in which participants are encouraged to share opinions and ideas. Decisions are made by majority rule and all team members share the tasks of leadership.

• Advantages: High creativity and quality in work outputs, open exchange of ideas, strong employee engagement and a unified team.
• Disadvantages: Slow decision-making and lack of clarity around lines of responsibility can create inefficiencies.
• Example: Co-founder of SEEK Andrew Bassat is known for encouraging and valuing input and ideas from all levels of employees.
  
  This culture of ownership and shared responsibility has been a crucial part of SEEK’s considerable success and strong reputation.

3. Laissez-faire leadership

The laissez-faire leadership style, which translates as “allow to do” in French, involves a hands-off approach and letting teams work independently.

The role of the leader is to articulate the vision and then delegate its implementation to employees. Leaders using this style need to feel that they can fully trust their workers.

• Advantages: Empowered and engaged employees, and opportunities for skilled and motivated workers to shine.
• Disadvantages: Operations can go off-track without consistent leadership and teamwork can be poor if employees pursue their work in different ways.
• Example: Steve Jobs, head of Apple, was known for hiring intelligent, motivated people and giving them creative licence to drive innovations in technology and design. But he was also reputed to be a harsh disciplinarian when employees fail to meet his expectations.

4. Servant leadership

Servant leadership promotes the idea that leaders should focus on the wellbeing and prosperity of their followers rather than relentlessly pursuing organisational or business goals.

Leaders not only facilitate communal decision-making but also work towards building supportive workplace communities that foster open communication, employee growth and caring behaviour.

• Advantages: Deep employee engagement, strong relationships and high levels of trust can build a motivated and productive team.
• Disadvantages: Some may disagree with the caring approaches used and professional boundaries can be blurred.
• Example: Larry Page, co-founder and CEO of Google, is renowned for cultivating openness and transparency, empowering employees to contribute and innovate, and building systems for personal communication.
  
  All of these have contributed to Google’s success and reputation as a great place to work, but there have been incidents of trust breaches, including workers violating data security protocols.

5. Transformational leadership

With the transformational leadership style, passionate and energetic leaders aim to inspire workers to be motivated and driven by the values, goals and vision of the organisation rather than by personal gain.

This includes mentoring workers to upskill them into managers by building trust, leading by example, and valuing the unique strengths and aspirations of each individual.

• Advantages: Strong workplace relationships, as well as high levels of motivation, creativity and employee engagement.
• Disadvantages: High expectations and emphasis on constant improvement can lead to burnout and feelings of disruption.
• Example: Mike Cannon-Brookes, co-founder of Australian-American software company Atlassian, is a visionary leader who is known to foster creativity, growth and continuous learning amongst his staff.
  
  He has also been called a “messiah” by the Australian Financial Review.

6. Transactional leadership

The transactional leadership style is based on a structured ‘carrot-and-stick’ system in which leaders motivate workers to follow instructions via reward or punishment.

These leaders hold positions of power and authority, and are responsible for making decisions and regulations that workers are required to follow.

• Advantages: Simple hierarchical structure, clear rules and benefits for reward-motivated employees.
• Disadvantages: Low employee engagement, reduced productivity and penalties for underperformers.
• Example: The leadership style of Amazon CEO Jeff Bezos includes setting clear expectations and goals that workers must achieve, and rewarding staff for dedication and innovation.
  
  His successful company is known for its culture of high performance and accountability, but there have been high-profile complaints about working conditions. Additionally, Harvard Business Review also reports that Bezos “isn’t a particularly nice boss” who has been known to belittle employees.

Choosing the right leadership style

Leaders need to be able to choose and adapt the most appropriate leadership style for any specific situation and group, and understand how to blend it with their own personal strengths.

Changes in leadership style may become necessary as an organisation develops and when external factors such as a crisis or downturn impact business operations.

“With knowledge of leadership styles, leaders become more aware of their own behaviours and can develop effective strategies to drive better outcomes,” adds Jeff Shao, Associate Professor at Deakin Business School. 

“Importantly, understanding the pros and cons of different leadership styles enables leaders to adapt their approach to suit various team dynamics and situational demands.”

Unlock your leadership potential with Deakin

Deakin’s online Master of Leadership is an innovative, first-of-a-kind qualification that will develop and strengthen your leadership capabilities, including understanding your personal style.

The course combines the study of contemporary leadership theory with an in-depth analysis of your unique skills and experience through workplace-based research, applied practice, and feedback.

By critically and constructively examining your own professional practice, you’ll develop an understanding of your leadership style and abilities. This will help you become a better leader today and prepare you to tackle the challenges and opportunities of tomorrow.

The course is 100% online, providing you the flexibility to study while you work with dedicated one-on-one support available every step of the way.

Learn more Deakin's online Master of Leadership on our website or reach out to a Student Course Adviser today.