Effective leadership is one of the most important skills an entrepreneur can have - and it starts with knowing what kind of leader they choose to be.

By Mia Kollia

"Fifty years ago, people thought that leadership was only one thing—that there was only one way to do it," says business consultant Jivi Cheema. "Today, we know that there are different leaders and ways of leading, with advantages and disadvantages." In fact, up to 50 different leadership styles have been identified, but we can group them into five primary types:

1. Transformational leadership
2.  Liberal
3. Participation
4. Trading
5. Imperial

Determining which type best describes us can help us refine our approach to get the best input from our team. Let's see which style suits us best.

"The big vision": Transformational leadership style

Leaders of this type often have big ideas and plans. Their limit is only the sky, and the changes they make are continuous. They want to support a creative environment and do everything for it. As a result, they expect their teams to have a high level of critical thinking and accountability.


- Teams are empowered and often experience greater job satisfaction.

- Companies that have such managers often exhibit high ingenuity and innovation.

- There is less pressure on the leader because he shares decision-making and accountability across the organization.


- Transformational leaders can sometimes get carried away by their vision - they are not always strong in execution.

- Teams may struggle to turn vision into action.

"All good": The liberal leadership style

Like their transformational counterparts, non-interventionist leaders do not impose strict discipline or structure on their companies. Instead, they let team members work out their processes and approaches, giving them a high degree of autonomy.


- Employees are free to work in ways that suit them best as long as they get the job done.

- Team members can grow by promoting their ideas and projects.


- Structures, plans, goals, and performance indicators are usually ill-defined, making it difficult to measure success and leaving team members somewhat uncertain about their performance.

- Team members must be highly motivated. Otherwise, their initiatives may be at risk of failure.


"All for one and one for all": The participative leadership style

Participative leaders work by consensus, seeking input from all team members before moving forward.


- Some teams - particularly in research and development companies - value having a say in the company's direction and their work.


- Achieving consensus often takes time: It can be challenging to make decisions quickly, thus limiting the flexibility of a business.

"Results first": The transactional leadership style

As the title suggests, these leaders view the manager/employee relationship in transactional terms. Employees receive their salaries to do the tasks assigned to them. That has historically been the most common type of leadership, but over the years, the value of building constructive relationships has led to other approaches.


- This type of leadership is prominent, so team members always know what is expected of them and how well they perform.


- Team members have little scope for personal growth or new ideas, and thus their motivation and morale may decrease.

- Leaders face more pressure as they are responsible for all the work and decision-making.

"My way and only": The authoritarian leadership style

Of all the possible leadership styles, this is the least constructive. Authoritarian leaders give clear instructions and are not interested in feedback or different approaches from their teams. Employees are expected to do as they are told and not question direction.


- This type of leadership can be highly effective in the right circumstances—usually in situations where accuracy and uniformity are nonnegotiable and independent thinking is undesirable, such as in military organizations.


- Authoritarian leadership can be highly demotivating for team members.

- Very few businesses thrive under this leadership style in the long term.

We don't have to be just one type of leader.

While every leader has a general style, which fits one of the abovementioned types, few people follow a single path. If we have understood who dour way of coaching our employees, we can experiment using another way at different times to see which brings the best results for our company.