June 19, 2023

Types of leadership in businesses: Pros and cons

We all had a team leader who made a great impression on us, whether in a positive or negative way. More often than not, the figure of a leader is linked to a person always giving orders. That is an obsolete vision of a leader. There are many types of leadership in an organization. This is something leaders and team members must be aware of. 

At T2W we have extensive experience in talent management and human resources, so we know about leadership. In this article, we’ll delve into the most common types of leaders in businesses and their main characteristics. 

Types of leaders in businesses 

1. Democratic leadership 

Let’s start this list with the leader many people would like to have at work: the democratic leader. This is a person who understands that a team is comprised of people with their own ideas. For that reason, the democratic leader involves all team members in the decision-making. Each member’s opinion is taken into account. 


In general, the democratic leader tends to promote constant collaboration in the team. For that reason, creativity and ideas tend to flow easily in the team. Likewise, collaboration and consensus create a good working climate. Since everyone’s opinions are considered, employee engagement increases significantly.  


Of course, democratic leadership is not perfect in all scenarios. When there is an excess of this type of leadership, the leader’s authority can be at risk. After all, why is it necessary to follow a leader when all decisions are made collectively? In addition, making a decision can take more time than necessary since it involves many people. 

2. Autocratic leadership 

Next, we have a person who moves in the opposite direction to the democratic leader. An autocratic leader is someone who calls all the shots. This person usually has extensive experience, which is used to set up specific goals, a plan with clear actions and tasks for everyone. The team must follow the instructions carefully and people’s opinions are not usually taken into account.  


This leader is perfect when a company faces critical situations that require quick and difficult decision-making. Since it’s just one person making all the decisions, actions can be implemented quickly and it’s easier to react to unexpected changes. These leaders tend to have a clear view of the company and the objectives it must meet. 


A clear negative aspect of this leader is that the team doesn’t take part in the decision-making. For that reason, if the leader doesn’t know how to motivate the team, engagement levels could be low among employees and there could be a bad working climate. Another negative aspect is that, since this person doesn’t hear other people’s opinions, there could be a creativity deficit. 

3. Coach leadership 

Companies usually have people with a lot of potential in their ranks. A coach leader makes the most of that potential and boosts it. This leader focuses on developing employees and from this, seeks to offer value to the company. That way, this person helps the company meet its short-term objectives.  

In order to achieve that, the coach leader must get to know all team members, as well as their strengths and weaknesses. Here usually are used actions such as upskilling and reskilling. Based on that, this person sets immediate objectives for everyone and boosts their motivation. Feedback is constant since the priority is meeting short-term objectives. 


One of the benefits is the development of all team members. People feel they grow professionally and learn new things, which not only is good for employees, but also for organization performance. Likewise, since employee wellness is considered in this approach, they feel good at work and employee satisfaction increases. 


This leader centers on the development of each individual, which requires a considerable time investment. Also, since the leader focuses so much on the people inside the team, this person can lose sight of the company’s general objectives. 

4. Transformational leadership 

The transformational leader is very similar to the previous one since this one also works on the people inside the organization. This leader analyses the organization’s needs in the long term. Based on this, the leader will assess employees’ potential to help the company meet its objectives. 

This leader also meets, motivates and boosts employees’ skills. However, while the coach leader focuses on people and based in that, tries to get immediate results, the transformational leader focuses on company’s future objectives and tries to develop the team based on those needs.  


Transformational leaders have a clear vision about company’s needs and is objectives in the long term. For that reason, they never lose sight of the future and prepare actions based on what’s about to come. Also, since they focus on employee development, employee satisfaction and morale levels tend to be good.  


Since the transformational leader always focuses on the future, this person tends to overlook the actions that must be implemented in the company in the short term. As a consequence, company performance can suffer.  

5. Laissez-faire leadership 

The laissez-faire leader tends to trust the people they lead and their skills. This person usually creates a detailed plan and delegate tasks for the team. For that reason, this leader is also known as delegative leader. This person doesn’t exert constant pressure. In fact, the team is free to act as long as they follow the plan that has been drawn up. 


Teams guided by this type of leader tend to have a good working environment since pressure levels are low. Likewise, creativity levels are high and people with initiative tend to benefit since they can act freely. 


Productivity can be affected if the team don’t have the knowledge or the experience necessary for the tasks. In fact, this type of leadership requires someone who can monitor the actions of the team and the results of their actions. 

These are some of the main types of leaders in business. Are you familiar with one of these? Keep in mind you need to know all their pros and cons to work on the disadvantages and reach balance. 

At Talent2Win, we strive to align your company’s business objectives with the best Talent Acquisition strategies available. If you want to learn more about the services we offer, do not hesitate to contact us.        

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