Leadership styles in comparison. Effects of the three classic leadership styles as well as transactional and transformational leadership

Table of contents

1. Introduction

2. Leadership and Leadership Style Definitions
2.1 Leadership
2.2 Leadership Style

3. Classic Leadership Styles
3.1 Authoritarian Leadership Style
3.2 Democratic Leadership Style
3.3 Laissez-faire Leadership Style
3.4 The Leadership Style Experiment by Kurt Lewin
3.5 Advantages and Disadvantages of Classic Leadership Styles

4. Transformational vs. Transactional Leadership Style
4.1 Transactional Leadership Style
4.2. Transformational Leadership Style
4.3 Results of Current Studies

5. Conclusion

List of References:

List of Figures

1. Introduction

The history of leadership research and management theory goes back far into the past. Since people have been living together in groups, there have been leading people and those who are being led. Since the 1950s, many different leadership styles have been discussed and criticized. The question arises as to which style is most efficient for the management of people or the "right" style.

For a company, it is of great importance what behavior their managers use to influence or motivate employees to achieve the best possible performance and thus achieve the company goals. Empirical studies show that the leadership style has a major influence on the work and well-being of managers and employees and thus also on the economic success of the company. However, there is not an optimal leadership style, as some studies and publications have already proven. Each of the styles can achieve both positive and negative results depending on the situation and the individual employees. The leadership styles should be adapted to the situation.

The present paper explains and compares the classic leadership styles with the transactional and transformational leadership styles after defining the terms leadership and leadership style. Possible advantages and disadvantages as well as their influence on employee motivation, willingness to perform and leadership success are shown. In addition, results of current studies should provide an insight into the state of research. Finally, the most important points are summarized and a final conclusion is drawn based on the knowledge gained.

Due to the poor availability of original publications of empirical study results, it was sometimes not possible for me to quote from the primary sources. For this reason, in these cases the secondary source (in which some study results were summarized) was indicated with reference to the original sources. For the sake of ease of readability, the term manager or leader was used in the present work. This always refers to both male and female gender.

2. Leadership and Leadership Style Definitions

2.1 Leadership

There is no general definition that includes all possible characteristics of leadership. York Urban sees the reason why the term is used inconsistently in the literature, since very different concepts are combined under it. However, the commonality of most approaches is that, in the context of leadership, there is a form of influence of whatever kind (cf. York Urban 2008, p. 68). According to the Gabler Wirtschaftslexikon, leadership is defined as "a focus on the action of individuals and groups on the realization of specified goals [...]" (Gabler Wirtschaftslexikon a).

The leadership functions consist of employee motivation and ensuring group cohesion and also include orientation of target achievement by individuals and groups in companies.

The success of leadership requires various factors such as situational conditions, the use of leadership techniques, social relationships and the personal characteristics of the manager. Consequently, it is a complex social process (cf. Gabler Wirtschaftslexikon a).

Similarly, Rosenstiel and Wegge (2014) see the personnel management as a mutual influence process, since employees, colleagues and superiors influence each other in a similar way (cf. p. 329). For successful management, it is of great importance for the manager to follow the task orientation and the relationship orientation equally. Relationship orientation mainly includes creating a positive working atmosphere, measures to resolve conflicts and appreciation of all employees. The task orientation includes the formulation of instructions, directives and specific goals as well as the control of task fulfilment (cf. Richter 2011).

2.2 Leadership Style

Leadership style is defined as the “typical manner of the behavior of superiors towards individual subordinates and groups” (Gabler Wirtschaftslexikon b). According to Laufer (2014, p. 41), the leadership style includes "characteristic behavior and approach of managers in the performance of their management tasks".

At the beginning of leadership research, a differentiation was made between the three classic leadership forms democratic (the people being led are involved in decisions by the leader), authoritarian (the leader decides without consideration of the people being led) and laissez-faire (the leader usually allows the people being led to be granted and holds back) leadership style (cf. Gabler Wirtschaftslexikon b). Meanwhile, there are a variety of different management theories and concepts that are constantly being expanded and/or renewed. In the 70s and 80s, some new management theories and concepts were created, such as the charismatic and transformational management approach (cf. Lang/ Rybnikova 2014, p. 16).

In reality, however, management styles are only rarely found in their pure form. The individual implementation of the style is influenced by the personality of the manager, the situational conditions, the demands, experiences, qualifications as well as the competencies of the employees managed and the social group relationships. This results in modifications and mixed forms of management styles (cf. Gabler Wirtschaftslexikon b). According to Kellner (1999, p. 94), the behavior of the leader and thus also the leadership style is influenced individually by the temperament, the inner attitude towards the employees, the frustration limit and by the role models of the manager.

3. Classic Leadership Styles

3.1 Authoritarian Leadership Style

A distinction was made between autocratic and democratic leadership style in classic management theory. These terms represent the two contradictory basic views of human management. "Autocratic" comes from the Greek word "autocrator", which means the sole ruler (cf. Laufer 2014, p. 85). In the meantime, we usually speak of “authoritarian” rather than “autocratic” leadership style. This term originates from the Latin "auctoritas" and means personal reputation/applicability (cf. ibid.). The authoritarian leadership style is characterized by extreme task and performance orientation (cf. ibid.). It is characterized by the fact that the managed employees have no chance of participation. For the authoritarian manager, the employees are only subordinates who do not have a say in the decision-making processes. Employees are required to be absolutely obedient to the manager, the orders and tasks should be followed without objection and can be checked by the supervisor at any time without notice (cf. Gartner 2002, p. 260).

3.2 Democratic Leadership Style

The word "demos" comes from Greek and means the people. In the form of democracy's government, the prevailing representative is elected by the people. However, the managers are not even elected by the employees in a strongly democratically managed company and they do not have all powers either (cf. Laufer 2014, p. 87). For this reason, the term "cooperative" leadership style is often chosen in current literature (cf. Rosenstiel/ Wegge 2014, p. 335).

The cooperative leadership style is characterized by the fact that the employees are given the greatest possible say, since the managers influence the opinions and interests of their employees in the decisions as far as this is possible and practicable. In this leadership style, a pronounced focus is placed on employee and needs orientation (Laufer 2014, p. 87). The tasks are usually presented for discussion by the manager in the group and only intervenes in decision-making. The allocation of tasks and the processing goals are usually developed by the employees in the group, the manager also assumes part of the tasks and only takes action in case of problems or if the employees wish to do so (cf. Jenny 2001, p. 415). The cooperative leadership style is characterized by a relatively high level of participation and self-regulation for the employees. They receive comprehensive information from their manager, the goal is set for them and the guided persons are given freedom to contribute their own ideas and to be able to make mistakes (self-experience value). In contrast to the authoritarian leadership style, the employee is recognized as a full partner; instead of commands, there is interpersonal communication here (cf. Jenny 2001, p. 415).

The figure below (Jenny 2001, p. 419) clearly illustrates the differences between the two leadership styles. The opportunity to participate, the level of control, the freedom to make decisions, etc. are contradictory in both leadership styles.

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Figure 1: Characteristics of leadership behavior

3.3 Laissez-faire Leadership Style

The laissez-faire style is mentioned as the third classic leadership style in some specialist literature. However, there are shared opinions about whether this can be designated as a leadership style, since it is basically non-leadership. The term comes from French and means literally translated: "let it do". The manager allows the employees to decide and act at their own discretion (cf. Laufer 2014, p. 87). The manager indicates what should be done, but then does not intervene either in a controlling or supportive manner (cf. Rosenstiel 2004, p. 21). For this leadership style, it is characteristic that no control is applied, the manager behaves passively and only little information is passed on to the employees (cf. Jenny 2001, p. 416). In practice, this leadership behavior usually occurs when the manager has resigned and already resigned internally. The leader then no longer perceives the needs of the employees or even wants to prevent that his/her knowledge will benefit from them (cf. ibid.).

After the three classic leadership styles have been presented, the question now arises as to the efficiency of the individual styles or their advantages and disadvantages. Kurt Lewin's leadership style experiment is significant for classic leadership style research.

3.4 The Leadership Style Experiment by Kurt Lewin

Kurt Lewin (1890-1947) is considered to be the founder of experimental leadership research with his study at the University of Iowa 1939. With the help of a field experiment, he examined the classic management styles "authoritarian", "democratic" and "laissez-faire" and the corresponding effects on the performance and attitudes (emotions) of those led (cf. Wegge/ Rosenstiel 2014, p. 334 f.).

As part of a field experiment, investigations were carried out on children aged ten years. Over a period of 18 weeks, the leadership style was controlled in various groups as "authoritarian", "democratic" and "laissez-faire". The achievements as well as the emotional reactions (particularly aggressive behavior) of the children were observed and documented. "Authoritarian" and "democratic" were operationalized mainly due to no or a high chance of participation among the led. With the laissez-faire style, a reaction of the authority person was only expected if it was demanded by the children (cf. Wegge/ Rosenstiel 2014, p.335).

The results showed no significant differences between democratic and authoritarian leadership style in terms of performance level. However, the satisfaction in the democratically led team was significantly better than in the authoritarian team. Significantly lower satisfaction and poorer performance were observed in the laissez–faire led group. It was also interesting to observe what happened when the leader left the room: In the democratically managed group there were no relevant changes, in the authoritarian-led group, on the other hand, the performance fell enormously. In the laissez-faire-led group, one of the led took the command after the actual leader was absent and thus achieved more performance among the group members (cf. Rosenstiel 2004, p. 21 f.). This experiment suggested many further investigations on this topic, the results of which essentially confirmed the results of which were those of Lewin. Neuberger (1972) summarized this in the table below.

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Figure 2: Effects of the authoritarian and cooperative leadership style (Neuberger 1972 in: Rosenstiel 2004, p. 22)

3.5 Advantages and Disadvantages of Classic Leadership Styles

Benefits of democratic leadership are the promotion and demand of responsible and dutiful employees. In addition, this style of leadership provides the opportunity for those being led to identify with the leader, the organization and the tasks. The social relationships within the group are enormously promoted under this leadership style. The focus is on the task and the risk of conflicts or displeasure on the part of those being led is low (cf. Jenny 2001, p. 415).

One possible disadvantage is that in many situations there is no time to discuss and clarify decisions, ideas, etc. However, democratic leadership has often proven itself in practice when it comes to employee satisfaction and achieving goals quickly. The involvement of the employees in the decision-making process increases the probability that they will show solidarity and loyalty to their managers (cf. Frey and Schmalzried 2013, p. 37).

The democratic leadership style is well suited for more complex tasks that require the independent work of of those being led. In addition, it can be advantageous if high performance is to be achieved over a longer period of time, but it is not so easy to control the employees for certain reasons. The implementation of this leadership style requires a high level of social competence, sensitivity to employee needs and trust from the leader (cf. Jenny 2001, p. 415).

The disadvantages of the authoritarian leadership style lie in the untapped potential of the managed employees. Most of the time, this leadership style prevents the self-initiative and ingenuity of those being managed. There is a strong dependency of the employees on the manager (cf. Jenny 2001, p. 415). An appreciative approach to employees is not sought after by the authoritarian manager, the employees are made small and the scope of action is severely limited. The guided will be disregarded from their maturity. Depending on the implementation of authoritarian leadership, this can also lead to a reduction of the employees (cf. Frey/ Schmalzried 2013, p. 38). However, this is a description of the authoritarian leadership style, which is more Western, it is very widespread and accepted in other cultures (cf. ibid.).

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