leadership in small businesses
Leadership in Small Businesses
April 2, 2019
leadership skills
Leadership Skills – An Overview
April 16, 2019

Ok, hold tight for a theory overload…this is a brief overview of some of the current leadership styles you can use in your team.

An area that might provide solutions for the challenges of small business leaders is appropriate leadership styles. One general observation regarding leadership styles in both the large and the small business context is the following. “To be effective, leaders need to adapt their behavior to changing situations” (Goleman, 2002; Yukl, 2013). They need to be “flexible and able to adapt their leadership style to the situation” (Blanchard, 2007). Leadership theory provides different models that accommodate this need for flexibility and adaptivity.

Here is a summary of different leadership styles:

The Situational Leadership Model

Hersey and Blanchard’s Situational Leadership Model suggests four different leadership styles depending on follower readiness, which is defined as “the extent to which a follower demonstrates the ability and willingness to accomplish a specific task” (Hersey, Blanchard, & Johnson, 2001).

The four leadership styles directing, coaching, supporting, and delegating are similar to the “Tells, Sells, Consults and Joins Leadership Model” (Malone, 2008). They both are based on the amount of task and relational behaviour. They move from a rather autocratic to a democratic style.

Figure 1 Situational Leadership (Hersey & Blanchard)

Goleman & Blake and Mouton Leadership Styles

Further, Goleman (2002) proposes six leadership styles: visionary, affiliative, coaching, democratic/participative, pacesetting, and commanding/directing. And according to Blake and Mouton’s Managerial Grid (Malone, 2008), there are five types of managers depending on their concern for people and production.

Low concern for both people and task is reflected in an Impoverished Manager who “avoids taking responsibility for actions”. This is, therefore “the most ineffective style”.

The Country Club Manager has a high concern for people but low for production. The Task Manager, on the other hand, is more concerned about the production than about people.

The Middle of the road Manager balances both on an acceptable level. And the Team Manager is a “high-performance manager” who is good at both, achieving “highest possible standards” in the production area “while maintaining excellent relationships”. He or she is the “ideal manager for the modern organisation”.


Figure 2 Blake & Mouton’s Leadership Grid

Small Business Leadership

In their study on Leadership Styles, Management Systems and Growth, Wang and Poutziouris (2010) argue that small business leaders tend to operate in the more directive, task-focused style “to safeguard the ownership control”. This is due to an “antipathy against external interference” and because they are “skeptical about employee’s participation on decision-making”. However, the study shows that the participative leadership style is the most prevalent in small businesses in the UK.

Participative Leadership is when a leader asks his followers to participate in the decision-making process (Yukl, 2013). It involves delegation as the highest form of participation. When delegating, the leader gives full authority over a decision or an area of responsibility. Lower forms of participation would be consultation, where the leaders ask for an opinion or idea but then makes the decision alone. And then there is a joint decision, where the leader has as much authority as the involved individual or group (Yukl, 2013).

Transformational vs Transactional Leadership

According to Bass (1990), a transformational leader has charisma, is inspiring, stimulates followers intellectually and considers the individual. Transactional leadership, on the other hand, is about “increasing compliance, reducing resistance, reward contributions and support mutual dependence” (Afsar et al., 2017).

Both styles are not mutually exclusive but rather different approaches. However, transformational leadership is more effective and more likely to increase the entrepreneurial behaviour of employees (Afsar et al., 2017; Bass, 1990; Yukl, 2013).

Psychological empowerment

Psychological empowerment is an important moderator for the effectiveness of leadership behaviour. “Empowerment typically involves delegation of authority from management to employees” (Renko et al., 2015). However, if they lack any of the four elements – meaning, self-determination, self-efficacy, and impact, delegation might not be successful (Yukl, 2013).

Yukl (2013) presents guidelines for empowering, such as “provide resources to carry out responsibilities, express confidence and trust in people, provide coaching and advice when requested” and more.


Considering these theories in the context of small businesses, we can conclude that small business leaders tend to apply a more task-oriented leadership style. What skills leaders require for more effective leadership will be covered in my next blog.

Once you’ve woken up from your theory-overload-nap please contact me or book your free intro session here and find out how you can apply these theories to your leadership practice.

Effective leaders apply various leadership styles depending on the people they lead and the situations they are in.

Happy Tuesday everyone (or whatever day you’re reading this!)


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