cover photo Reflect Blog
Ingo Kallenbach

Leadership styles and their impact on companies

Preparing the way in partnership or autocratic guidance? Which management style is suitable for your company and how to apply it successfully.

Numerous scientists have been pondering the question of the "right" behavior that a manager should show his employees for several decades. So far, it can only be stated with relative certainty that the management style contributes to achieving the company's goals.

We have summarized the advantages and disadvantages of classic concepts for you and supplemented them with an outlook on modern approaches. Find out which management style is best suited to the needs of your company and what you need to bear in mind when applying it in practice.

The classical approaches according to Lewin

Essentially, a leadership style contains the basic attitude and the behavioral pattern oriented to it with which one performs one's leadership tasks in relation to others. The research group led by psychologist Kurt Lewin identified three different leadership styles that are now regarded as the classical concepts.

Authoritarian leadership or hierarchical leadership style is characterised by the leader giving clear instructions that must be followed. This approach propagates a sole "command and definition" of the leader and marginalizes the needs of the employees. Authoritarian leadership is best suited to situations where quick decisions and decisive action are required. However, all responsibility is transferred to one person, which can often lead to wrong decisions, as decision-making under authoritarian leadership is one-dimensional and not very creative.

The democratic, cooperative or participatory management style is shaped by the cooperation between the manager and employees. The delegation of tasks, the transfer of responsibility and the motivation of employees are the essential functions of the managers. Employees are actively involved in the decision-making process and criticism and comments are expressly welcome. In this way, employees' own initiative and creativity are encouraged. Due to participation, the decision-making process can take longer and trigger strong competition between employees.

The laissez-faire management style includes extensive freedom of action for employees, who shape their own tasks without the intervention of a manager. In this case, the employees are neither sanctioned for errors nor can you count on the help of the manager in case of problems. On the one hand, this promotes the creativity and independence of employees. On the other hand, a lack of definition of roles can lead to a lack of plan, chaotic states and rivalries. The laissez-faire style of leadership has proved to be the least effective in numerous studies and has therefore received little attention in practical application.




The modern approaches: Situational and Transformational Leadership

The strengths and weaknesses of classical approaches are counteracted by the situational management style, which emphasizes the specific influences of the environment and the situation on the behaviour of the leaders. The central assumption is that employees have different "levels of maturity" according to which the management style should be developed. A new employee, for example, needs much more instructions than a long-standing employee with excellent expertise. The advantage of this management style lies in its flexibility and the adaptation to the needs of the respective employee.

The transformational leadership style is an approach that has become increasingly popular in recent years. Essentially, this concept is based on transforming values and settings. Employees should be inspired by their selfish, individual goals for achieving the long-term, common and overriding corporate goals. Transformational managers try to intrinsically motivate their employees by conveying visions, communicating the common path to achieving goals, acting as role models and supporting individual development. In this way, employees develop trust, loyalty and respect towards the manager. Research has shown that this style of leadership has led to higher performance and better group satisfaction than other styles of leadership.

The "right" management style for your company?!

When it comes to leadership styles, it is questionable to speak of "right" or "wrong". Where one needs clear announcements and precise guidelines, the other feels restricted in his creativity by a strict hand. The authoritarian style of leadership can fail to have an effect, as can the democratic approach. In the best case, the management style is continuously adapted to the respective situation and the respective employee. Managers are faced with a special challenge, as they have to develop an intensive feeling for their environment in order to be able to act as adequately as possible. This requires the ability to adapt to changing roles and to find an effective balance between motivator, authority, coordinator, conductor and coach. The "right" management style is therefore based on a continuous balancing of the various demands that customers, employees and the company place on the manager.

On the basis of these preliminary considerations, we have conceived the style of "Balanced Leadership" within the concept of "Healthy Organization", which describes the "process of self-management and social influence on the actions of others" by establishing a balance within and between the three management levels of self-management, employee and company management" (Kallenbach 2016: 236f).


The "right" style of leadership always depends on the respective situation within a specific context. An authoritarian style of leadership can therefore be ineffective and counterproductive in certain cases, whereas only a democratic style could have an effect and vice versa.

The situational management style offers an initial approach that takes into account the specific circumstances. The transformational is the only one that incorporates the higher-level corporate structures and tries to establish a convergence of goals between employees and companies.

With the "balanced leadership style", we introduce a concept that involves all management levels and creates a healthy balance between these, the individual company dimensions, as well as across dimensions.

(Editorial realization: Corinna Brucker)

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