fbpx
Connect with us

Business

Use the Hand You’re Dealt: Leadership Styles Need to Match Business Size

What does it take to run a business effectively? The short answer is quite a lot. The long answer involves a rather extensive list of factors that leaders and entrepreneurs must consider when planning and carrying out their business plans. But for all the specific traits that could be rattled off, the one factor that I’ve seen have the greatest impact on how entrepreneurs lead their organizations is, without a doubt, size

It goes without saying that every entrepreneur has their own leadership style that they gravitate towards. On the spectrum of common leadership types, one could naturally fall under a transformational or an autocratic style, a transactional or a laissez-faire style, and so on. They might also want to take inspiration from some of the most prominent business leaders. Perhaps someone might appreciate Bill Gates’ more autocratic approach or admire Richard Branson’s charismatic leadership. It’s only natural that an entrepreneur would, in addition to their ideas for starting a business, have ideas for how they might want to lead their business.

The unfortunate truth is that effective leadership is heavily dependent on the business itself. Leaders can’t simply pick and choose which style they want, even if it’s the one they’re most comfortable with. They have to ensure that their business is operating efficiently, and when you’re leading your employees in a way that doesn’t suit the organization you’re building, it can lead to lower productivity, work quality, and profitability, fundamentally harming what you’ve worked so hard to build.

Size is an essential factor when considering leadership styles because ultimately, it affects the way in which leaders interact with employees, according to a study by Thomas George Marx for Sciedu Press. For example, leading a large organization gives a CEO far less opportunity for interpersonal interactions with low-level employees, whereas the boss of a smaller company will probably converse with employees more regularly. 

In particular, the study claims that the importance of engaging and interacting with followers decreases alongside the company’s size. This is likely a result of larger organizations having a more rigid hierarchical structure, formal policies and procedures, standardized operating and decision-making systems, and legal constraints, to name a few factors. 

So does this mean that the common leadership types I referred to earlier are better suited for the different sized organizations? The study also found that larger companies are more risk-averse, which tends to promote directive and task-oriented leadership styles that allow leaders to keep their organizations in order. But interestingly enough, the study implies that these are simply tendencies, not requirements, for leadership styles in different-sized companies. Based on the data, Marx concludes that one leadership style is not more effective than another, rather that it more depends on whether or not the style is aligned with strategy, policies, practices, and culture. This means that it’s not necessarily that a particular style of leadership is better suited for larger or smaller businesses: certain leadership types might suit certain types of organizations, but regardless of a company’s nature, but each style must be fine-tuned to suit the size of the business.

Let me paint a scenario. Say that a large business leader and a small business leader both utilize a democratic style, meaning that they often ask for input from their teams in order to inform their decisions. The small business leader might be able to discuss this directly with all their employees, and directly hear how feedback on how their ideas might affect the entire company. A large business leader would instead take their ideas to other members of the C-suite, department heads, and managers rather than low-level employees. The larger company is a bit more limited in how democratic they can be, but everyone is still represented in some capacity.

Of course, in certain scenarios, limiting the participation from followers can be beneficial for the large business, and the direct connection between leader and employee can be a detriment to the smaller business. If these leaders disagree with the opinions they hear, it might be harder for the small business leader to ignore or push back against their employees for fear of lowering morale and productivity.

As with most things in business (and in life) though, it’s a case-by-case basis. No matter what leadership style an entrepreneur ends up using, and no matter what size their business is, it’s important to tweak and adjust that style to suit the organization. If entrepreneurs can manage that, success will become that much more attainable.

Norbert Wicki is an internationally-experienced financial services consultant and serial entrepreneur. He holds a master’s degree in jurisprudence from the University of Zurich and Bern, a certification as a chartered financial analyst, and a wealth of firsthand experience in the Swiss, Azeri, and Russian economic sectors. Currently, he lives and works in Dubai, where he serves as founder and president of WETEC, a financial services consulting firm that centers on assisting with project management and financing and specializes in helping European clients optimize their business endeavors in the Middle East.

Advertisement

Join Disrupt Magazine

Become A Disrupt Contributor
Become A Disrupt Contributor

Most Disruptive

Entrepreneurship3 weeks ago

5 Disruptive Leaders Paving the Way in 2021

Where there is uncertainty, lies a whirlwind of opportunity. 2020 was the year that had entrepreneurs learn a great deal...

Politics7 months ago

Brock Pierce Wants To Disrupt The Two Party System And Be Your Next President

We don’t usually cover politics much here at Disrupt, but when Crypto billionaire and friend of the show, Brock Pierce...

Business9 months ago

John Mcafee – Predictions For The Future

John McAfee is a world-famous tech CEO, computer scientist, civil disobedience activist, privacy advocate, and pioneer of the commercial anti-virus...

Finance10 months ago

Gaby Wall Street – Teaching Latinas to Thrive During The Crisis

It’s no secret we are facing one of the most challenging financial times of the last few decades as we...

Entrepreneurship10 months ago

Tony Delgado – The #1 Entrepreneurship Movement In Puerto Rico

Puerto Rican online market is in constant progress. With many entrepreneurs who are coming here to start a business, it...

Entrepreneurship1 year ago

Elena Cardone – The 10X Ladies Conference Is Declaring 2020 The Decade For Women

The next ten years are meant for women to continue growing their potential and succeeding in multiple areas, including business....

Marketing2 years ago

How Josh Elizetxe Built Snow Into a $40 Million Dollar Business

There is nothing quite like an entrepreneur’s determination when starting a business. That’s my original quote by the way (pun...

Entrepreneurship2 years ago

How Jason Capital Became A Self Made Millionaire By 24

Have you ever wanted to earn the respect of everyone who ever looked down on you at some point in...

Entrepreneurship2 years ago

Sam Bakhtiar On His Way To A Quarter Billion

Dr. Saman Bakhtiar, who prefers being referred as Sam, lives in an 8200 square foot $5.2 million house, Sam is...

Trending

Copyright © 2020 Disrupt Magazine - Disrupt is a Minority Owned Privately Held Company

Disrupt is the voice of Latino entrepreneurs around the world. We are part of a global movement to increase diversity in the technology industry and we are focused on using entrepreneurship to grow new economies in underserved communities around the world. We enable millennials to become what they want to become in life by learning new skills and leveraging the power of the digital economy. We are living proof that all you need to succeed in this new economy is a landing page and a dream. Disrupt tells the stories of the world top entrepreneurs, developers, creators, and digital marketers and help empower them to teach others the skills they used to grow their careers, chase their passions and create financial freedom for themselves, their families, and their lives, all while living out their true purpose. We recognize the fact that most young people are opting to skip college in exchange for entrepreneurship and real-life experience. This Podcast was designed to give them a taste of that.