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Leadership Styles: How to Be a Better Leader

Leadership is freaking hard. There are no ifs, ands or buts about it. Whether you’re leading a craft, a team or a billion-dollar corporation, your employees are looking to you for guidance and direction. In fact, your leadership affects everything about your business. No pressure, right? So, let’s make sure you’re setting everyone up for success—including yourself!

Let’s start by talking about the difference between your leadership style and your leadership principles. Then we’ll dive into three core leadership styles and our advice for choosing (or changing) your personal leadership style.

What Are Leadership Styles vs. Leadership Principles?

Leadership styles and leadership principles are simply terms that refer to how you lead and why you lead that way. A leadership style is how you interact with your employees in the day-to-day work. It defines how your employees expect you to behave and the type of relationship you have with them.

Leadership principles are the why behind your style. These principles, like open communication, trust or company values, are the things you believe in as a leader and take with you to every job and meeting. They’re the foundation of your leadership style—and that means you need to be crystal clear on your values and principles before you start leading people.

If all that feels a little cloudy, don’t worry. You’ll see how styles and principles work together as we look at three common leadership styles, what they are, and how they affect your employees and business.

What Is Transactional Leadership?

Transactional leadership (also called managerial leadership) is a leadership style based on a system of order, structure, rules and regulations. It’s much more focused on molding the behavior you want and need for the sake of productivity—and much less focused on building relationships.

A transactional leader asks two questions:

  1. What am I getting out of my employees?
  2. What are my employees getting out of the company?

These leaders run their business like an assembly line in a factory. Employees are units of production and can be replaced if they don’t work out.

Now, let’s be clear: Productivity and efficiency aren’t the enemy. But only focusing on productivity and efficiency can cause employees to feel disconnected and dissatisfied. Another problem with transactional leadership is that it can stifle creativity and innovation because employees are trained to focus on meeting quotas rather than brainstorming new ideas or problem-solving.

Even though businesses can succeed under transactional leadership, employees need more than rules and regulations. They need leaders who invest in relationships, work toward a shared mission, and help their team members grow personally and professionally. These types of leaders transform the workplace.

What Is Transformational Leadership?

Unlike transactional leaders, transformational leaders invest their time and effort into their team because they know that as those people grow, they’ll grow the business.

Transformational leaders are like coaches or teachers. While they can’t force anyone to learn, grow, or improve, they can show them the way and encourage them to push through the struggles while celebrating their accomplishments.

A transformational leader helps employees become a better version of themselves not by removing the obstacles in their way (those challenges are actually essential to their growth)—but by giving them helpful advice, asking them the right questions, and working through their struggles with them (not for them).

What Is Servant Leadership?

Servant leaders focus on what they can do for others instead of what others can do for them. Don’t confuse servant leadership with being subservient. Being a servant leader doesn’t diminish you, your title, or your authority.

These leaders are willing to do the most difficult work on the team—leading the person behind the position.

Servant leaders:

  • Put others’ needs first
  • Find ways to be flexible with timing and commitments
  • Help others before helping themselves
  • Listen and empathize before responding

They put their employees’ needs first because they know that when the team is happy and thriving, business will be booming. They keep a cool head when an employee unloads their emotions. They’re willing to have tough conversations nobody wants to have and they think through problems objectively. These things takes courage and confidence. And that’s servant leadership.


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When work gets busy and distractions come rolling in (or knocking on your door), ask yourself these two questions so you can respond like a servant leader:

  1. How can I help my employees accomplish more?
  2. What can I do to help them?

Identifying (or Changing) Your Leadership Style

What if you don’t have a leadership style at all? Good leaders set an example for their teams by growing themselves, so you’re on the right track by identifying your style and working to grow into the leader you want to be. Here are a few things to consider as you develop your leadership style:

1. Be true to yourself.

Don't just pick a style off the shelf—be true to yourself. If you try to be someone you’re not, your employees will notice it from a mile away.

2. Don’t betray yourself.

This might sound similar to “be true to yourself,” but the context is different. When you’re interacting with an employee and you hear that small voice in your head telling you ask that question or allow them to take that risk, have the courage to follow through. Don’t betray yourself.

3. Follow the Golden Rule.

Everyone’s had a leader they didn’t like or who had poor leadership skills. That’s why you need to become the leader you would want to have. And you can start by treating people the way you want to be treated.

When you make a mistake at work, how do you want a leader to respond? With kindness or with threats? Set the example for your team by responding with kindness and the heart of a teacher.

How Will You Lead Your Team?

Being a good leader takes time and effort. You’ll have a unique style that works for you and your business. And while we encourage everyone to work toward servant leadership, there are aspects of other leadership styles that might be necessary for your business and employees. Adapt your style to each employee to better serve them while helping the company grow.

Great leaders (like you!) are always looking for ways to improve their leadership. To keep growing, be it in HR or as a business leader, check out our other helpful resources at SmartDollar.

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Ramsey Solutions

About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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