The Importance of Leadership style: Make or break your organisation’s culture with a conscious approach.

The importance of leadership style cannot be understated. It’s a no-brainer that leadership styles positively affect organisational commitment and work satisfaction. Moreover, work satisfaction can then affect work performance positively. Your leadership style can literally make or break an employee’s performance, which can in turn affect the organisation’s productivity and profitability. Leaders set the standards for how people and teams act, respond, and communicate with customers. If there is a poor relationship between the leader and their people, there will be unclear expectations, decreased team motivation, and increased team frustration, which can lead to disappointed customers. If your customers are disappointed, they are less likely to come back. Leadership behaviour can drive customer loyalty through effective management styles.  

What leadership styles exist, and where are they most appropriate?  

Democratic/Participatory  

The critical characteristic of this style is the shared decision-making process. Whilst the leader still has the final say on all decisions, as expected, they would base their decision on each team member’s input. Giving everyone an equal say prepares the lower-level employees on how to exercise authority which they may need to do in future positions they hold. Moreover, it stimulates the decision-making process in company board meetings, as rarely does one person ultimately have the power to decide.  

This opposes the traditional top-down approach and is becoming increasingly influential due to the younger generation’s preference for flatter organisational styles. This style acknowledges the employees as stakeholders in the organisation who are entitled to their voice, and by doing so, employees arguably become more engaged as they are more involved. A practical example of this style was James F Parker, former CEO of Southwest Airlines. Parker chose to embody this style after the 9/11 attacks. Rather than cutting back staff like most other airlines, he initiated a profit-sharing program. The airline is arguably still one of America’s most successful low-cost airlines.  

Autocratic Leadership  

This style is almost the complete opposite of democratic. Autocratic operates on a strict hierarchical system where the ‘boss’ or leader decides without any input from staff. Historically, this approach was often adopted and viewed as a requirement for success. Employees are neither considered nor consulted before a change in direction and are expected to adhere to the leaders’ decisions at the stipulated time and place, regardless of their opinions. This style can lead to employees feeling as though they are not trusted by their leader and discourages innovation/creativity.   

For this reason, among others, this style has become less and less popular. The workforce is knowledgeable, capable, and educated in the modern world, meaning they often react negatively to this style. Moreover, the ever-changing, highly competitive environments that business takes place in today require constant innovation, and this style fails to foster creativity, making it inappropriate.  

There are some positives to note. It relieves pressure on employees. If the organisation is in a highly stressful situation, it may relieve employees that the decision-making burden does not fall on them. Moreover, this style can benefit manufacturing and construction environments by ensuring safety and preventing accidents and injuries.   

Transformational Leadership  

The core premise of this style is continuous improvement and transformation. Employees are set a basic number of tasks and goals that they should complete every week, but the leader is constantly pushing them outside their comfort zone. Transformational leadership theory is deemed to improve the subordinate’s performance by changing the motives and values of employees. The characteristics of this style include individual influence, spiritual encouragement, and intellectual stimulation. Leaders embodying transformational leadership consider individuals, establish a vision, and aim to create an open culture and build trust with employees to reach their own goals and the employee’s potential.  

This form of leadership works exceptionally well in growth-minded companies as it motivates employees to see their capabilities. A transformative leader is a visionary who inspires others and encourages critical thinking/innovation. Steve Jobs is an excellent example of this. The core aim of these leaders is to transform 'people and organisations inside a literal sense – to alter them in mind and heart enlarge vision, insight, and understanding.’  

This style is crucial in the modern business environment. These leaders encourage followers to view problems from new perspectives, provide support and encouragement, and share their vision for the organisation as a goal to work towards whilst self-improving.  

Transactional Leadership  

This style rewards employees for precisely the work they complete. Effectively employees are rewarded for their efforts and performance. It focuses on the staff’s basic and external demands, with the relationship between leaders and subordinates based on contract. Max Weber first developed this framework with the premise being ‘the exercise of control based on knowledge.’  

For example, a marketing team may receive a bonus if they manage to nurture ten leads – this helps to establish roles and responsibilities for each employee, but on the flip side, it can encourage bare minimum work. So when an employee reaches their target, they may be less motivated to continue as they have already achieved their maximum reward. This style assumes that all employees value external rewards and are not self-motivated, primarily focusing on results. However, this is not always the case. 65% of millennials want their employer to support their development through training wanting their higher-level needs addressed, e.g. belonging, esteem, and self-actualisation.   

Having said this, there are benefits to this style as it often results in running a tight smooth-sailing ship where everyone is crystal clear on the goal and objective of leadership. Bill Gates is a successful practical example of this style.  

What do you think are the most effective leadership styles? 

The Side Hustlers: The emerging trend of the side-hustle culture.

Many people, particularly Gen Z, are embracing the ‘side hustle’ culture. A side hustle can either be a secondary business or job that brings in, or has the potential to bring in, extra income. People are increasingly taking on a side hustle to complement their day job. For the purpose of this blog, I will be using research published by the Henley Business School. Their white paper, ‘The Side Hustle Economy,’ investigates the emerging side hustle economy and how it has impacted working practices across the UK. The study includes 500 C-suite UK business leaders and owners and 1,100 UK adults. 

There are numerous reasons why many are choosing to have a side hustle. Usually, taking a second job was for financial purposes. However, times are changing – research has found that 73% of people who start a side hustle do so to follow a passion or explore a new challenge. This entrepreneurial spirit is coming from deep within – 69% of people with a side hustle have claimed that their hustle fulfills something that their main job cannot, which is that it makes life more interesting. 

The side hustle trend really took off during Covid – understandably so; many wanted to fill their time or recoup the money they were losing. Therefore, it may be tempting to see this trend eventually die down. However, research shows that this trend is here to stay. Those who already have a side hustle find the lifestyle desirable, and two-fifths of those who haven’t taken part in the trend are interested in starting their own business. 

As you can imagine, if your main job takes up to 40 hours of your week, there is not a lot of time to give a second job. 45% of employees with a side hustle work more than 40 hours a week, and 25% work more than 50 hours a week, which means that the average UK employee is putting in an extra day or more per week for their side hustle. 30% of those who run their side business use annual leave to work on their hustle. People are generating a substantial amount of income – Research by 118 118 Money has shown that, on average, Britons are making £411 per month from their side hustle. It’s no wonder why the trend is so lucrative – these funds can keep up with the cost of living or fund a life’s ‘extras.’

However, are there tax implications? Well, that entirely depends on how much an individual earns. HMRC introduced introduced a tax-free allowance to cover ‘self-starters.’ The allowance means that the first £1,000 earned (gross, before expenses) is tax-free. Nothing is paid on the income; individuals do not need to report it, either. However, should an individual earn over the allowance, they are required to submit a self-assessment tax return. As research has found, Britons are making an average of £411 per month, which means there would be no tax implications – no wonder side hustles are appealing!

However, we all have moments at work. The beauty of ‘main’ jobs is that most of us can switch off once we go home. So, wouldn’t side hustles cause more stress? Employers are worried that this trend could take their employees away from their main job. On the contrary, a side business is motivational. Henley Business School found that 69% view life positively as they have two roles, and their side hustle gives them a sense of fulfillment. In fact, 47% said they would stay in the job even if their business took off.

Research has proven that a side hustle cannot take away from an employee’s attention from their ‘main’ job. But does that mean employers shouldn’t prepare for this trend to become increasingly popular? Employers may want to prepare their workforce as a safety blanket. 30% of businesses record and monitor side-working, and 26% require their staff to notify them. The research found that the public and non-profit sector had more policies in place around working outside their job. However, smaller businesses (with 9 or fewer employees) support the side hustle trend. However, it becomes an issue when businesses grow. 29% of businesses (10-49 employees) have an active policy that prevents side-working, which suggests that when a business is in its growth phase, leaders are likely to hold onto talent by restricting their outside interests.

Businesses in a growth phase may be concerned about compliance. If their employees are working from home or on flexible hours, there is a concern that employees may be conducting their business on company time or using company property. Therefore, there needs to be mutual trust, especially if the employee is meeting the performance requirements, as their side hustle is not taking them away from their ‘main’ job. Rather than refraining employees from their interests, businesses can safeguard their concerns with policies and agreements. 

What do you think of the side hustle culture?