Explain the Different Theories of Leadership

When you start a small business, you automatically become the leader of your enterprise. Leadership requires you to evaluate yourself and your effectiveness so that you can convince employees, partners, vendors, lenders and customers to follow you in pursuit of your vision. Understanding various leadership theories can help you choose your leadership approach.

One of the oldest theories about leadership suggests that leaders have certain traits that make them effective. These traits include drive, integrity, tenacity, empathy and self-confidence, to give a few examples. Though the original idea was that you either had these qualities or you didn't, in modern practice you can use trait theory to help you examine your personality to see what traits you want to emphasize.

With behavioral theory, you don't concentrate on what qualities you have. You decide what behaviors to engage in. For example, you may choose to be a stern ruler who lays down the law, a democratic leader who encourages employee participation in decision-making or a hands-off leader who trusts others to make wise decisions. The idea is that you can choose your behaviors based on what you think would be most effective for your business.

Contingency theory suggests that no single leadership approach applies to every situation. Instead, you choose your style based on the needs of your employees, the nature of the problem or the types of tasks you need to reach goals. For example, when you need everybody pulling together, you might take a more democratic approach, while you could choose an autocratic style when you make tough decisions and can't afford to deal with disagreements and alternative views.

You can use power to lead as long as you know what the source of your power is. For example, you may have expert power. This is influence that comes from knowing a subject better than anyone you are managing. You may have power simply because you do the hiring and firing. This type of leadership recognizes that you and your employees have a simple transaction. You agree to pay, and they agree to work. You may also have power that comes from charm. If you have the ability to disarm opponents with a smile, you may consider using this power as part of your leadership style.