From Jack Welch of General Electric to Herb Kelleher of Southwest Airlines, great chief executive officers have used different leadership styles to support their employees. For example, Warren Buffet of Berkshire Hathaway thinks it best to avoid putting his team under a microscope; he uses the laissez-faire management style. If your small-business employees are capable, confident and motivated, you might follow Buffet's model. If your team does better when granted less autonomy, your company will benefit if you provide more direct leadership.

Laissez-Faire Leadership

Managers and supervisors who adopt the laissez-faire leadership style delegate responsibility for the accomplishment of work objectives and decision-making power to their employees. For example, a CEO of a large, new-car dealership may allow departments -- such as new car sales, used car sales and service -- to operate on their own without his direct supervision. In this case, the CEO sets expectations for the departments' operations, revenues and costs and provides the needed resources to accomplish particular business objectives. However, the department managers and employees determine how they will achieve the objectives.

Implementation of Laissez-Faire Leadership

This laissez-faire system works best in groups of experienced, educated and highly skilled employees -- such as staff specialists or consultants -- who are accustomed to working in team environments. In our example of the car dealership, the new car sales, used car sales and service department teams each possess specific skills and have received specialized training. So each team may work best when it establishes its own work schedules, works independently and makes decisions as a group, rather than at the direction of its CEO.

In this example, laissez-faire leadership is especially effective because many department problems are well defined, a course of action is frequently predetermined, resources are readily available and limited CEO interaction is required for the team to work effectively.

Advantages of Laissez-Faire Leadership

“Hands-off” leadership allows each team's skilled members to brainstorm to identify appropriate solutions to problems and implement these decisions rapidly. As a result, the business avoids the cost involved in some meetings, such as the opportunity cost of not completing other tasks, missed sales calls and lost customer face time. Laissez-faire leadership works well in a creative environment where employees are free to implement innovative solutions. In our example, the sales team works with the finance department to identify creative financing options for potential buyers. The service department, meanwhile, employs up-to-date technology and mechanics skilled in contemporary engines.

Disadvantages of Laissez-Faire Leadership

Productivity may suffer when the laissez-faire leadership style is implemented if group members lack the expertise required to accomplish assigned objectives. For example, the CEO of a small, two-person used-car dealership may employ an inexperienced mechanic who requires supervision to perform his work properly. Laissez-faire leadership makes some employees feel insecure when they don't have contact with a manager and don't get feedback or confirmation of a problem's solution. Without regular monitoring, some employees’ work may take a wrong direction, resulting in a failure to meet project deadlines and increased costs. In the used-car dealership and inexperienced mechanic example, the employee might easily perform the repairs incorrectly without supervision.