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Importance of Leadership in Business Management

Published on Mar 13,2023 660 Views

If you have seen most of the successful companies in the world, one person is always in focus. When you talk about Apple, you immediately remember Steve Jobs. The names come to your mind because they were effective leaders who steered their companies to success.

Leadership is an essential quality in every business. A good leader need not be one who has a lot of experience or one that holds an executive post. We must first understand what leadership is and then see the importance of leadership in business management. 

The Advanced Executive Certificate Course In Business Management In Digital Era teaches you how to be the leader of your company or team. You can learn more about this course on our website. 

Who Is A Leader?

Leaders are people who can inspire others to follow them and also help the followers achieve their personal and professional goals. Leadership is not power or authority but an ability to influence others to reach a common objective. Leaders can motivate others to follow them and work for the goals that they aim to achieve. These followers need not be directly reporting to the leader.

That is the power of leadership. Leaders don’t do something because it is an obligation because of their position. Whatever they do is aimed at innovation, which is the importance of leadership in business management. 

Leaders are popular for their beliefs and work ethics. They are known for their passion for work. These professionals pass on their enthusiasm to their colleagues and subordinates. It allows others also to perform well and achieve their goals. Leadership is not just about organizing the efforts of others. Good leaders help to maximize the efforts of others.

They inspire others to do that extra bit for the company instead of just doing what they are bound to do. Executives know the importance of leadership in business management, and that is the reason companies retain such people. 

Different Leadership Styles

Before we look at the importance of leadership in business management, let us look at the common leadership styles. Leaders use these methods to influence others to work towards the company’s goals. Their style determines how these professionals implement their plans and strategies to achieve the company’s goals. The idea behind using different styles is to build trust in the leaders.

Employees must trust their leaders if they must follow the instructions and do more than expected. The styles mentioned below are described based on observations made by various researchers. 

Leaders adopt different styles based on the circumstances and people they have to manage. Leadership styles are important because they show the leader’s image that their subordinates can follow. Having a style allows employees to copy something and work similarly. It leads to the achievement of objectives as expected by the leader.

Leaders must be flexible with their styles and change them with circumstances. It can lead to better communication and collaboration. Having a style suitable to the circumstances helps improve employee engagement and strengthens the team’s effectiveness. 

Leadership Styles



  1. Democratic Leadership

It is one of the most popular styles that gives a voice to all employees in the company. Everyone can express their opinions and suggestions in the decision-making process. Each member gets an opportunity to contribute to the company’s progress and achieve its goals. Employees also understand the importance of leadership in business management when they get to say their opinions. In this leadership style, authority is delegated to every employee who determines work assignments. As this style encourages the creativity of team members, it results in better employee satisfaction. 

  1. Autocratic Leadership

It is exactly the opposite of the above style. In this type of leadership, the leader makes all decisions on behalf of the team. Leaders will have complete authority and responsibility. Once the decisions have been made, the team members are expected to support and work according to them. This style can be effective when the leader has excellent knowledge and experience about the work, and no support is needed to make decisions. However, in many cases, it can cause frustration among the employees. As no opinion is taken from the workers, the manager can remain unaware of the problems. 

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  1. Laissez Faire Leadership

It is the extreme level of democratic leadership. In this style, there is a completely hands-off approach from the leader. The employees are given the necessary tools to complete their tasks and are left alone without any interference or supervision. They can make decisions, plan their work, solve problems and achieve the desired results. This type of leadership can work where the company expects high creativity from the employees. But the flip side is that the workers may need help understanding the importance of leadership in business management and can feel directionless. 

  1. Transformational Leadership

This style results in a total change in the team members and the company. Managers push their subordinates out of their comfort zone and expect them to achieve what was thought as not possible. The importance of leadership in business management is very much felt in high-growth companies, and this style is most useful in such firms. The leaders give tasks that increasingly become difficult and deadlines that become tighter with every task. Such a leadership style can bring about high productivity if the leader earns the trust and respect of the employees. 

  1. Transactional Leadership

This style is mostly short-term, and the commitment is only till they complete the job. It is a style where payment is made for completed tasks, and there is no more expectation from the employees. This method is used mainly in sales and marketing jobs. Employees get payment or incentives if they achieve a specific sales target. Incentives are provided to encourage employees to finish the tasks within the deadline. These leaders clearly establish the duties and roles of each employee. This style of leadership prevents confusion as the tasks are clearly mentioned. However, such a rigid arrangement may prevent creativity and innovation. 

  1. Bureaucratic Leadership

With this style, you will hardly notice the importance of leadership in business management because everything is done as per the book. There is no room for any flexibility here. The manager expects employees to follow the processes and procedures written down by the company’s policies. Managers consider the ideas put forth by the employees but will reject them if they don’t conform to the directions as per policy. New ideas are rare to come by. Though there is more freedom than the autocratic leadership style, the strict rules prevent innovation or creativity. 

  1. Servant Leadership

As the name suggests, in this style, the manager becomes a servant to the team before becoming its leader. These leaders try to fulfill the needs of the team above theirs. These leaders also lead by example. They try to inspire people to follow their lead to achieving goals. This type of leadership creates a positive culture and develops high employee morale. However, it will likely fail when the competition is between these leaders and others who don’t follow this style. More ambitious leaders will easily overtake servant managers. 

The above are the important leadership styles managers and companies normally employ to accomplish work. You will learn about these and other styles in the Advanced Executive Certificate Course In Business Management In Digital Era. More details about this program are available on our website. We will also look at other styles that some firms follow. 

  1. Coach Style Leadership

In this type of leadership, the manager understands the strengths and weaknesses of their employees. The leader will provide the necessary support to fill the skill gaps and ensure that the team performs well. The members of such a team understand the importance of leadership in business management as they acquire new skills and move forward in their careers.

  1. Charismatic Leadership

As the name suggests, this style works due to the charisma of the leader. The personality of the leaders and their communication skills help inspire the team and make them do their tasks successfully. However, in such a leadership style, it is possible that the managers can assume a bigger status than the team and lose track of important tasks. 

  1. Strategic Leadership

In this style, the importance of leadership in business management is very much felt as the managers head the company’s main operations and support its growth plans. Such leaders can support numerous employee layers simultaneously. 

It is impossible to say that any type of leadership will be suitable for all companies or situations. The same organization may need to switch between different styles depending on the situation at that time. There are many factors that decide what type will suit the company. The type of organization is one important factor. The maturity and knowledge of the team are other factors to consider when choosing the leadership style. The personality of the leaders also decides the type. 

Importance Of Leadership In Business

  1. Vision

Effective leaders have a vision of the short and long-term goals of the company. They help to develop a clear roadmap for achieving the objectives of the organization. They can lay down the steps and methods for the same. These professionals also have a clear idea about the usage of available resources to reach the goals. Good managers enable the company to move quickly from ideation to execution.

  1. Communication

Good leaders come with excellent communication skills. It helps them convey job descriptions and tasks to the employees very clearly. They can convey clear messages to customers about the company’s vision and mission. Leaders with good communication skills can market their products and services to customers very effectively. The importance of leadership in business management lies in the fact that managers can use their communication expertise to resolve issues in the company and ensure smooth working. 

  1. Decision Making

Efficient leaders possess excellent decision-making capabilities. It is very helpful for the company as the right decisions enable the organization to succeed even in difficult times. This skill allows the firm to quickly change as the situation changes and adapt to new circumstances. Decision-making skills are also highly essential to settle conflicts and disputes among employees. Good leaders absorb all the facts in front of them and come to the right decision to ensure that the company doesn’t suffer due to inaction. 

  1. Passion

Companies need passionate leaders to succeed and grow. Those who are passionate about their work will drive others also to work towards the common goal. Leaders who have passion for their job will also be good learners as they wish to be experts in their field. They encourage others to be equally passionate about their jobs and the company’s objectives. This will give enough reason for employees to remain dedicated to their work.

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  1. Guidance

No employee comes with all the knowledge needed for the job. This is where the importance of leadership in business management is crucial. Effective leaders are needed to guide employees in their jobs and help them achieve their goals. They supervise the work of their subordinates and make sure there are no lapses. These professionals also ensure that all employees’ efforts align with the company’s goals. It will certainly improve the efficiency of the team. 

  1. Commitment

Commitment to the company’s goals, mission, and vision is the hallmark of good leaders. Such commitment makes them work hard towards objectives. It also drives them to influence their subordinates and get them to achieve the common goals of the organization. These leaders focus on the long-term goals of the firm and don’t allow temporary setbacks to affect their work. They also motivate the team members to look beyond immediate issues and concentrate on achieving the firm’s goals.

  1. Integrity

If there is one thing that sets good leaders apart from others, it is integrity. They will never compromise their ethical values and insist that the company also follows them. They will want to see honesty and transparency in all the dealings the firm has with outside entities. For these professionals, truthfulness and fairness are attributes they will never let go of in any situation. Having such leaders stresses the importance of leadership in business management. 

  1. Confidence

Confidence is something we want to see in everyone, which is why it appears so low on the list of qualities that good leaders have. It is a quality that motivates employees to achieve organizational objectives with a strong belief in the company vision. These leaders exhibit confidence in their abilities, and this makes employees respect them. It is also a quality that will spread to anyone who interacts with these leaders. They listen to employees’ problems at work and provide positive feedback that will bring out the best in them.

  1. Morale

One of the importance of leadership in business management is that it helps to boost the morale of all employees. Effective leaders are high on morale and will not allow anything to put them down. Such leaders provide positive feedback to the employees boosting their morale and keeping their spirits up even in the face of some setbacks. High morale will keep the employees focussing on important issues and prevent any kind of distraction from work. It will help divert their energies to achieve company objectives. 

  1. Growth

Effective leaders boost the growth of the organization. They will make sure that the company continues to grow even if there are any temporary issues slowing their pace. Such leaders will also make sure that the team concentrates on company growth. These professionals will also ensure that employees grow with the company and achieve their personal goals. Leaders who promote open-mindedness and flexibility among the workers will lead the firm to high growth. 

Qualities Of A Leader



Innovation  – Good leaders are innovators who can suggest new ideas, strategies, and practices achieve company goals.

Honesty – Honesty allows good leaders to be truthful to their team members regarding workflow, challenges, and vision of the company.

Active Listening – This quality allows leaders to know about their employees’ problems and help them out of them. It also enables managers to know the strength and weaknesses of every person. 

Delegation – Effective leaders know that they cannot do all the tasks, and their time must be used for more creative activities. Hence they delegate work to capable employees.

Problem-Solving– All good leaders are great at solving problems. Their subordinates look to them to give solutions to daily issues at work. 

You can acquire all the qualities needed for a good leader in the Advanced Executive Certificate Course In Business Management In Digital Era. More details about this course are available on our website. 

Summing Up

Managing a business and taking it forward toward its goals is not an easy task. The company has employees from different backgrounds who need to be brought together to achieve the common goal of the firm. There are resources that must be used properly to help the team do their tasks successfully. Only good leaders can handle all these efficiently and ensure that the organization achieves its goals. Courses from reputed institutions can teach you all the skills needed for the job. Such qualifications, along with experience, can make you a great leader.


More Information:

14 key principles of business management

Using Digital Business Management For Better Profitability

Learn Business Management courses From The Best Institution

Business Management Program Online: What Is It And How To Choose One?


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