Importance of Leadership on Business

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Running head: LEADERSHIP
LEADERSHIP
Name of the Student
Name of the University
Author note

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Introduction
Leadership plays a very crucial role in the success of any organization. Leadership
helps in transforming the potential into reality for any organization. Leadership is also
responsible for providing a working climate that is pleasant to the work and is also
responsible for boosting the confidence of the employees by sharpening and developing their
skills (Northouse, 2018).
Leadership helps in encouraging and stimulating the actions that are required to
perform, which will enable an enhanced result for the organization; this includes making
innovations in the style of planning and making decisions. Leadership helps in motivating the
employees of the organization and encourage them to perform better (Ward, 2016).
The organization must understand the importance of leadership as it will help in
taking faster and decisive action when required for the organization (Dunne et al.2016).
Leadership in an organization also helps in performing better and accomplishments of the
objectives and goals set by the organization. This report will discuss the importance of
leadership in business, several theories and models of leadership and the application of these
theories and models in the business.
Discussion
Importance of leadership on business
Leadership is considered as one of the primary function of management as it helps in
maximizing the efficiency and leads towards the achievement of the organizational goals.
Leaders play a very crucial role in initiating a work by making proper communication with
the employee using the proper medium for transferring the message to be delivered (Sfantou,
et al. 2017).

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A leader plays a very important role in guiding his subordinates to perform efficiently
and effectively. They also help in boosting the confidence of their subordinates by
continually motivating them and engaging them in various decision-making. Leaders are
responsible for building the morale of the employees they have and this, in turn, helps in
cooperating towards the work and provide guidelines to them (Turner, 2019).
Leadership in business is important as t involves the ability of the organization’s
management to achieve the aims tactfully and act in a decisive way (Ndalamba, Caldwell &
Anderson, 2018). It also helps in staying ahead of the competitors by increasing the
efficiency in performance (Lee, Alpeissova & Akisheva, 2019). Some of the reasons include:
Maintaining the vision of the organization: ensuring the organizational vision and
acting towards the accomplishment of it is essential, and this is directed by the leaders of the
organization. They form a guideline for the sub-ordinates to walk upon and accomplish them.
Inspiration: a leader is responsible for enhancing the morale of his subordinates and make
them work harder, which will help them to develop their skills and the organization to induce
profits (Liao & Huang, 2016).
Embracing diversity: working in a diversified organization helps to develop many
personal and professional skills at the same time. Hence, leadership helps in offering this kind
of environment on behalf of the organization. Leaders always ensure that the people working
under him are working in a diversified working environment (Harris, 2017).
Communicating new strategic decisions: making decisions in an organization is very
common, and it occurs very frequently. Therefore, a leader plays a very important role in
communicating the necessary information to the subordinates and adapt these strategic
decisions taking place in the organization (Köhler & Zerfass, 2019).

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Encouragement for continuously learning: a business leader is responsible for
encouraging the employees in learning and developing themselves continuously. This
improves not the productivity and delivery of the employees, but it helps in improving the
overall learning opportunities for other employees.
Leadership theories
Many theories were proposed or leadership in an organization or business (Nawaz &
Khan_ PhD, 2016). Some of the theories of leadership include:
a) Trait theory (1930s)
b) Behavioural theory (1940s and 1950s)
c) Contingency theory (1960s and 1970s)
d) Transactional theory (1980s and above)
Trait theory: this theory was based on the indication that whatever the situation may be, the
traits or the characteristics that an individual has remains constant and throughout. This
theory mainly focuses on the differences between the personalities of several individuals
(Scheffer & Heckhausen, 2018). The main concentration of this theory was on the motives,
values and skills of the individuals. Application of trait theory can help managers in
understanding and identifying the strengths and weaknesses of themselves and can
accordingly develop the required qualities for leadership.
Behavioural theory: this theory stated that behaviours are gained through conditioning
which occurs due to the interaction with the environment. It was believed by the
behaviourists that the way we respond to a situation is based on the environmental stimuli
that help in shaping the actions we as individuals take. This theory offered a new perspective
which was concentrated towards the behaviours of the leaders. The theory said that leaders

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are created and not born. Individuals are capable of learning through that of observing and
teaching someone (Wolske, Stern & Dietz, 2017).
Contingency theory: this theory states that there is no best style for any leadership, and a
leader is only effective when he or she chooses the leadership style that fits him best
depending upon the situation. The path-goal theory was one of the approaches made by
several contingency approaches. This described the way used by the leaders to inspire and
support the subordinates and helping them in following the goals set (Bratton, 2020).
Application of this theory helped the leaders to focus on the type of style required for catering
demands of various situations and also helped in the assessment of the effectiveness of any
individual.
Transactional theory: this theory is also termed as management theories that are featured
by any transaction been made between the leaders as well as the followers or the
subordinates. This was the only theory that was based on rewards and punishments. When a
mutually reinforcing environment is developed, this theory is proved to be more efficient as
compared to others.
Leadership models
Path-Goal model:

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Source: author
The path-goal model is based on a leadership style that is best suited in the situation
and the work environment in order to achieve the goals and objectives of the organization.
Here, the goal is to increase the morale of the employees by inspiring and empowering them,
which will help in making the members of the organization more productive.
The theory of Path-goal is conceptualized based on the expectancy theory of Vroom,
which states that an individual will act in a specific way that is based on the expectation of
any act and then it is followed by an outcome of the situation (Famakin & Abisuga, 2016).
This theory was first introduced by Martin Evans in the year 1970 and was later developed by
House in the year 1971. There are three basic steps involved in the path-goal model.
The first step is the determination of the characteristics of the employee and the environment.
The second step involves the selection of leadership style.
The final step includes focusing or concentrating on the factors that are motivational and will
help in succeeding of the employees.

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However, there are certain limitations to this model. There is a lack of flexibility with
this model, as the style of leadership becomes fixed.
Fiedler’s contingency model:
Source: author
The model was first developed in the year 1960s by a scientist Fred Fiedler. The
theory states that there is no specific or best style of leadership; instead of this, it is based on
the effectiveness of the leader based on the situation. The effectiveness is based on the result
of two factors that includes the style of leadership and the favourableness of the situation
(Nastiezaie & Musavinejad, 2018).
There are three major steps involved in this model.
The first step includes the identification of the style of leadership.
The second step involves the identification of the situation.
The third step is the determination of the leadership style that is most effective for the
situation.

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Implementation of leadership style on business
Transformational leadership: this is the most effective style of leadership that is used by the
business. this style is implemented in business will help in transforming the goals of the
teams and will help them in improving constantly. This kind of leadership also helps in
creating a vision for the future which the leaders share with the members of the team.
Democratic leadership: this type of leadership style in business helps the members engage
in decision making, and this helps in keeping the members engaged to the team. In this case,
the members of the team are responsible for taking any decision for the team. However, this
is a time taking process as it takes time to take feedback from all the members of the team.
Autocratic leadership: the organization that uses this kind of leadership style do not
facilitate any power of decision making to the members of the team; rather, all the decision is
taken by the leader himself. The main problem of this kind of leadership is that the
employees remain dissatisfied as they are not engaged in any kind of decision making within
an organization.
Laissez-Faire leadership: this kind of leadership in any organization gives the employees
full freedom and a lot of resource and support is provided to them whenever required
(Northouse, 2018). This can be beneficial at the times when the leader has a lot of trust
among the members of the team.
Bureaucratic leadership: the organization that incorporates the bureaucratic leadership
style maintains the rules and regulations within the organization. There are strict process and
procedures to follow in the organization by each and every member of the team, and all these
are one very precisely. This is certainly not the best and most common leadership style but is,
however, followed by most of the organization.

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Transactional leadership: any organization that incorporates this kind of leadership style
gets a clear outline of the situations that are difficult, and this helps the leader to provide
correct instructions to the organizational members in an effective way. However, this kind of
leadership style is complex and inflexible at times which restricts the leaders from taking
necessary steps when required (Northouse, 2018).
Conclusion
Thus, in the end, a conclusion could be drawn as leadership is the most important and
effective step of management, which involves leaders and group members. Leadership helps
in motivating the employees of the organization and encourage them to perform better. The
organization must understand the importance of leadership as it will help in taking faster and
decisive action when required for the organization. Leadership plays a very crucial role in the
success of any organization. It helps in transforming the potential into reality for any
organization. It is also responsible for providing a working climate that is pleasant to the
work and is also responsible for boosting the confidence of the employees by sharpening and
developing their skills.

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References
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