Leadership Styles

Now, let's discuss the most studied and widely used leadership styles across various industries, situations, and businesses. It is important to identify leadership styles in order to make changes.

Paternalist Leadership

Paternalist leadership works well while everything is going well. This style of leadership tends not to work proactively on performing fair and pragmatic performance reviews of the team members. They focus only on highlighting the good deeds, neglecting to face issues and behaviours that need correction. These leaders always find excuses to justify mistakes and misconduct, avoiding facing reality and confrontations. They will do whatever it takes to keep a good climate and working environment amongst the team.

As a result, the output and performance of the team can be damaged. Some members of the team can see themselves as constantly carrying an excess of duties to compensate or cover for others who do not receive the right feedback or training to deal with substandard output or behaviour. Over time, top professionals may become disengaged from the team, potentially leading to their departure or reduced efforts in compensating for underperforming members. This can result in the team's diminished performance and failure to meet expectations.

Paternalistic leaders hinder the company's overall evaluation process by placing professionals with below-expected performance and behaviour on the same level as those who meet or exceed expectations. This results in a waste of time, money, and energy on promotions and recognitions for employees who, in many cases, should not even remain in the company. Additionally, opportunities for the development of deserving professionals are taken away due to paternalistic evaluations, negatively impacting talent growth. In the end, the entire company suffers. Unfortunately, many organisations have a corporate culture that allows this type of leadership to persist.

One of the reasons for this attitude is that addressing individuals and providing honest feedback about their performance can be challenging. People often prefer to avoid facing difficult situations or interactions.

Democratic Leadership

A democratic leader decides by listening to the team members. Consequently, there is a genuine sense of ownership and participation from the team when decisions are based on issues and challenges that are shared and discussed.

There is a clear pragmatic understanding of each professional role and how it influences the team output, actively playing the skills in the right place. Successes and failures are shared, and there is a genuine dialogue on how to adjust. Difficult conversations are not avoided and are treated with maturity and respect.

In a Retail Banking business, democratic leadership is powerful. Dealing with a large variety of situations every day by sharing ideas and involving the team members in decision-making helps people to evolve and build new solutions for new situations, thus improving the results.

The risk with this type of leadership is the delay in decision-making while attempting to reach a consensus. Sometimes, a decision will inevitably create winners and losers or disrupt existing structures. Such delays can result in financial losses for the bank or missed opportunities.

A democratic leader does not aim to please everyone but rather considers the vision of their team while understanding that some decisions must be made independently. In such situations, a different leadership style may be required – the autocratic approach, which we will discuss next.

Motivational Leadership

With motivational leadership, the leader uses a variety of tools to recognise the right behaviour and results. The leader creates a healthy competition among the team members, where the achievement of the results, done correctly, is recognised and impacts on financial gains, awards, and career. It is driven by consistent positive feedback. It is a powerful style that delivers great outcomes and results.

The risk of this style of leadership is to slip into a paternalistic mode (as described above), always trying to motivate even the constant underperformers. It's important to note that an effective leader can blend different leadership styles. In retail banking, combining democratic and motivational leadership can be highly effective when applied wisely.

Situational Leadership

As mentioned, sometimes the leader is not the boss! Companies or departments sometimes face challenging situations where a professional, a team member who does not have the top job, ends up leading the team towards the solution or success based on knowledge, experience and charisma.

An individual professional who rises in such a situation can quickly become the formal leader of the team. In that situation, they are often proven to be the best suited professional for the job. Many times, an interim position becomes a full time or official position.

Autocratic Leadership

Autocratic leadership focusses on the 'boss' characteristics. There is an overvaluation of their abilities, knowledge and experience as the boss. They are the ones who know everything and decide what to do. This style can be the definition of a boss, not a leader. More often than not, the person is more feared than respected.

This leadership style can result in some common and to-be-expected mistakes because of the centralisation of information on one person. A lack of new ideas and limited creativity to solve issues will follow when there is no or very little feedback from the team. A sense of pleasing the boss (and not telling the truth) leads to bad decisions.

We included this leadership style on the list because, although it is almost synonymous with a boss, there are moments when this type of leadership is highly important.

Autocratic leadership must be a short-term solution in times of crisis, when quick fixes are required, or a great opportunity arises and the decision time is very short.

Autocratic leadership is not ideal for managing a Retail Banking business due to the many variables and diverse situations faced daily. Effective leadership in this sector requires a fluid and open communication channel to ensure alignment and agility. Additionally, given the geographic dispersion of teams in retail banking, leaders must actively foster training, motivation, and trust. Recognising and reinforcing these initiatives is crucial, yet these practices are often lacking in an autocratic leadership style.