Understanding CEO Leadership Styles

Leadership Styles

Chief Executive Officers or CEOs require strong leadership skills to effectively guide their organizations in meeting their strategic mission and goals. Every CEO leads in their own management approach. Some CEO leadership styles are more effective than others, dependent on the environment and industry. Great leaders don’t follow a set formula but embrace their own leadership philosophy.

While CEO leadership styles and skills can be difficult to cultivate and understand, they’re crucial to success.

Here’s what the CEO role entails and the different types of CEO leadership styles that professionals may choose to use to support their roles.

What Does a CEO Do?

As a company’s highest-ranking executive, the CEO makes the major decisions that affect the business, establishing a company culture, managing operations, and allocating resources. The CEO also may serve as the public face of the company, communicating with shareholders, board members, customers, employees, and media outlets to present information, gather feedback and track business progress.

According to a 13-year study by Harvard Business Review, CEOs are “always on,” working an average of 62.5 hours per week, with almost 80% working weekends and 70% working vacation days. CEOs also may travel a great deal to other company locations and partner meetings. While spending significant time in routine meetings and review sessions, they need to be ready to respond at a moment’s notice to any sudden business issues.

CEOs need essential leadership skills for success. A 10-year study by Harvard Business Review found that effective CEOs demonstrate the following key behaviors:

Making fast and resolute decisions. High-performing CEOs are fast, resolute decision-makers, despite often having ambiguous or incomplete information. Stephen Gorman, the former Greyhound CEO, said, “A bad decision was better than a lack of direction. Most decisions can be undone, but you have to learn to move with the right amount of speed.”
Engaging stakeholders. High-performing CEOs engage stakeholders like employees in building strategies and delivering results. Successful CEOs thoroughly understand stakeholder needs and values and align all initiatives with those needs. Madeline Bell, Children’s Hospital of Philadelphia CEO, said, “With any big decision, I create a stakeholder map of the key people who need to be on board … I make it clear to people that they’re important to the process and they’ll be part of a win.”
Adapting proactively. High-performing CEOs adapt proactively to changing markets and customer behaviors. Dominic Barton, a McKinsey & Company global managing partner, said: “It’s dealing with situations that are not in the playbook. As a CEO you are constantly faced with situations where a playbook simply cannot exist. You’d better be ready to adapt.”
Being reliable. High-performing CEOs are highly consistent and reliable. Harvard Business Review found that 94% of strong CEO candidates consistently followed through on their promises.

Additionally, successful CEOs must clearly communicate their ideas, inspire others, build trust, and earn respect. They need high emotional intelligence and an understanding of ethics and morals to lead their organizations into a sustainable future.

4 CEO Leadership Styles

Executives can employ different CEO leadership styles to effectively manage their teams and drive success. Earning a Master of Science in Leadership (MSL) degree can help professionals develop the necessary skills to employ the four core CEO leadership styles.

Transformational Leadership

The transformational leadership style centers on motivating and empowering employees to drive change throughout the organization. Building a strong corporate culture and trusting employees to take initiative by using their expertise and creativity are important traits of this leadership style.

Transformational leaders are innovative and charismatic; they have a clear set of ethics, values, and core goals for the common good of the company. These CEOs enthusiastically lead through example by fostering open communication and mentorship opportunities.

Microsoft CEO Satya Nadella, for example, transformed Microsoft’s slow-moving, risk-averse corporate culture into one that released dozens of new product features and updates each month. While founder Bill Gates was more of an authoritative visionary, Nadella encouraged teams to explore new ideas through collaborative learning. Nadella even launched a company-wide hackathon in which employees could build and share their passion projects. These initiatives led to Microsoft’s investment in cloud services and artificial intelligence (AI), which composes 32% of its revenue as of 2017 ― just three years after Nadella became CEO.

A downside to transformational leadership is the risk and expense associated with investing in major organizational change. Employees also can burn out from constant pressure to innovate and collaborate according to the CEO’s vision.

Authoritative Leadership

The authoritative leadership style involves making strict decisions and implementing policies without employee input. Authoritative leaders set high-performance standards for their teams, and outline specific rewards and punishments for reaching or missing those standards.

This CEO leadership style enables executives to make quick decisions without relying on input from others. An authoritative approach also establishes a clear leadership hierarchy and strictly set goals, under which some employees may thrive. According to the results of a study of 211 supervisor-subordinate relationships in Chinese technology companies published in 2018, authoritarian leadership positively impacted employee performance.

Consider psychologist and leadership expert Daniel Goleman’s example: Tom, an executive for a national restaurant chain that specializes in pizza delivery, knew his company faced a downturn. He saw an opportunity to take charge and set a new vision for the company. At a key strategy meeting, he presented an enthusiastic speech about the importance of thinking from the customer’s point-of-view instead of just focusing on low sales numbers. Customers wanted convenience, and Tom believed that should drive all future strategic decisions. By taking an authoritative stance and declaring a new focus for the company, Tom motivated his store owners and inspired employees to create new delivery programs that improved customer satisfaction.

On the flipside, authoritative leadership may spoil relationships with employees who want to contribute their expertise to important decisions and strategies. While trying to gain employee respect by establishing control, authoritative leaders could appear harsh and lose that respect.

Strategic Leadership

The strategic leadership style involves adapting in the face of change but remaining firm in protecting core values. It combines flexibility, steadfastness, big-picture thinking and an ability to see the small details. Strategic leaders have their pulse on the market and can spot signs of change before happening. Seeing opportunities others may miss, they’re comfortable challenging traditional methods and defending for their convictions despite pushback.

Most notably, this CEO leadership style involves constant learning—gathering, analyzing, and synthesizing information for better decision-making. Strategic leaders take their time to collect qualitative and quantitative data and seek to communicate with others to gather insights.

Former Starbucks CEO Howard Schultz, for example, implemented strategic initiatives despite risks and pushback. He provided health care benefits to employees, offered tuition-free degree programs through a partnered university, and committed to hiring 10,000 veterans and military spouses. As a result of his initiatives, Schultz grew Starbucks into an $84 billion business with over 25,000 stores.

Still, taking such an inquisitive, analytical approach can keep strategic leaders from making split-second decisions when necessary. As a result, they risk stalling company growth when competitors think on their feet.

Affiliative Leadership

The affiliative leadership style involves fostering a culture that nurtures employees and puts the people first. This is achieved by building loyalty, strengthening emotional bonds, and administering praise. The affiliative leader maintains harmony and ensures that employees feel a sense of connection to the organization and its goals.

When Sameer Dholakia became CEO of email platform SendGrid in 2014, the company was a slow-growing startup. In just a few years, Dholakia used affiliative leadership to grow sales by nearly 40% and reach $100 million in revenue. As CEO, Dholakia believes his primary role is to empower, support, and serve his employees. He spends half of his workdays meeting with them, hearing their feedback, and asking what more he can do for them.

Still, CEOs should be wary of using the affiliative leadership style on its own. By focusing solely on positivity and emotional sensitivity, affiliative leaders can neglect to reproach poor performers and deliver constructive criticism, which can be necessary for growth.

Prepare for a Career in Leadership

Earning an advanced degree provides unique benefits for those pursuing a CEO career. An MSL degree can cultivate the skills needed to create leaders who inspire organizations through strategic communication, emotional intelligence, and ethical understanding. Coupled with the right tools, this degree can help professionals build their own CEO leadership styles and reach their career goals. Learn more about Norwich University’s online MSL program and how it can help you prepare to pursue an executive position.

Recommended Readings

10 Different Types of Leadership Styles

Sources

4 Leadership Strategies of Great CEOs, Gary Vaynerchuk

How CEOs Manage Time, Harvard Business Review

Lead From the Top: 5 Core Responsibilities of a CEO, Entrepreneur

What Sets Successful CEOs Apart, Harvard Business Review

Five Top Skills for CEOs to Maintain Influence, Forbes

What Is Transformational Leadership? A Model for Sparking Innovation, CIO

What the Best Transformational Leaders Do, Harvard Business Review

The Secret to Transformational Leadership, Forbes

The 10 Habits of Transformational Leaders, Forbes