6 Prominent Theories of Leadership

An effective leader can be the difference between a team that succeeds and a team that fails. Leaders set the tone for their teams, and different management styles can affect employees in different ways. Theories about what makes a good leader have existed for a long time, and ideas about leadership have changed significantly over the years.

Theories of Leadership

There are many theories about leadership and how to identify people who should be in leadership positions. Being familiar with the different theories can help you become an effective leader and better manage your team.


The trait theory of leadership operates under the assumption that some people are born to be leaders. It argues that leaders all possess certain traits: intelligence, a sense of responsibility, creativity, and so forth. The theory has been widely criticized, however, for a variety of reasons. If all leaders possess the same traits, why do some people who possess those traits not become leaders? Does the context within which the leader arises play a part? What is the explanation for leaders who do not possess the traits supposedly common to leaders?


There are multiple behavioral theories of leadership, says Mind Tools. How do leaders interact with their team? Do they allow employees to make important decisions, or do they micromanage? Do they celebrate their teams for successes or focus on weaknesses? In the 1930s, Kurt Lewin broke down leaders into three broad categories.

  1. Autocratic leaders are classic micromanagers, taking responsibility for all decision-making. While an autocratic leader might be able to make decisions quickly and firmly, many teams grow to resent autocratic leaders. Micromanaging a team can be ineffective because it monopolizes a manager’s time and draws their attention away from more important things, and because it can cause employees to feel disempowered.
  2. Democratic leaders involve the team in decision-making, allowing everyone to have a say. While team members may still disagree with their leader’s decision, their perspectives are taken into account. This style of leadership can cause teams to become more invested in the process and the goal, but they can also get bogged down with complicated decisions.
  3. Laissez-faire leaders use a light touch managing their teams. They expect their team members to make the right call on their own and trust their employees to do their jobs well. This can be an effective style of leadership with a highly skilled team, but it can result in a team suffering from a lack of direction. Less-skilled teams can run into problems as well.


Under transactional leadership, a manager approaches employee relations as a series of transactions or exchanges. For example, a leader might offer employees a bonus for hitting sales goals or extra vacation time for working through a holiday. According to the Journal of Business Studies Quarterly (JBSQ), this style of leadership emphasizes contractual agreement and extrinsic motivators: money, job security, benefits, and so forth.

Transactional leadership has the benefit of providing a clear relationship between task and reward: An employee does a job and then gets the agreed-upon incentive. This can create strong short-term motivation. But transactional leadership can lead to poor long-term motivation, resentment between managers and employees, and a tendency to work only hard enough to obtain the reward. Transactional leadership is fundamentally risk-averse and can stymie innovation and autonomy within the workplace.


Transformational leadership involves downplaying motivators like job security and pay. Instead, it emphasizes motivators like self-actualization and shared values, according to JBSQ. A transformational leader calls on employees to work for the good of the organization and convinces them to do so because the organization’s goals and values align with those of the employees. Transformational leaders are often charismatic and display qualities that employees find attractive or worthy, which they may seek to emulate.

For example, a marketing firm with a transformational leader still has the goal of creating compelling marketing collateral on a reasonable deadline. To motivate employees, a transformational leader might explain how the project helps the company reach its goals, how those goals impact clients, and how all of this ultimately impacts the employees and their own goals and values.

While transformational leadership can lead to high employee motivation, the extent of the effect is unclear. Other factors can and do affect employee motivation, so it can be difficult to credit an individual’s leadership with a team’s successes without including that caveat. Because transformational leadership tends to build trust and encourage autonomy, it can have a positive effect on workplace productivity, innovation, and willingness to take risks. This risk-taking can be a double-edged sword though, and employees may become dissatisfied if they perceive the leader acting in a way counter to the corporate culture.


A component of the transformational theory of leadership, the full-range theory of leadership seeks to improve employee motivation by connecting an individual employee’s sense of identity to the health and prosperity of the organization. According to Boundless, full-range theory has four parts:

  • Individualized consideration—the degree to which the leader attends to each follower’s concerns and needs and acts as a mentor or coach;
  • Intellectual stimulation—the degree to which the leader challenges assumptions, takes risks, and solicits followers’ ideas;
  • Inspirational motivation—the degree to which the leader articulates a vision that is appealing and inspiring to followers; and
  • Idealized influence—the degree to which the leader provides a role model for high ethical behavior, instills pride, and gains respect and trust.


The contingency theory of leadership arose from the realization that, given the various theories of leadership that exist, it’s unlikely that there is a single, most effective leadership style. Rather, contingency theory focuses on the context and the situation, stating that leadership styles should be modulated and adapted accordingly, says Mind Tools.

For example, a leader might use a transactional approach with certain employees who are highly motivated by money and other such extrinsic benefits, but the leader might use a transformational approach to motivate a different group of employees. The work or project in question also plays a role; when team members are engaging with a project they’re very familiar with, a leader might approach the project in a laissez-faire way, allowing the employees to leverage their own expertise. However, when working on a new, unfamiliar project, the leader might take a more direct hand in decision-making, switching to a democratic or even autocratic mode of leadership.

Learn to Be a Great Leader

With Rivier University’s online business degrees, you can learn the skills you need to effectively lead a team or company. Develop knowledge of the theories of leadership and ways to put them into practice, so that you can manage your team in a style that maximizes success. Rivier’s online programs allow you to learn in a flexible, dynamic environment that works with your schedule.