6 Corporate Governance Styles (And Why They Matter)

Every element of an organization must be carefully designed and structured – even leadership. Many businesses use strategies to ensure that leadership is organized and moving toward a common goal. Some of the most popular strategies fall under the umbrella of organizational management, which is a field concerned with planning and managing people and resources to achieve success.

Organizational management styles

In the past, many organizations have allowed individual leaders to find their own organizational leadership style, but recently, many companies are entering managers and executives to lead a more consistent and integrated style of corporate management. A study of corporate governance reveals that there are several styles for businesses to choose from:

Autocratic administration

An autocratic organizational management style involves a single leader with unlimited power. This executive takes responsibility for all important decisions, usually without input from lower managers or employees. Often, in automated organizations, the leader sets clear procedures and policies, and expects all employees to follow them without question.

Although autocratic rule is out of favor, it still has some important applications. In organizations where control is more important than innovation—where personnel must use precision and discipline to achieve a certain result—autocratic organizational management can shine. In addition, autocratic management is often employed in organizations with limited training and continuous management is essential.

Bureaucratic management

A bureaucracy is a complex organization with multilayered systems and processes, and the bureaucratic organizational management style involves creating and managing those systems and processes in a business setting. Companies that maintain this style of management will have a clear hierarchy of expectations for different levels of employees, and managers are tasked with enforcing rules to ensure that expectations are met.

Bureaucratic management is another style that is generally fading from popularity. Still, organizations that tend to process a lot of information or need to keep a lot of documents may benefit from bureaucracy.

Democratic administration

The democratic organizational management style is similar to the bureaucratic management style with one important difference: leaders who use this style welcome input from all employees. Democratic organizations tend to encourage all forms of cooperation and teamwork, and open communication between employees and managers is common.

As this leadership style tends to improve employee morale and reduce turnover, more and more organizations are looking to adopt a democratic management style. In addition, the support and innovation provided by the workforce can create competitive advantage for organizations. Still, it is not easy to maintain democratic management as the leaders must understand how to effectively use the strengths and ideas of each employee.

Management laissez-faire

From the French, laissez faire literally means “let it be,” and in English, the word refers to a non-interventionist attitude or policy. Subsequently, laissez-faire organizational management refers to a leadership style in which leaders do not involve themselves much in decision-making or operations. Often, executives and managers in these organizations simply hold onto their titles and expect their employees to manage themselves with proper guidance and resources.

Although rare, laissez-faire organizations do exist. This style of organizational management works especially well for companies that employ a lot of experienced employees who have a lot of experience and don’t need constant management. In fact, leadership confidence forces employees to perform at higher levels in order to achieve greater success for the organization.

Management styles

Management of movement

Although it does not have the formal name of other organizational management styles, it is a less viable management style. As the name suggests, this style involves leaders walking through their employees’ spaces, maintaining high levels of interaction throughout the workday. Throwing the name around may make it sound like an aimless and ineffective organizational management style, but in reality, it applies especially to team leaders and project managers who act as team members.

By moving around and maintaining constant communication, managers can receive feedback, offer suggestions, provide encouragement, and reinforce the company’s goals and values.

Patriarchal management

A paternalistic organizational management style tends to view the company as a family. One or more leaders may act as the head of the family, but they set policies and maintain a culture that resembles a traditional family environment. Typically, leaders invest heavily in the personal and professional development of their employees, putting employee needs ahead of profits.

In some patriarchal organizations, employees feel more loyal and motivated to do good work because of the strong relationships they develop with their superiors and peers.

Gone are the days when a company trusted its leaders to physically develop a sound management strategy. With the knowledge and skills acquired in corporate management courses, business leaders can determine the best leadership style for their organizational culture.

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