Managers and business owners need to lead flexibly, because different employees respond to different styles of leadership in different ways. While some employees simply want to be left alone, others require a high level of feedback and encouragement. Understanding the effect that your leadership has on individuals is the sign of a competent manager.
Giving individual attention to each of your employees can improve their performance. While hard-working and ambitious employees will appreciate the attention and feedback, malingerers will also be aware that you are paying attention to them as individuals and will be more inclined to work harder. In a best-case scenario, their malingering eventually will disappear as they realize that their contributions are genuinely appreciated. While in a large corporation, managers don't have the time to deal with every situation on an individual basis, whatever individual attention you can afford to give to employees will improve both their morale and your bottom line.
A leadership style that emphasizes encouragement over demands and regulations can be very effective with a certain kind of employee. People who don't respond well to being ordered around thrive when their contributions are noted and appreciated in a positive way. Organizing talks and workshops for management in your company helps them to become more aware of the effectiveness of positive leadership styles. When leaders offer more positive feedback, and employees respond with better work, the result can be a mutually beneficial circle that results in a more content and more productive workplace.
There are certain employees who take advantage of a laid-back and encouraging leadership style. Knowing who these people are and managing them in a different way is one of the many advantages of running a small company in which you know each of your employees individually. While an authoritarian style is usually counterproductive to some extent, it might be necessary to be quite forceful with certain employees who are prone to malingering and doing poor work. Threats of demotion are not pleasant, but they sometimes work in situations where being nice does not.
Leading by Example
The best leaders are always those who do not ask something of someone else unless they are willing to do it themselves. Leading by example shows your staff that you are willing to walk the walk as well as talk the talk, and it is an effective way of building solidarity and loyalty in your organization. Good employees will be inspired by your example, and bad employees will have difficulty complaining about being asked to do something if it is something you have been doing yourself.