5 Levels of Leadership Every Entrepreneur and Business Owner Must Know

As a business owner, entrepreneur or CEO, you need to be a great leader. But what are the different levels of leadership? Which level are you at?
the five levels of leadership

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Leadership is non-negotiable.

If you plan to start, maintain and grow your business, being at the forefront, you have no choice but to be a leader.

But how good of a leader are you? Or will you be? Which of the five levels are you at?

Level 1: Positional Level

Positional leadership is where most start.

You are a leader solely by position. People follow you not because they want to but because they have to.

Being a positional leader isn’t automatically a bad thing, though. There must be some merit for you to be there in the first place. So that’s a positive.

The upside is you get to build your leadership capacity. It puts you in a better position to practice leadership but doesn’t inherently make you a leader.

The downside is that people you train will always give you the least of their effort, time, energy, and mind. You may order people around, but they’ll only ever do what is specifically expected and very little more.

The biggest mistake you can make at this level is thinking the position alone gives you the power to command.

We’ve all experienced someone in authority who operates under the idea that their title alone enables them to do as they please. But this approach seldom favours any long-term growth, loyalty or a following.

A true leader isn't characterised by their formal job title or position but rather by their influence on others. Nothing more. Nothing less.

True leaders don’t weaponise their title because they recognise it doesn’t mean anything.

Level 2: Permission Level

The key word with this stage is “relationships.”

People follow you because you are a leader that they like. This leadership level is where ‘has to’ transforms into ‘wants to’. If you’re not likeable, you’re not influential. When people around you like you and enjoy your company, they implicitly permit you to lead them.

In other words, people cling to leaders they can trust.

So, how do you get people’s permission to lead them? You build positive relationships.

What happens when we spend time with people we don’t like? It drains our energy. We end up not wanting to be there. We aren’t free or comfortable to be completely authentic.

On the other hand, spending time with friends is like recharging our batteries. We work better. We feel better. We strive for more.

Our environment matters – and that includes people too!

Level 3: Production Level

Yes. Getting people to like you and enjoy having you around is important.

But it doesn’t ‘get the job done’.

Leaders are only measured by their outcomes. “Numbers don’t lie.” Level three leaders produce results. Simply put, things happen because of you.

The key phrase at this stage is “lead by example”.

You can’t produce if you’re not productive yourself. You can’t expect others to do what you have not done or at least can’t do. They won’t take you seriously and will soon lose respect for you.

Whatever you want from them, you must first display and show it to them.

When you show your team and those around you exactly what and how it’s done, you set the standard for everyone else. Your credibility increases when you deliver results and build momentum.

From there, people will naturally want to join your team.

No one wants to jump on a train that isn't going anywhere.

You have to be that train where your actions and numbers speak for themselves, where your results speak for the direction and proof of your ability to lead effectively.

Level 4: People Development Level

A leader’s success depends upon the success of the people they are developing.

At this level, people follow you because of what you have done for them. The people on your team are the best assets you have.

The greatest resource will always be people.

The keyword for the people development level of leadership is “replication”.

It’s important to recognise that an effective team isn’t just a group of people working together. It’s the fine interrelationship between various skills and attributes.

"A good team is greater than the sum of its parts because all the strengths are fused together to balance out the weaknesses."

But, of course, every good team needs a team leader. You’re the someone who ensures everyone’s working together and heading in the right direction.

As a leader, you are responsible for identifying strengths and weaknesses to compose the team. Leaders position people relative to their interests, strengths and passions.

It’s crucial for the team that the leader never loses sight of the big picture and charts a course towards the final destination.

Level 5: Pinnacle Level

The highest level of leadership.

Level 5 is reserved only for those who invest their lives into the lives of others for the long haul.

The key word here is “reputation”.

People follow pinnacle leaders for who they are and what they represent and stand for. They create opportunities where there were none prior – and in doing so, leave back a legacy.

For this reason, this is typically achieved much later in someone’s career or industry. Pinnacle leaders influence many people, with their legacy remaining long after they come with generations to follow.

As a result, Level 5 leaders often transcend their position, their organisation, and sometimes their industry.

Pinnacle leaders are necessary for multiple reasons:

  • Firstly, having just one leader creates an organisational bottleneck. In other words, when just one person makes all the decisions, the rest of the company becomes passive and dependent.
  • Secondly, when that one leader leaves, what happens? You can’t have a ship without a captain. Before that time, it’s crucial to create a leadership culture within the organisation and empower team members to become leaders.


The Pinnacle of all you do is replicating yourself and creating other leaders who can act autonomously and develop their leaders. Effectively, you reproduce your work to infinity.

One thing to note is that you must recognise that you’ll be on different levels of leadership with other people. Someone enters your team for the first time; regardless of how much everyone else loves you or that you might be a level 4, you must start again with this new person.

What level of a leader are you? For who?

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