A powerful leadership idea you can use today

In today’s complex and fast-evolving business environment, leaders must navigate the tension between empowering teams with autonomy and ensuring consistency. This is especially important in accounting and finance roles where compliance, ethics and performance intersect.

One approach involves leading with principles; the other with prescription. The most effective leaders blend both depending on context, team capability and organisational culture.

Differences in approach

A principle-based approach grants individuals the agency to make decisions about how they undertake a task, says leadership expert Dr Michelle Gibbings.

“When you’re working with principles, you’re permitting a level of freedom. You’re saying, ‘this is where we need to get to, but there is autonomy in terms of how you get there — with values, ethics and professional standards serving as guidelines’.”

On the other hand, a prescriptive model lays out what needs to be done and precisely how to do it. “It is more tightly controlled,” Gibbings says.

Executive coach Dr Tanvi Gautam likens the distinction between the two to the difference between a blank canvas and a paint-by-number kit.

“On a blank canvas, an artist has the freedom to paint the canvas with the palette given to them, whereas a paint-by-number specifies which colour goes where,” she says. “There is beauty in both approaches. Principle-based leadership empowers teams to innovate within value-based guardrails, while prescriptive leadership ensures consistency through detailed guidance.

Principle-based approaches are adaptive and context-sensitive, whereas prescriptive methods prioritise standardisation and predictability.”

Gibbings agrees there is “a time and a place” for both principles and prescription.

“Leadership is contextual,” she says. “You must understand the context in which you are working to establish the best approach to adopt.”

Content is key

Gibbings says leaders should consider three factors when determining which leadership model to employ: the level of risk, the skill of the individuals or teams involved, and the operating dynamic in which the work is being undertaken.

“It is about understanding your context, your team and their capabilities,” she says.

Prescription suits situations which require a hands-on approach.

“When you’re working in a high-risk, high-stakes crisis scenario, a directive approach can be effective because you are looking for efficiency and real clarity given the time pressure and the significance of the situation,” Gibbings says.

An inexperienced employee faced with a complex task also benefits from the scaffolding offered by prescriptive leadership.

A principle-based approach, meanwhile, is preferable in circumstances where autonomy is welcome.

“In a highly skilled team working in an environment where the operating context is known, a principle-based approach can be really effective,” Gibbings says. “It shows trust and builds a sense of dynamic teamwork and connection, which in turn increases engagement and elevates performance. People think, ‘I feel trusted, so therefore I will work harder’.”

When to use each style

Gautam recommends asking a series of questions to assess important factors like risk, resources and capabilities.

“What is your risk tolerance and is the risk worth taking? Do you have the resources to recover if the risk backfires? Does the employee have the capability to undertake value-based decision-making or do they need more support?”

Culture must also be taken into account, she says. “Does the culture understand the upsides and downsides of each approach? And, importantly, will an individual be penalised for colouring outside the lines?”

This type of assessment can reveal gaps in a team’s capabilities.

“It might show that I need to upskill my team to improve decision-making and their understanding of the nuances and complexity of the work that we are doing, in order to move from a prescriptive approach to a more principle-based approach,” Gibbings says.

The ability to switch between the two models is a skill that leaders must develop to be effective, Gautam says. “A leader has to have the capability to enact both styles and to create teams that can run with both approaches as well.”

Prescriptive leadership preconditions

With its reliance on rules and regulations and emphasis on regulatory compliance, prescriptive leadership requires specific preconditions to be effective and equitable, executive coach Dr Tanvi Gautam says.

These include the following:

• Equal access to information: Everyone receives the same detailed guidance and training.
• Standardised evaluation: Performance is measured against consistent, predetermined criteria rather than subjective judgement.
• Predictable consequences: Similar actions produce similar outcomes, regardless of who takes them.
• Transparent processes: Decision-making follows visible, consistent logic that everyone can understand.