Final answer:
A leader who encourages group participation and builds consensus before making decisions is known as a democratic leader. This style can be effective but may cause slower decision-making processes and potential factionalism within the group.
Step-by-step explanation:
According to the situational theory of leadership, a leader following the democratic leadership style encourages participation, consults with followers, and facilitates decision making. Democratic leaders engage in consensus-building and prioritize group participation in the decision-making process. They strive to create a cooperative environment where all members have the opportunity to contribute before any actions are taken. While this leadership style tends to foster a positive work atmosphere and can lead to well-rounded decision making, it also runs the risk of slow progress due to the time necessary for building consensus. Additionally, democratic leaders may face challenges if group members become divided into opposing factions instead of finding common ground.