Are you a boss or a leader?

While people may use the words “boss” and “leader” interchangeably, those who’ve made the journey from one to the other understand the key differences.

The differences may be best explained by Douglas McGregor, an MIT management professor. In the 1950s, McGregor drew on psychologist Abraham Maslow’s hierarchy of needs — people must feel safe, loved and have esteem before they can grow — to theorize two styles of management: Theory X and Theory Y.

Theory X-style managers assume that employees have little ambition, avoid responsibility, and are only motivated by individual goals. McGregor believed that this style of management hinders satisfaction, as it ignores employees’ higher-level need for growth and experimentation.

Theory Y-style managers assume that employees are internally motivated, enjoy their work, and want to grow. With Theory Y, McGregor believed that managers could motivate employees to reach their fullest potential.

The boss versus the leader

These two theories created a clear dichotomy: the boss and the leader.

Theory X managers are bosses — they control, dominate and intimidate. Bosses fear that they’ll lose their position, so they rule with an iron fist. They often make decisions with little or no input from employees.

Bosses are also low in demand, easily replaced, and often the butt of the joke. It’s no mistake that Michael Scott, the clownish lead character of the U.S. sitcom The Office, highly values his “World’s Best Boss” mug.

Meanwhile, Theory Y managers are good leaders — they trust, teach and inspire employees. Leaders always aim for the team’s success but allow for experimentation, even failure. Leaders inspire employees to succeed and never take credit for their success — instead, leaders celebrate.

Leaders are in demand, both in life and business. To have an effective leader can make the difference between success and failure. Businesses now want true leaders who focus on how employees are led, managed and motivated. They want a leader who is part of the team, someone who creates a culture while improving the bottom line.

Are you a boss or a leader? Here are eight key differences.

1. Bosses deflect mistakes, leaders own mistakes

In “Extreme Ownership,” a leadership book by Navy SEAL officers Jocko Willink and Leif Babin, they write that the best leaders admit to mistakes, own those mistakes — even if someone on their team could be blamed — and develop a plan to recover.

“The most fundamental and important truths at the heart of Extreme Ownership: there are no bad teams, only bad leaders,” they write.

And this may serve as an alternative definition for boss: a bad leader. A boss will more often cast blame, while leaders accept responsibility. Bosses want to avoid the hot seat, but leaders thrive in the heat.

2. Bosses command, leaders teach and listen

Bosses have a “just do it” attitude. We don’t mean “just do it” inspirationally, like Nike, but rather an attitude of “I command, you obey.”

Leaders teach — they want employees to understand everything. But the best leaders realize that they’re fallible, just like everyone else, so they show humility and ask questions when they don’t know an answer. This creates a culture of two-way communication, allowing for employees to both teach and understand.

A culture of two-way communication makes leaders, employees and teams stronger. As Peter Drucker once wrote, “No one learns as much about a subject as one who is forced to teach it.”

3. Bosses micromanage, leaders trust

There’s a simple difference between trusting leaders and micromanaging bosses:

A leader trusts their employees to create and finish their own to-do list.

A boss will create their employee’s to-do list for them, hovering over their shoulder as they work through it.

4. Bosses rule by authority, leaders rule by influence

In his book “Emotional Intelligence,” Daniel Goleman wrote that “Leadership is not domination, but the art of persuading people to work toward a common goal.”

To persuade takes emotional intelligence, an ability to manage one’s own emotions, communicate effectively, have empathy with other people, as well as overcoming challenges and conflicts.

Leaders have great emotional intelligence, while bosses rule by authority. Authority may get some results, but it won’t allow employees to grow, learn and trust in the company’s mission — emotionally intelligent leaders will.

5. Bosses have big egos, leaders are self-assured

Bosses want to look good for their own bosses. Leaders trust that they’ll look fine. Instead, leaders focus on ensuring that the work is up to snuff, being humble enough to know that the next mistake, error or obstacle is always lurking.

6. Bosses think short-term, leaders think long-term

A boss is often too focused on what may happen today. Good leaders, on the other hand, think big picture.

Leaders account for the present, but they also want to be sure that their decisions are adding up to something good next month, next quarter and next year.

7. Bosses want credit, leaders give credit

A boss wants the raise, the promotion, the credit. A leader, on the other hand, wants those achievements for their team.

This trait of leaders is best summarized by Drucker in his legendary book “The Effective Executive”:

“The leaders who work most effectively, it seems to me, never say ‘I.’ And that’s not because they have trained themselves not to say ‘I.’ They don’t think ‘I.’ They think ‘we’; they think ‘team.’ They understand their job to be to make the team function. They accept responsibility and don’t sidestep it, but ‘we’ gets the credit. This is what creates trust, what enables you to get the task done.”

8. Bosses foment fear, leaders build confidence

“Drive out fear, so that everyone may work more effectively and productively,” said productivity expert Edward Deming.

But this is the opposite of what bosses do — bosses want employees to fear failure. Leaders, on the other hand, know that errors, mistakes and failure will happen as sure as the sun sets.

Instead of fear, leaders work to build everyone’s confidence while staying on the right track. One big way leaders build confidence is simply accepting reality. When something has gone awry, leaders don’t hide from the problem, nor do they fear it. Instead, they own the problem as part of reality, working with team members to solve it.

U.S. Navy Admiral James Stockdale, a former prisoner of war, embodied this trait. He once said: “You must never confuse faith that you will prevail in the end — which you can never afford to lose — with the discipline to confront the most brutal facts of your current reality, whatever they might be.”

Good leaders drive out fear. They face the brutal facts of reality and keep going.