By looking beyond profit, servant leaders benefit employees, communities and the bottom line

Despite the longstanding notion that businesses exist primarily to generate profit, more and more organizations are adopting a new vision: servant leadership, in which leaders prioritize multiple stakeholders and improve society, while prospering financially.

Research led by James Lemoine, assistant professor of organization and human resources in the School of Management, shows how major companies are using servant leadership to benefit teams, the community and the bottom line — and how other executives can become servant leaders themselves.

“Fifty years ago, when retired AT&T executive Robert Greenleaf introduced the concept of servant leadership, it was a radical idea — that leaders could act as servants, emphasizing employee development and societal improvement with profitability,” says Lemoine, a trustee for the Greenleaf Center for Servant Leadership. “But since then, research has consistently shown that a broad stakeholder focus by leaders is the best path for business performance.”

In a paper published by Business Horizons, Lemoine and his co-authors aggregated more than 200 published articles to demonstrate how servant leadership positively impacts five key stakeholders: employees, customers, suppliers/partners, the community and shareholders. In addition, they identified behaviors managers should embrace to implement servant leadership at work.

Here are their key findings for each stakeholder:

• Employees: Servant leaders’ focus on employee development boosts confidence, engagement, communication and creativity among team members, according to the researchers. They recommend leaders pay close attention to the words they use and how employees will perceive them. For example, saying “we” or “us,” rather than “I” or “you,” puts the focus on the team, rather than on any individual.
• Customers: To servant leaders, clients are valued partners, not transactions. In their paper, the authors singled out Zappos, an online retailer known for “wow experiences” with customers — and its resulting growth. To create memorable interactions, they suggest giving employees autonomy to develop solutions to customer issues, which research shows will generate trust and goodwill among employees and enable them to act swiftly to better serve customers.
• Suppliers: With external partners, servant leaders act fairly and ethically, even when it’s not mandated by law or industry standards. The researchers concluded that, when possible, working with suppliers and vendors — rather than treating them as adversaries — resulted in better outcomes for all. “To create an ethical culture, leaders must explicitly discuss what is appropriate, and what’s not, within their firm,” Lemoine says.
• Community: According to the paper, a key factor that differentiates servant leadership from other approaches is its focus on society. “Greenleaf argued the world could only become a better place if businesses worked to make it happen,” Lemoine says. “And, when they do, research shows businesses will reap rewards, generating goodwill and improving the ability of communities to support them.”
• Shareholders: Alongside these other concerns, servant leaders still focus on economic performance — with great success. The researchers demonstrated how servant leadership improved results across the board, boosting firm, operational, team and individual performance.

Lemoine co-wrote the article with Nathan Eva, senior lecturer, Monash University Business School; Jeremy D. Meuser, assistant professor of management, University of Mississippi School of Business Administration; and Patricia Falotico, CEO emeritus, Greenleaf Center for Servant Leadership.