Zappos CEO Tony Hsieh is an example of a servant leader. (Photo By Andy Cross / The Denver Post)

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What can businesses do to boost their chances of making a profit in this challenging economic climate? Hire and develop managers who put themselves at the service of their teams, rather than the other way around – in other words, employ servant leaders

According to new research from Emlyon Business School in France, not only does servant leadership improve employee morale, it also increases company profit. The research is the first paper to make this finding since the general consensus previously was that while servant leadership was good for people management and employee morale, it did not positively impact on company performance or profits. 

“There has always been the suspicion that servant leaders have better performance because they may be ‘nice’ to their teams, which could be at the company’s expense,” says Vincent Giolito, professor of strategy at Emlyon Business School, who conducted the research alongside colleagues from the University of Illinois, the Rotterdam School of Management, Erasmus University, and the University of Auckland. 

He adds: “By showing servant leadership as conducive to profit, we may help resolve a fundamental tension between employees and shareholders.”

The research is based on a study of 55 similar stores in a single company within a large metropolitan area in France. In this particular setting, the average growth for the stores was negative. Yet, of the 22 stores that achieved positive profit growth, 18 had managers rated above average on servant leadership.

Giolito says that servant leaders are often defined by seven different behavioural dimensions. These are: caring for each individual employee when he or she incurs setbacks in their professional or even personal life; displaying conceptual skills; empowering people, providing the employee with latitude to find their own best way to work; behaving ethically and willingly helping the employee to make difficult, values-loaded decisions; putting their employees first; helping employees grow and succeed; and inviting individual followers to create value for the community, even beyond the boundaries of the organization.

He believes the study highlights a fundamental and important dimension of leadership for employees – having the capacity to get help from their managers. “This dimension might be especially important for organizations for overcoming the unprecedented challenges brought about by the current crisis,” Giolito suggests. 

The research also shows that the weaker the ‘power distance orientation’ between leaders and their followers, the stronger the influence of servant leadership in terms of flourishing employees. It therefore underlines that those leaders who are more approachable and less intimidating to their staff are likely to generate better results for their companies. As a result, the investigation demonstrates that servant leadership is beneficial for all stakeholders, including shareholders.

The term ‘servant leadership’ was coined 50 years ago in an essay by U.S. management writer Robert K. Greenleaf. A servant leader is primarily focused on the needs of others and on helping their people to develop or grow, seeing this as the route to organizational success. Well-known proponents of servant leadership in business today include Tony Hsieh, CEO of online shoe and clothing company Zappos, and Melissa Reiff, CEO of specialty retail chain The Container Store.