WORDPOWER

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Servant Leadership Theory: Opportunities for Additional Theoretical Integration1

Scott G. Heyler2 A ssistant Professor o f M a n a g em en t

U. S. Air Force Academy scott.heyler@usafa.edu

Jo h n A. Martin Associate Professor

Wright State University john.a.martin@wright.edu

The term servant can evoke strong feelings, both negative and positive. Whereas there are negative connotations associated with the term, such as being passive or indecisive (van Dierendonck, 2011), the concept of serving others is generally an optimistic and positive one. In organizations, the idea of a servant is normally applied to the employee. Servants in an organization take care of high-powered CEOs and other important people. Indeed, although many associate the idea of service with this viewpoint, servant leadership theory “inverts the pyramid” of the organization such that organizational leaders are serving the other members of the organization. Over the past several decades, the concept of servant leadership has emerged as a dynamic form of leadership associated with a positive impact on organizations. According to Liden el al. (2014), global trends such as the increasing size of the service sector as well as increased competition to the point that managers need to utilize leadership approaches that develop employees to their full potential, makes it imperative to move away from autocratic leadership styles and toward leadership styles that are “more personal, individualized, and cooperative” (Liden et al., 2014: 1447).

1 Acknowledgments: The authors would like to thank Achilles Armenakis and Dave Ketchen for dieir thoughtful feedback on this manuscript. 2 Opinions, conclusions and recommendations expressed or implied within are solely those of the authors and do not necessarily represent the views of the U.S. Air Force Academy, USAF, the DoD, or any other government agency.

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Recently, empirical research has shown the benefits of servant leadership in various contexts such as nurse managers (Neubert et al., 2016), organizational learning (Choudhary et al., 2013), and lower follower withdrawal in terms of turnover intentions and increased follower helping behavior (Hunter et a l, 2013). Also, practical examples abound of servant leadership. For example, TDIndustries, ranked 44th in Fortune Magazine’s 2017 Best Places to Work For (Fortune, 2017), has embraced servant leadership principles for several decades. Not only do supervisors provide suggestions to subordinates on areas for improvement, subordinates provide feedback to supervisors on areas where they can improve. Indeed, one question on all evaluations states, “How am I doing as a Servant-Leader?” (Sipe and Frick, 2009: 169). Former AlliedSignal CEO Larry Bossidy suggested that leaders will not remember quarterly performance results once one retires; rather, “What you’ll remember is how many people you developed. How many people you helped have a better career because of your interest and your dedication to their development” (Hunter, 2004: 50). As a final example, Southwest Airlines regularly appears on Fortune’s Best Companies to Work For. According to Ruschman (2002), Southwest is successful because they are employee-driven and they do things such as have their leaders spend one day in Southwest’s flight operations each quarter - during these days, Southwest’s leaders perform tasks such as working in flight reservations or loading baggage (Ruschman, 2002).

The term “servant leadership” was first created by Robert Greenleaf in the early 1970’s, and his thoughts and a definition of the theory were published later in the decade (Greenleaf, 1977). Servant leadership has been described as an altruistic calling due to “a leader’s deep-rooted desire to make a positive difference in others' lives” (Barbuto and Wheeler, 2006: 318). The servant leader is one who chooses first to serve and then as an outpouring of that desire comes an aspiration to lead others (Greenleaf, 1977). Servant leadership theory is different from other leadership theories, such as transformational leadership. For example, servant leadership “focuses on a desire to serve and preparing others to serve as well, whereas transformational leadership emphasizes a desire to lead and inspiring followers to perform well” (van Dierendonck et al., 2014: 546), The servant leader sees subordinates, or followers, as the main reason for being in the position and wants to do everything in his/her power to ensure they grow (Luthans and Avolio, 2003), are developed and that they eventually become servant leaders themselves. Greenleaf states that the best test of whether a person is a servant leader is, “Do those served grow as persons? Do they, while being served, become healthier, wiser, freer, more autonomous, more likely themselves to become servants?” (Greenleaf, 1977: 13-14).

Recently, servant leadership has gained significant traction in the literature. Some reasons include that servant leadership “describes a comprehensive approach to leading” (Liden et al., 2015: 255), it explains additional variance beyond other leadership theories such as transformational leadership and leader-member exchange (Liden et al., 2015), and because it helps explain individual (e.g., van Dierendonck et al., 2014), group (e.g., Schaubroeck et al., 2011), and organizational (Peterson et al., 2012) outcomes. Further, because servant leadership suggests that one avoid their self-interest (O’Reilly et al., 2014), it is viewed as an antidote to unethical behavior. Although the theory of servant leadership is well established in the literature, the authors think there are opportunities to test it in different theoretical environments by integrating it with other theories. Thus, their primary research question is, “How can servant leadership

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theory be strengthened through additional theoretical integration?” Additional integration with other management theories offers the opportunity for scholars to test the boundary conditions of not only servant leadership theory, but other theories as well. Thus, the purpose of this paper is to examine the theory of servant leadership as it relates to several different management theories. In some cases, servant leadership fits well into the theoretical framework (e.g., stewardship theory), whereas in other cases, servant leadership may serve as an antidote to some of the theories’ main tenets or assumptions (e.g., agency' theory). The authors will examine several of these cases to determine how the concepts of servant leadership can be utilized to best facilitate additional studies. One benefit of doing so, for example, could help scholars and practitioners understand how to increase organizational performance. In summary', good leadership is critical to the success of organizations. Servant leadership is a leadership style that can have a significant positive impact on organizational outcomes. However, there has been little discussion that the authors have found in the literature regarding how the servant leader can help organizations succeed when juxtaposed with the challenges described by the management theories that are covered in this article.

SERVANT LEADERSHIP

Before the authors begin to examine how servant leadership theory fits with other management theories, it is important to understand the main characteristics of the servant leader. One of the first characteristics that Greenleaf (1977) describes in a servant leader is listening. Epictetus famously said, “We have two ears and one mouth so that we can listen twice as much as we speak” (Epictetus). Often times leaders are so intent on communicating their vision to others and “getting the message out” that they fail to listen to those with whom they work to understand what their needs, challenges, and abilities are. Greenleaf (1977) contends that only a natural servant will respond to a problem by listening first, and Spears (1995) suggests that listening helps leaders understand the will of their followers.

Imagination and acceptance are two other important qualities a servant leader exhibits. Imagination allows the leader to connect their ideas with the follower’s own experience (George, 2000) and thereby drives the follower to become more involved and committed to the effort. Servant leaders are also knowm to always be accepting and empathetic towards those in their sphere of influence. They accept a person for who they are and yet they still refuse to accept a level of effort that is not equal to a subordinate’s capabilities, in part because servant leaders aim to foster an environment of trust (Ferch, 2005). This balance of accountability and care is unique to the servant leader (Greenleaf, 1977).

Foresight is another ability that is required of the servant leader. The ability to look at the current situation and effectively envision possible future outcomes is an area where leaders need to be effective. However, the servant leader has a responsibility to those they lead and owes it to them to ensure they are adequately prepared to meet future challenges (Greenleaf, 1977). The servant leader must be focused on the current situation while at the same time seeing the present as a piece of the larger environmental context that the organization is a part of. Thus, the better the leader is at putting all of the pieces of the puzzle together, the more successful the leader and the organization will be.

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The ability to persuade others to their point of view is another important ability that a servant leader must possess. The servant leader is focused on showing subordinates the rightness of their way of thinking and convincing, rather than coercing them, to that way of thinking. The ability to persuade requires patience, persistence, and confidence that the leader’s way is the best approach to a given situation (Greenleaf, 1977). When a servant leader is able to persuade their subordinates to their way of thinking, the changes that are made are much more likely to be enduring since subordinates will accept it as their own (Greenleaf, 1977).

The ability to conceptualize is a final characteristic servant leaders are thought to possess. One must be able to see a vision for the future and then be able to share that vision with others in a way that they can understand and become excited about (Greenleaf, 1977). Big changes come from big ideas and servant leaders need to be able to develop these ideas and then communicate them effectively to their subordinates. If the idea is enduring enough, it will inspire followers to get behind it and maximize their efforts in order to achieve it.

Although Greenleaf (1977) suggested ten characteristics of servant leaders, researchers have identified as many as 44 characteristics of servant leadership; recently, research (see van Dierendonck, 2011, for a review) suggested these overlapping characteristics can be (imperfectly) boiled down to six of the most important characteristics of servant-leader behavior. These include empowering and developing people, humility, authenticity, interpersonal acceptance, providing direction, and stewardship (van Dierendonck, 2011).

The description given above provides a general understanding of who a servant leader is and what qualities they need to possess in order to successfully lead their organization. Whereas recent comparisons of servant leadership theory to other leadership theories exist, the authors are not aware of studies that examine the opportunities and challenges to integrate servant leadership with other management (non-leadership specific) theories. Next, the authors examine several well-known management theories and examine how servant leadership theory can be integrated into those theories. The information in Table 1 provides an overview of the theories the authors discuss and how they interact with the concept of servant leadership.

Agency Theory

As organizations transition from entrepreneur-owned firms, where owners reap all the rewards from their efforts, to modern corporations, where shareholders (principals) need to hire professional manager/CEOs (agents) to run the organization’s day-to-day operations and such agents only share a portion of the principal’s profits, an agency problem is created (Jensen and Meckling, 1976). Agency theory is, “... concerned with two problems that can occur in agency relationships. The first is the agency problem that arises when (a) the desires or goals of the principal and agent conflict, and (b) it is difficult or expensive for the principal to verify what the agent is actually doing. The second is the problem of risk sharing that arises when the principal and agent have different attitudes toward risk." (Eisenhardt, 1989: 58). When organizations are faced with this issue, they must develop ways to monitor the agent and ensure that their actions are in line with the principals’ (shareholders and others) desires.

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The servant leader can significantly reduce the agency problem in organizations. This is because the servant leader is much more concerned with others’ well-being than their own. Servant leaders have humility and put the needs of others first (Greenleaf, 1977). Authenticity is also a servant leader characteristic - servant leaders do what is promised and are honest (Russell and Stone, 2002). Also, servant leaders exhibit the characteristic of stewardship. This is the most important characteristic as it relates to agency theory because servant leaders put the organization’s needs before their own needs and self-interest (Block, 1993; Spears, 1995). As a result, servant leader agents will desire to know what the principal wants and are likely to ensure their organization will strive to achieve those goals. This is not to suggest that servant leaders do not have personal financial goals and aspirations, but rather they will be more aligned with principals compared to self-serving leaders.

The servant leader can also combat the problems of agency as it relates to subordinates. As mentioned above, servant leaders are focused on the well-being of their subordinates (Luthans and Avolio, 2003). Thus, subordinates who work for servant leaders are much more likely to feel as though their individual needs are being met and that the organization cares about their well-being. This allows them to focus on their jobs and on achieving organizational goals, rather than worrying about how to take care of themselves. Servant leaders also have an ability to persuade others to their point of view. Thus, servant leaders will be able to convince subordinates that their way (and by extension, the organization’s goals) is the best for all involved and be able to get the subordinates moving in the right direction towards achieving organizational goals.

Another main attribute of servant leaders is their desire to inspire others to become servant leaders. In effect, the behaviors of servant leaders are contagious and will eventually spread throughout an organization and improve it over a period of time. As more servant leaders are developed within the organization, the benefits of their efforts will be felt in every area. Employees will be more satisfied in their roles and also more likely to perform organizational citizenship behaviors towards the organization and their leaders as a result of their desire for reciprocity (Vidyarthi el a l, 2010).

Servant leadership selves as an effective way to reduce the agency problem within an organization. This, in turn, helps the organization reduce its costs because the entire organization is in alignment with shareholder desires. One of the main assumptions of agency theory is that organizations need to develop governance mechanisms that reduce the problem of agency (Eisenhardt, 1989). These mechanisms, which focus on monitoring and incentive mechanisms (Walsh and Seward, 1990) can be expensive to organizations; however, if a servant leader is present, they might be able to reduce or eliminate the need for some of these mechanisms, beyond what is legally required, and therefore it can be beneficial to organizational performance and importantly, shareholder returns. As a result, the authors predict:

Proposition 1 - Organizations tha t employ servant leader CEOs will incur fewer corporate governance costs, which will result in higher organizational performance.

Stewardship Theory

A steward is an individual “...whose behavior is ordered such that pro- organizational, collectivistic behaviors have higher utility than individualistic, self- serving behaviors” (Davis et al., 1997: 24). The steward (e.g., CEO) and the principal

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(e.g., shareholders) might have different goals at times, but the steward will place a higher value on cooperation than their self-interest in those situations. The main goal of any steward, according to stewardship theory, is to focus on whatever is in the best interest of the organization and not be directly concerned about his/her own self-interest (Davis et al.. 1997).

There are many parallels between the concepts of servant leadership and stewardship theory. Both are outward focused and interested in the needs and goals of others. “The steward realizes the trade-off between personal needs and organizational objectives and believes that by working toward organizational, collective ends, personal needs are met” (Davis et al., 1997: 25). The servant leader sees the situation in a similar fashion. They feel fulfilled when they are able to serve others and help them achieve their desired goals (Barbuto and Wheeler, 2006). Servant leaders will deem themselves successful when they have assisted and inspired others to improve, to the point of retreating “into the background when a task has been successfully accomplished” (van Dierendonck, 2011: 1233).

Instead of boards of directors having to focus on developing structures that monitor and control their organizations, they can instead focus on empowering employees and facilitating their development (Davis et al., 1997) when a steward or servant leader is in charge. Some research suggests that when CEOs have duality as CEO and board chair, this will result in a higher return to shareholders (Donaldson and Davis, 1991). Thus, CEOs who are viewed as stewards of their organizations and allowed a great deal of autonomy in leading them will be more likely to create a higher return on investment. This will also be the case when the CEO is not given high levels of contingent-based performance compensation (i.e., stock options and stock ownership). Therefore, in contrast to agency theory, stewards are able to focus on organizational goals and drive higher performance because of their commitment to the organization over oneself.

Servant leaders function in much the same way. Their focus is also other-centered and they spend their time trying to develop others and serve them in whatever way makes them more effective (van Dierendonck et al., 2014). When a leader is a servant first, the organization does not have to be concerned with monitoring self-serving behaviors of that leader to ensure they are working towards organizational goals. Their focus on others ensures that they are looking out for subordinates who can directly affect the organization and its success. Thus, servant leaders appear to be a near-perfect match for the notion of steward in particular, and this apparent alignment will lead to better firm performance. Accordingly, the authors suggest:

Proposition 2 - Organizations that employ CEOs who are both servant leaders and stewards will experience an increase in organizational performance.

Upper Echelons Theory

Hambrick and Mason (1984) describe the importance of the values and beliefs of the members of an organization’s dominant coalition (i.e., top management team) in its performance outcomes. Although upper echelons theoiy focuses on easily observable demographic characteristics that are compared with firm performance data, the authors have described a separate set of servant leadership characteristics, which, if applied to members of an organization’s dominant coalition, might also yield a positive relationship with firm performance.

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Hambrick and Mason (1984: 196) assert that, “...the cognitive bases, values, and perceptions of upper level managers are not convenient to measure or even amenable to direct measurement.” However, Russell and Stone (2002) developed a model and Liden and colleagues (2008) empirically tested a model of servant leader characteristics, which closely parallel the cognitive values described in Greenleafs (1977) original article. Russell and Stone (2002) describe nine functional attributes of a servant leader that are measurable, including vision, honesty, integrity, trust, service, modeling, pioneering, appreciation of others, and empowerment. Recently, Liden et al. (2008) tested nine similar factors and found seven of them to be predictive of servant leadership. They are emotional healing, creating value for community, conceptual skills, empowering, helping subordinates grow and succeed, putting subordinates first, and behaving ethically.

Whereas Hambrick and Mason (1984) used observable characteristics in order to predict what upper echelon teams will do, the promising insights gained from recent research (Liden et al., 2008; Russell and Stone, 2002) suggests researchers will be able to base predictions on the actual values of the dominant coalition members instead of easily observable characteristics (e.g., age, functional background, education, socioeconomic upbringing) (Hambrick and Mason, 1984). This will give researchers a more accurate prediction of behavior, because the cognitive values are much closer to an individual or group’s decision-making process. For instance, a person’s level of integrity should be a better predictor of their decisions than their age or education level.

When one or more servant leaders serve together in an organization’s dominant coalition, it is likely that the organization will be positively impacted. Liden et al. propose that, “...servant leadership, aggregated to the group-level also relates to key individual outcomes. In essence, the authors contend that the pervasiveness with which leaders engage in servant leader behaviors across followers in their work groups influences each individual in that work group to be more committed to the organization, to perform at higher levels, and to be more active in serving the community in which the organization is located.” (2008: 164) Accordingly, it stands to reason that when the dominant coalition of an organization includes servant leaders, this will lead to increased organizational performance from a large portion of the organization’s employees.

Because of its ability to spread from superior to subordinate, servant leadership has the ability to significantly impact the culture and performance of an organization as well. As Russell and Stone (2002) propose in their model of servant leadership, those qualities (e.g., vision, honesty) will lead directly to improved organizational culture and then to increased employee attitudes and performance. Further, a study of 815 employees and 123 immediate supervisors found that servant leadership positively influences organizational citizenship behavior (OCB) (Walumbwa et al., 2010). Higher levels of OCBs can lead to higher organizational performance. If the dominant coalition described in upper echelons theory is comprised of servant leaders, there is a distinct possibility that the organization will be positively changed by their presence and impact. Thus, the authors offer:

Proposition 3 - When an organization’s top management team is populated by a majority of servant leaders, organizational performance will increase.

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Institutional Theory

There are two opposing ways in which servant leadership and institutional theory may interact. On the one hand, servant leaders are not as focused on the external environment as other leaders. They tend to focus more on their subordinates by emphasizing both collaboration and creativity among their employees (Hunter et a l, 2013). As a result, they may be less influenced by their industry competitors and less susceptible to the isomorphic pressures described by institutional theory (e.g., DiMaggio and Powell, 1983). On the other hand, a servant leader-led organization may be so influential as to drive isomorphic tendencies within its industry. If the servant leader’s organization is successful, other companies in the industry are likely to follow their lead and pattern themselves after the original organization based on a desire for legitimacy or due to mimetic pressure as described in the institutional theory literature. The authors will look at both aspects and speculate about their possible implications.

Meyer and Rowan (1977) describe institutional theory as, “...organizations are driven to incorporate the practices and procedures defined by prevailing rationalized concepts of organizational work and institutionalized in society. Organizations that do so increase their legitimacy and their survival prospects, independent of the immediate efficacy of die acquired practices and procedures.” In other words, organizations feel pressure to become like other organizations in their industry either to gain legitimacy or because they do not have any original ideas on how to organize.

It is proposed that servant leaders do not succumb to this pressure because of the nature of their leadership style. Two of the mechanisms of institutional isomorphic change proposed by DiMaggio and Powell (1983) are coercive and mimetic pressure. Coercive pressure comes from outside organizations and attempts to force organizations to become more like others in its industry. Servant leaders are less likely to be impacted by these pressures because their focus is on others in the organization - such as on relationship formation with employees, employee empowerment, and assisting in employee growth (Ehrhart, 2004), rather than on their competitors or others in their industry. The servant leader’s main goal is to improve the well-being of their subordinates, customers, and community. They are not sw'ayed by pressure to conform to industry norms solely so the organization can be deemed legitimate or to acquiesce to external pressure. Their foundadonal underpinnings allow them to stand against this pressure.

An example of this is the case of Chick-fil-A restaurants being closed on Sundays. The trend in the fast food industry is to be open seven days a week and sometimes twenty-four hours a day. However, S. Truett Cathy, as a servant leader, has followed his values and kept the company’s franchises closed on Sundays. Traditional wisdom suggests that they are giving up substantial income, but they continue to fight against the isomorphic trend and have had success doing so.

Mimetic pressure for isomorphism is said to come when organizations are uncertain or when goals are unclear (DiMaggio and Powell, 1983). A servant leader’s organization is unlikely to find itself in such a position because of their foresight, wisdom, and persuasive mapping. The wisdom described by Searle and Barbuto (2011) is such that the leader can pick up cues from the environment and recognize the implications of their actions before they are taken. This ability allows the servant leader to avoid mimetic pressures to imitate others. Therefore, the authors suggest:

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Proposition 4a - Servant leader-led organizations are less likely to be impacted by isomorphic pressures fro m their industries.

In the same way that servant leaders can resist the temptations of isomorphism, they also drive others in their industry to become isomorphic in their direction. Assuming that a servant leader meets the requirements laid out by Greenleaf (1977), the organizational characteristics that emerge are likely to gain attention. This attention will lead to public endorsement and that will drive other organizations to adapt to be more like the subject organization. One study showed that organizations become more legitimate when they are strategically isomorphic (Deephouse, 1996). As a result, an organization that is approved of by the public is more likely to be mimicked so that other organizations in its industry can reap the benefits of legitimacy. The authors predict:

Proposition 4b - Servant leader-led organizations are more likely to be imitated by other organizations in tlieir industry as a result o f mimetic isomorphic pressure.

Transaction Cost Theory

Williamson (1981) describes the transaction cost approach as an economic way of examining an organization where transaction costs are the friction in an organization’s engine that leadership makes every effort to reduce. Williamson (1981) discusses the transaction costs associated with managing employees, which can be minimized by organizing employees in a way that is most effective for all involved. Servant leaders can play a positive role in these cases.

Williamson’s (1981) relational team is characterized by a “clan” mentality and the human assets are firm specific. In these teams, it is critical for the organization to provide high levels of indoctrination to ensure the team members understand the goals of the organization and are committed to its success (Williamson, 1981). These types of teams and employees are best led by a servant leader who is committed to their growth and development. Williamson (1981) discusses how difficult these teams are to lead and manage, but the characteristics of servant leadership make it an excellent match. The servant leader can persuade team members to go along with their ideas (Laub, 1999) and share a compelling vision of the future. Servant leaders can also overcome employees’ concerns about being exploited by being committed to their growth and development and focusing on their needs. Indeed, research suggests that servant leaders form bonds with their followers because of the time they invest in quality interactions (Ehrhart, 2004). When an organization puts a servant leader in charge of a relational team, it will reduce transaction costs and improve organizational performance. Therefore, the authors suggest:

Proposition 5 - When organizations are r u n by servant leaders, organizational transaction costs will be reduced due to the leaders’ focus on the well-being o f employees.

Resource-Based Theory

Even though the concept of servant leadership has garnered significant attention in the management field, the servant leader in the corporate world is still somewhat

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unique. From a resource-based theory perspective, a servant leader is a resource that can provide a sustained competitive advantage because they are valuable, rare, imperfectly imitable, and do not have a direct substitute (Barney, 1991). The servant leader brings inspiration to an organization and this makes them valuable. As discussed, servant leaders are not yet common in the corporate world; hence, they are rare. The concept of a servant leader is counter to the bottom-line focus of many organizations and so it will be difficult for other firms to imitate what a servant leader-led organization does. Also, because servant leaders are not commodities - they gain their firm-specific understanding by immersing themselves in the daily operations of the firm - they are imperfectly imitable. Finally, a servant leader cannot be replaced by another type of leader such as a transactional or transformational leader because their focus will be different. This makes them non-substitutable. In summary, servant leaders possess the four characteristics that Barney (1991) suggests can help firms achieve a sustainable competitive advantage.

Greenleaf (1977) describes the business manager in a servant leader-led organization’s response to the question, what are you in business for? His response is, “I am in the business of growing people - people who are stronger, healthier, more autonomous, more self-reliant, more competent. Incidentally, we also make and sell at a profit things that people want to buy so we can pay for all this...we are distinguished.. .because the best young people want to work for us.. .and they never want to leave.” (Greenleaf, 1977: 146-147) This type of organization will thus possess a resource-based strategic advantage and will be successful as a result. Accordingly, the authors predict:

Proposition 6 - Servant leaders are a valuable, rare, imperfectly imitable, an d non- substitutable resource that a n organization can use to achieve a competitive advantage.

CONCLUSION

The concept of servant leadership began as an ideal described by Robert Greenleaf more than three decades ago. Since that time, the construct has been evaluated, tested empirically, and defined more robustly. In this article, the authors have offered several propositions regarding how the concept of servant leadership can be applied to some of the most well-known management theories and often times have a significant impact on organizational performance. Future research can take these ideas and apply them to find out if the evidence suggests they are true. The servant leader may have the ability to affect organizations in a significant manner that improves individual, group, and organizational performance, and also makes those associated with the organization better than they were before. If that is the case it could revolutionize the way organizations are managed in the future.

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