Does Servant Leadership’s People Focus Facilitate or Constrain Its Positive Impact on Performance? An Examination of Servant Leadership’s Direct,Indirect,and Total Effects on Branch Financial Performance

Abstract

Servant leadership’s positive effects for employees and the organization are well-documented, but servant leadership theory postulates that servant leaders prioritize people more than production. This untested supposition raises questions about whether servant leadership’s emphasis on employee support relative to goal achievement has negative consequences for a unit’s financial performance through group organizational citizenship behavior (OCB) that constrain servant leadership’s positive effect on unit performance. The resource allocation framework applied to OCBs suggests that trade-offs exist between OCBs and financial performance because both behaviors impose demands on employees’ limited time. In addition, a work group’s social norms may exert subtle forms of pressure on group members to increase their helping behaviors. This pressure may incur process loss that negatively affects financial performance. Data consisting of 546 employees from 103 bank branches within a large Midwestern community bank support servant leadership’s positive direct effect on branch financial performance; its stronger relationship with support climate than goal achievement climate; and its negative indirect effect on branch financial performance through support climate and branch OCBs that weakened servant leadership’s total positive effect on branch financial performance. Goal achievement climate was not significantly associated with branch OCBs. Theoretical and practical implications are discussed.

Keywords

servant leadership support climate goal achievement climate financial performance

Servant leadership represents an others-focused, relationship-based approach to leadership that focuses on the greater good of multiple stakeholders (Graham, 1991). It places the needs of those being led ahead of one’s own self-interests or egocentric needs (Greenleaf, 1970). Servant leadership has gained growing scholarly interest due to its positive implications for employees, teams, and organizations (cf., Eva et al., 2019; Lemoine et al., 2019; Liden, Panaccio, et al., 2014; van Dierendonck, 2011). To date, however, extant research has focused primarily on explaining why and how servant leadership impacts employee-oriented outcomes resulting in a follower-centric model of servant leadership. This focus fails to consider whether servant leadership’s follower focus facilitates or constrains its effectiveness for the organization. This gap is problematic because servant leaders have a moral obligation to enhance follower as well as organizational stakeholders’ interests. According to Greenleaf’s (1970) seminal theory, servant leadership is a leadership style that enriches all stakeholders without diminishing or depleting any of them. Theoretical and practical concerns, however, suggest that this supposition may be tenuous.

The degree to which servant leaders benefit the organization remains a subject of debate among servant leadership scholars. Liden, Panaccio, et al. (2014) expressed concern that servant leaders may not be able to benefit everyone because “all stakeholders place a claim on the servant leader’s finite time, energy, and financial resources, and there simply may not be enough to go around” (p. 362). Servant leaders’ acute attention to followers may thus preclude them from attending to organizational goals (Sun, 2013). Andersen (2009) more forcefully argued that servant leaders are exclusively follower-focused such that they “do not concentrate their efforts on attaining the goals set by the owners” (p. 13). Andersen’s assertions raise the possibility that servant leadership may have a negative direct effect on organizational performance. However, this possibility contradicts Greenleaf’s foundational proposition that servant leadership does not harm organizational stakeholders.

Greenleaf envisioned an ethic in which servant leaders place relational and supportive goals on parity with, not in competition against, financial goals. According to Greenleaf (1996), “the business exists as much to provide meaningful work to the person as it exists to provide a product or service to the customer” (p. 155). Consequently, servant leaders do not neglect production-oriented goals. Instead, they prioritize growing people more than production while accomplishing both. Stated differently, servant leadership shifts an organization’s primary emphasis from production to growing people. This relative emphasis, however, may create normative expectations that drive employees collectively to become more internally focused such that they emphasize extra-role helping behaviors rather than in-role performance behaviors. As a result, servant leadership may have a direct, positive impact on financial performance, but its overall effectiveness may be constrained by the cues it sends to employees and the behavioral trade-offs they experience. This possibility is consonant with growing concern that servant leadership may not optimally benefit the organization (Sun, 2013). Our study’s purpose is to evaluate whether servant leadership’s relative priorities facilitate or constrain its positive effect on financial performance.

Leaders’ relative priorities are reflected in what they pay attention to, model, reward, and support within their work units, which becomes embedded within the unit’s climate (Zohar & Hofmann, 2012). Climate refers to “shared meaning organizational members attach to the events, policies, practices, and procedures they experience and the behaviors they see being rewarded, supported, and expected” (Ehrhart et al., 2014, p. 69). Two climate dimensions, support climate and goal achievement climate, correspond with servant leaders’ dual obligations to benefit people and production. Support climate refers to unit members’ collective perception that the unit supports them and is interested in their welfare (González-Romá et al., 2002, 2009). Goal achievement climate describes the collective perception that unit members work hard to achieve unit goals (González-Romá et al., 2002, 2009). Examining the relative strength of servant leadership’s relationship with support climate and goal achievement climate sheds light on the veracity of Greenleaf’s (1977) postulation that servant leadership prioritizes people (i.e., employee support) more than, but not to the exclusion of, production (i.e., goal achievement). Our first research goal is thus to assess the relative strength of servant leadership’s association with support climate and goal achievement climate.

Although Greenleaf (1977) suggests that servant leaders effectively focus on both people and production, this twofold focus may create trade-offs for employees. Discretionary helping behaviors (i.e., organizational citizenship behaviors [OCBs]) and in-role behaviors (i.e., task performance) are both desirable employee behaviors but, according to resource allocation theory, they represent a trade-off in which employees must allocate limited time between relationally supportive helping behaviors and task performance (Bergeron, 2007). Trade-offs incur opportunity costs such that “spending time on one activity necessarily comes at the expense of another” (Bergeron, 2007, p. 1084). Naumann and Bennett’s (2002) study of bank employees supported this line of reasoning by revealing that work group members who spent a considerable amount of time performing helping behaviors had less time to perform in-role behaviors.

Servant leadership’s primary emphasis on modeling supportive and helping behaviors may engender a support climate that influences group members to increase helping behaviors at the expense of unit financial performance. This process is consistent with the concern that servant leadership benefits employees, but employees’ interests may not be aligned with organizational goals (Andersen, 2009). Accordingly, our second research goal is to consider whether servant leadership’s relative effect on employee support and goal achievement increases employees’ group OCBs and decreases unit financial performance, constraining servant leadership’s overall positive effect on organizational outcomes. We investigate this possibility with multisource data and a time-lagged, objective measure of financial performance. This research design is amenable to detecting negative effects between OCB and financial performance because the positive OCB—financial performance relationship—“may be artificially inflated by common-method bias and percept-percept inflation” (Bolino et al., 2013, p. 555).

Our study contributes to servant leadership theory and research in two ways. First, we examine the veracity of Greenleaf’s (1977) theoretical claim that servant leadership attends to both people and production, but it has a greater relative priority on people. This focus provides an empirical basis to document servant leaders’ relative priorities and identify a theoretical point of differentiation between servant leadership and other relational forms of leadership. Second, our study illuminates a behavioral trade-off that followers encounter as a result of servant leadership’s relative focus on people and production. This tension supports growing concerns about servant leadership’s potential repercussions and provides a more sober assessment of its overall effectiveness (Liden, Panaccio, et al., 2014; Sun, 2013). Our hypotheses are tested with multisource data derived from 103 branches of a medium-sized community bank in the Midwestern United States.

Theoretical Background

Ehrhart (2004) proposed that servant leadership consists of seven major categories of behavior, including forming relationships with and among subordinates, such as creating a sense of comradery or community among employees; empowering subordinates; helping subordinates grow and succeed, such as prioritizing employees’ personal development; behaving ethically; having conceptual skills, such as using diverse sources of knowledge to solve problems; putting subordinates first; and creating value for those outside of the organization. Liden et al. (2008) created and validated a servant leadership scale with similar content and thematic dimensions.

Servant leadership is a relationship-based approach to leadership that is conceptually distinct from other relational and moral forms of leadership. Servant leadership differs from other leadership styles with respect to its relative priority on people and production. Other follower-focused forms of leadership (e.g., consideration, empowering leadership) are explicit about leaders’ attentiveness to people but are more agnostic about their attentiveness to production. Transformational leadership has a relational component, but it is predominantly goal-focused such that it inspires followers to transcend self-interest as a means to accomplish collective goals (Hoch et al., 2018). As such, transformational leadership is more instrumental and task-focused than servant leadership. Finally, servant leadership departs from ethical and authentic leadership in its moral emphasis. Lemoine et al. (2019) suggest that the moral philosophy undergirding servant leadership is consequentialism—the moral obligation to benefit the greatest number of stakeholders without causing harm to any—whereas ethical and authentic leadership are based upon deontological and virtue-based moral foundations, respectively. Servant leadership is thus distinct in its moral obligation to concurrently focus on people and production as well as its primary emphasis on people more than production (Greenleaf, 1977). In support of the theoretical differences among servant leadership and other leadership styles, recent meta-analyses indicate that servant leadership predicts unique variance in outcomes after accounting for transformational leadership (Hoch et al., 2018) as well as ethical and authentic leadership (Lee et al., 2020).

Our theoretical model draws upon Ostroff et al.’s (2013) conceptual framework suggesting that unit leadership and unit climate impact unit effectiveness through their influence on collective employee behaviors. Climate research has traditionally focused on unit leaders as climate creators (Kozlowski & Doherty, 1989; Naumann & Bennett, 2000). Leaders are proximal representatives of the organization who communicate normative expectations to employees and reinforce these expectations by rewarding and supporting desirable behavior. Stated differently, leaders influence group members’ climate perceptions through role-modeling and reinforcement. Climate, then, constitutes employees’ shared normative expectations about behaviors that are desired, rewarded, and supported in the work unit. As such, leadership plays an integral role in the “formation and maintenance of climate perceptions” (Kozlowski & Doherty, 1989, p. 547). In support of this causal sequence, Schneider et al.’s (2005) customer-focused study found that service leadership was related to unit sales through customer service climate, unit customer-focused OCB, and unit customer satisfaction. Servant leadership research suggests a similar process through which leadership influences unit outcomes.

Extant servant leadership research indicates that servant leadership’s association with employees’ OCB is mediated by different climates such as service climate (Hunter et al., 2013; Walumbwa et al., 2010), procedural justice climate (Ehrhart, 2004; Walumbwa et al., 2010), and positive psychological climate (Ozyilmaz & Cicek, 2015). OCBs, in turn, are employee behaviors that have a more proximal relationship with financial performance than elements of a group’s social-normative context (i.e., leadership and climate). Our conceptual framework applies the leadership → climate → OCB → financial performance linkage model to examine servant leadership’s relative emphasis on people and production as they relate to the work unit climate (support and goal achievement, respectively) as well as to behavioral outcomes (OCBs and financial performance). We consider these possibilities by first investigating servant leadership’s direct effect on branch financial performance and then considering the degree to which servant leadership’s indirect effects constrain servant leadership’s overall influence on financial performance. Figure 1 depicts the hypothesized relationships.

Figure 1.

Model of hypothesized effects.

Hypotheses

Servant Leadership’s Direct Effect on Branch Financial Performance

According to Greenleaf (1977), servant leaders have an explicit obligation to maintain and improve an organization’s effectiveness. Peterson et al. (2012) argued that servant leaders work to improve important organizational outcomes because they adopt a stewardship mind-set in which they form a psychological bond with the organization, develop a long-term performance orientation, and concern themselves with the needs of the collective. These arguments are consonant with elements of stewardship theory suggesting that leaders who identify with the organization experience a psychological and motivational impetus to enhance financial effectiveness and attain stakeholders’ long-term well-being (Davis et al., 1997; Hernandez, 2012). Indeed, research indicates that leaders who identify with the organization are more likely to engage in servant leadership behaviors and subsequently improve financial performance (Peterson et al., 2012). As such, servant leaders benefit the organization because personal needs are met “by working toward organizational, collective ends” (Davis et al., 1997, p. 25). Personal need fulfillment does not imply that servant leaders work to enhance financial performance to hurt employees or “assuage an unusual power drive or to acquire material possessions” (Greenleaf, 1977, p. 13). Such a motivation would be antithetical to the seminal definition of servant leadership. Instead, servant leaders improve financial performance to serve the unit’s collective goals and enhance the organization’s ability to improve their employees’ long-term well-being (Greenleaf, 1977).

In summary, servant leaders’ affective connections with the organization motivate them to benefit the organization and thus fulfill their commitment to enhance multiple stakeholders’ well-being. Growing empirical support exists to document the positive relationship between servant leadership and unit financial performance in the technology (Peterson et al., 2012), restaurant (Liden, Wayne, et al., 2014), banking (Schaubroeck et al., 2011), hospitality (Huang et al., 2016), and transportation (Overstreet et al., 2014) industries. We thus expect that servant leadership will be positively related to branch financial performance:

Hypothesis 1: Servant leadership is positively associated with branch financial performance.

Servant Leadership’s Indirect Effect on Branch Financial Performance

Although servant leadership is expected to have a direct and discernible impact on branch financial performance, servant leaders’ relative priorities concerning people and production may generate expectations within the work unit that introduce trade-offs for followers that impair their ability to contribute effectively to branch financial performance. We begin our investigation of servant leadership’s indirect effect on branch financial performance by articulating the theoretical foundation for the relationship between leadership and climate. We then consider, more specifically, why servant leadership is related to support and goal achievement climate and then explicate its relative effects on both climates. Next, we specify the relationship between the two unit climates and branch OCBs. Finally, we illuminate the association between branch OCBs and branch financial performance.

Leadership and climate

Leaders facilitate shared perceptions about a work group climate through their attentional consistency. Attentional consistency exists when leaders consistently allocate resources to or pay attention to, measure, and control processes and outcomes in a work group. Schein (2010) adeptly observed,

[t]he most powerful mechanisms that founders, leaders, managers, and parents have available for communicating what they believe in or care about is what they systematically pay attention to. This can mean anything from what they notice and comment on to what they measure, control, reward, and in other ways deal with systematically. (p. 237)

In sum, leaders’ attentional consistency conveys unambiguous signals that forge common perceptions among group members about behaviors that are rewarded, supported, and expected. Leadership thus generates shared climate perceptions that become a source of social-normative influence for employee behavior.

Leaders’ attentional consistency is driven, in part, by their managerial priorities. Servant leaders’ priorities are derived from their moral obligation to promote followers’ sense of meaning and significance as well as to enhance the organization’s financial performance. Servant leadership theory presupposes that servant leaders build others “while meeting all of the other performance criteria that society imposes for institutional survival” (Greenleaf, 1977, p. 143). As a result, theory suggests that servant leaders provide employee support and attend to an organization’s financial concerns. Let us consider servant leadership’s association with each climate before examining the relative strength of servant leadership’s effect on support and goal achievement climate.

Servant leadership and branch support climate

Servant leadership creates a supportive environment in which followers learn, grow, and help others. Servant leaders’ concern for followers is evidenced by the degree to which they develop a sense of community among employees, prioritize followers’ personal development, and seek employee input (Ehrhart, 2004). These behaviors model the importance of building strong interpersonal relationships that support employees’ growth, personal development, and well-being. They build a social context characterized by trust, psychological safety, and supportiveness. In support, extant research indicates that servant leadership is positively associated with positive psychological climate (Ozyilmaz & Cicek, 2015), trust climate (Ling et al., 2017), and serving culture (Liden, Wayne, et al., 2014). It is also associated with team psychological safety (Schaubroeck et al., 2011) and perceived organizational support (Otero-Neira et al., 2016; Rai & Prakash, 2016; Zhou & Miao, 2014). Servant leadership is thus expected to be positively related to branch support climate:

Hypothesis 2a: Servant leadership is positively associated with branch support climate.

Servant leadership and branch goal achievement climate

Servant leaders’ role model broad and facet-specific skills that encourage and support employees’ efforts to achieve organizational goals. More generally, servant leaders apply their knowledge, skills, and abilities to generate novel solutions to work problems and enhance unit effectiveness (Liden et al., 2008). They also provide clarity “around problems, goals, and strategic direction” (Peterson et al., 2012, p. 576). These leader behaviors not only convey that goal accomplishment is important but they also increase followers’ confidence and motivate them to work hard to reach unit goals. Empirical research documents servant leadership’s positive effect on task-focused goals such as creativity (Neubert et al., 2016), sales performance (Schwepker & Schultz, 2015), firm performance (Peterson et al., 2012), and organizational effectiveness (Barbuto & Wheeler, 2006).

In addition to modeling general task-focused behaviors, servant leaders model strategic service-oriented behaviors that cultivate a task-focused environment instrumental to unit effectiveness. For instance, servant leaders model service to customers as well as reward and support followers for engaging in high levels of service (Schwepker & Schultz, 2015; Walumbwa et al., 2010). Evidence linking servant leadership with service climate provides support for servant leadership’s task-oriented focus. Service climate mediated the link between servant leadership and task-focused outcomes such as unit sales (Hunter et al., 2013), unit customer service performance (Linuesa-Langreo et al., 2017), and firm performance (Huang et al., 2016). In sum, servant leaders model task-relevant skills that convey normative behavioral expectations as well as motivate and equip followers to reach unit goals. Therefore, servant leadership is expected to have a positive relationship with branch goal achievement climate:

Hypothesis 2b: Servant leadership is positively associated with branch goal achievement climate.

Servant leadership’s relative focus on support and goal achievement

Multiple climates exist concurrently in organizations (Kuenzi & Schminke, 2009), and their relative strength reveals the leader’s priorities (Zohar & Hofmann, 2012). Servant leaders theoretically develop both supportive/developmental and task-focused environments. According to servant leadership theory, servant leaders prioritize concern for employees more than organizational goal accomplishment. Greenleaf (1977) infers that organizations have an inert tendency to be primarily concerned with the production of goods and services (i.e., goal accomplishment) to secure their competitive viability. Because organizations tend to prioritize goal accomplishment more than employee growth, development, and well-being, the job of servant leaders is to restore balance by focusing predominantly on employee growth until it is “on a parity” with economically driven organizational goals (Greenleaf, 1977, p. 143). Both goals are important to servant leaders, but servant leadership is expected to prioritize employee growth more than task-oriented goal achievement. We thus predict a stronger, positive relationship between servant leadership and branch support climate than between servant leadership and branch goal achievement climate:

Hypothesis 2c: Servant leadership is more positively associated with branch support climate than branch goal achievement climate.

Branch support climate and branch goal achievement climate’s association with branch OCBs

Unit climate provides social-normative cues about how organizational members should prioritize their time, energy, and attention among multiple goals (Hofmann et al., 2003; Zohar & Hofmann, 2012). For instance, facet-specific climates with a strategic focus—such as safety and service—convey that thematically congruent outcomes are highly valued, rewarded, and supported. As such, these strategic climates focus organizational members’ efforts toward safety (cf., Nahrgang et al., 2011) and service outcomes (cf., Hong et al., 2013), respectively, relative to other organizational goals (Zohar & Hofmann, 2012). Support and goal achievement climates are expected to have similar effects on unit members as the facet-specific climate types described above.

Branch support climates convey that extra-role behaviors are valued within the work context. Accordingly, unit members may feel compelled to maintain a supportive social context by investing time, energy, and attention to express concern for, help, and build high-quality relationships with coworkers. Branch support climate is distinct from group OCBs conceptually in that support climate evaluates the degree to which employees feel supported by the branch whereas group OCBs assess helping behaviors among employees. A high branch support climate is thus expected to increase employees’ collective branch OCBs. In contrast, branch goal achievement climates convey norms that group members should have a heightened focus on in-role performance (i.e., task-oriented objectives and financial goals). A high branch goal achievement climate may signal to followers that relationally supportive extra-role behaviors are secondary to in-role behaviors because task-oriented behaviors and task accomplishment are rewarded and supported within the branch. Hence, a branch goal achievement climate’s task-oriented focus may compel followers to engage in fewer branch OCBs:

Hypothesis 3a: Branch support climate is positively associated with branch OCBs.

Hypothesis 3b: Branch goal achievement climate is negatively associated with branch OCBs.

Branch OCBs and branch financial performance

Seminal OCB theory suggests that OCBs are positively related to performance because they theoretically enhance the work group’s social context (Organ, 1997). A positive social context should increase work group efficiency and productivity through higher levels of knowledge sharing, group cohesion, social capital, and retention (Bolino et al., 2002; P. M. Podsakoff et al., 1997). Indeed, N. P. Podsakoff et al. (2009) conducted a meta-analysis and found a positive relationship between unit OCB and unit performance. However, a closer inspection of the results revealed stronger correlations when unit performance was assessed subjectively than when it was assessed objectively. A methodological explanation for this observation is that subjective assessments of unit OCB and performance artificially amplify the relationship through percept–percept inflation (P. M. Podsakoff et al., 2003). That is, an individual’s assessment of unit OCB is likely to bias their assessment of unit performance. Interestingly, among studies that assessed performance objectively, N. P. Podsakoff et al. (2009) found that the relationship between OCB and objective measures of profitability was not significant. This nonsignificant relationship suggests that OCBs are “specific acts of going the extra mile (e.g., instances of helping, taking on additional tasks, and defending the organizations) that are not inherently positive or negative” (Bolino et al., 2013, p. 556).

Research offers three explanations for a negative association between OCBs and financial performance. The first explanation applies the resource allocation framework to OCBs. Bergeron (2007), for example, noted that employees have resource constraints (i.e., limited time, energy, and attention) that attenuate their ability to accomplish multiple goals concurrently. This argument implies that employees who help others through group OCBs have less time to devote to their own task accomplishment, potentially undermining the group’s financial performance. In support, Bergeron et al. (2013) found that, after controlling for time spent on task performance, employees who spent more time on citizenship behaviors realized slower positive career outcomes (i.e., salary increases and advancement speed) than employees who spent less time on OCBs. From a self-regulatory perspective, a daily investigation of employees performing OCBs found that OCBs resulted in employees experiencing positive affect but also hindered their perceptions of work goal progress; in particular, reduced work goal progress resulted in lower daily levels of commitment and satisfaction and higher levels of burnout (Koopman et al., 2016).

The second explanation proposes that employees’ well-intentioned helping behavior may not actually help but rather result in process loss and hinder unit financial performance (P. M. Podsakoff et al., 1997). The final explanation is based on employees’ response to perceptions of compulsory citizenship behavior. OCBs are perceived as compulsory when employees feel that the unit leader or unit members’ behaviors apply citizenship pressure. Such perceptions prompt employees to engage in activities that go beyond their role expectations but can lead to role overload, job stress, conflict, and burnout. Compulsory citizenship behavior is negatively associated with job satisfaction and in-role performance (Bolino et al., 2010; Vigoda-Gadot, 2007). A group’s social norms may not be as abrasive as expectations associated with specific peer or leader behaviors, but they may nonetheless exert subtle forms of pressure on group members to help and support others and thus have negative consequences for group financial performance. Taken together, these perspectives suggest that group members’ collective interpersonal helping behaviors can have a negative impact on group financial performance. The above discussion leads to the following prediction:

Hypothesis 4: Branch OCBs are negatively associated with branch financial performance.

Due to the positive hypothesized effects between support climate and branch OCBs and negative hypothesized effects between goal achievement climate and branch OCBs, we expect that the direction of servant leadership’s indirect effect on branch financial performance will differ based upon the climate. We predict that servant leadership’s indirect effect on branch financial performance will be negative via support climate and branch OCBs because the people-focused climate increases helping behaviors at the expense of performance. Conversely, servant leadership’s indirect effect on branch financial performance is expected to be positive via goal achievement climate and branch OCBs because the production-focused climate reduces helping behaviors and thus enables followers to focus their effort on contributing to branch financial performance. Consonant with Greenleaf’s proposition that servant leadership has a stronger relative emphasis on people than production, servant leadership’s total indirect effect, accounting for both climates and their influence on branch OCBs, is expected to be negative. We thus hypothesize the following indirect effects:

Hypothesis 5a: Servant leadership has a negative indirect effect on branch financial performance through support climate and branch OCBs.

Hypothesis 5b: Servant leadership has a positive indirect effect on branch financial performance through goal achievement climate and branch OCBs.

Hypothesis 5c: Servant leadership has a negative total indirect effect on branch financial performance through both support and goal achievement climate and branch OCBs.

Method

Sample and Procedure

Data were collected in the retail banking (i.e., branch) network of a medium-sized community bank headquartered in the Midwestern United States as part of a broader study on leadership and the social context. The U.S. banking system is split between commercial banks and community banks. Community banks often serve small communities and focus predominantly on relationship banking based on personal knowledge of clients and the local economy (Kansas City Federal Reserve Economic Review, 2003). Not surprisingly, banking in small communities is a deeply relational exchange between branch managers and the community members they serve. Branch managers in community banks have considerable autonomy and discretion in their managerial roles, enhancing their ability to make decisions that directly influence the branch’s financial performance as described in greater detail below.

Multiple sources provided data including branch employees, branch managers, and the bank’s internal financial records. Branch employees and branch managers received an email link to a web-based survey. Branch employees rated their branch manager’s servant leadership, branch support climate, and branch goal achievement climate. Branch managers provided demographic information and rated employees’ branch OCBs.

The bank provided financial performance data that reflects each branch’s average deposit volume 4 months after the survey data were collected. This timeframe was selected for three reasons. First, a 4-month time lag provided temporal separation that was long enough to somewhat alleviate reverse causality effects, yet not so long that it would markedly diminish the salience of the predictor (P. M. Podsakoff et al., 2003). Second, this timeframe had practical significance to the organization. The financial institution is a publicly traded company which is required to release quarterly earnings report. Given that the survey data were collected toward the end of a quarter, having a 4-month time lag allowed us to capture changes that occurred during a full business quarter. Third, prior research that has examined the relationship between leadership and financial performance has commonly used a one quarter time lag for the financial performance measure (e.g., servant leadership → firm performance, Peterson et al., 2012; transformational leadership → firm performance, Zhang et al., 2015; service leadership → financial performance, Jiang et al., 2015).

We received responses from 580 branch employees within 122 bank branches (response rate 71%). One branch was omitted from the analyses because it was a financial outlier due to its function as a primary deposit branch for a large multi-national corporation. Eighteen further branches were omitted because there were only one or two branch employee respondents, raising questions about branch employees’ agreement concerning ratings of servant leadership and climate. The final sample thus consisted of 546 employees from 103 bank branches. Bank branches averaged 6.8 employees per branch, and the average number of respondents for the included branches was 5.3. The average response rate per branch was 77.9%.

The average age of the branch employees in our retained sample was 36.50 years (SD = 13.45 years). These employees averaged 6.66 years of work experience (SD = 6.92) with the organization and 4.25 years in their current position (SD = 4.68 years). The branch employee sample was 94.0% female, and the branch employees had worked with their branch manager for an average of 3.33 years (SD = 3.89). The branch manager response rate was 72% (N = 103). The average age of the branch managers was 46.01 years (SD = 10.69 years). The managers averaged 14.68 years of work experience with the organization (SD = 12.08 years) and 7.69 years of work experience in their current position (SD = 7.50 years). The branch manager sample was 83.5% female.

Measures

As mentioned previously, branch employees provided responses for servant leadership, branch support climate, and branch goal achievement climate. Branch managers provided responses for branch OCBs. In the surveys, original scales were modified to refer to the branch manager (instead of department manager) and branch (instead of team/group) for the sake of clarity. All measures were answered on a 5-point Likert-type scale (1 = strongly disagree to 5 = strongly agree).

Servant leadership

Servant leadership was assessed using seven items from the 14-item Ehrhart (2004) servant leadership measure. Ehrhart’s (2004) scale is currently the most widely used scale in the servant leadership literature. It is correlated (.90; Liden et al., 2008 and .94; Liden et al., 2015) with Liden and colleagues’ 28-item and 7-item servant leadership measures, respectively. Importantly, both the Ehrhart (2004) and Liden et al. (2008, 2015) scales were developed using the same seven dimensions that theoretically constitute servant leadership. The seven items used in our study collectively represent all seven dimensions.

To assess convergent validity between our seven-item servant leadership measure drawn from Ehrhart’s (2004) scale and Liden et al.’s (2015) seven-item short form measure, we collected data from Amazon Mechanical Turk master workers in the United States (N = 225). The two scales were correlated at .96, supporting convergent validity. This evidence suggests that the two measurement scales are functionally equivalent. Sample items from the servant leadership scale include “My branch manager makes the personal development of branch employees a priority” and “My branch manager displays wide-ranging knowledge and interests in finding solutions to work problems” (α = .91).

Branch support climate

We used a four-item measure of branch support climate (González-Romá et al., 2002). Employees were instructed to describe the extent to which the statements are characteristic of their branch. Sample items include “Employees feel supported by the organization” and “You can tell that the branch is interested in the employees” (α = .91).

Branch goal achievement climate

Branch goal achievement climate was assessed with González-Romá et al.’s (2002) four-item measure. Sample items include “Employees try hard to reach the branch’s goals” and “Everyone contributes enthusiastically to reaching the goals” (α = .88).

Branch OCBs

Branch OCBs were measured using Smith et al.’s (1983) five-item scale. Branch managers rated the extent to which employees (as a whole) in their branch engaged in OCBs. Sample items include “Help others who have heavy workloads” and “Willingly help others who have work-related problems” (α = .91).

Branch financial performance

Branch deposit volume was utilized as the measure of branch financial performance. Deposit volume was reported by the bank’s internal financial records and reflects the average daily balance of customers’ monetary deposits to, and withdrawals from, the bank branch for business days in the month. Deposit volume includes money held in checking, savings, and time (e.g., certificate of deposit) accounts. This measure of financial performance is an important metric in the banking industry because it is monitored and reported to the U.S. FDIC (Federal Deposit Insurance Corporation) by all FDIC-insured financial institutions including this bank. Deposit volume is also a useful measure of branch financial performance because it is amenable to influence by both branch managers’ and branch employees’ behaviors.

Each branch manager in our sample had a monthly deposit volume goal, and branch managers were responsible for meeting branch deposit volume goals by opening new accounts and expanding accounts with existing customer relationships. Branch managers were directed to do this in a variety of ways. For example, they were encouraged to conduct outbound calls to new and existing customers and to proactively seek new account relationships.

In addition to their individual efforts, branch managers relied upon branch employees to increase deposit volume. Branch employees are the more frequent and proximal point of contact for many customers, so they were well-positioned to (in particular) expand existing customer deposit relationships. Branch managers coached and directed branch employees to increase deposit volume by analyzing account relationships to educate customers on how the banks’ products could fit their other deposit needs and by referring bank deposit products when handling other types of customer transactions. Therefore, deposit volume reflects the collective efforts of branch managers and branch employees.

Control variables

We controlled for both leader tenure with the organization and discretionary branch expenses. Leaders with longer tenure are likely to be more embedded in the organization and may have a stronger influence on branch climate as well as more discretion to impact branch financial performance. Discretionary branch expenses are costs incurred to retain existing customers and procure prospective customers, particularly those who have or could have a material impact on branch revenue. They are generally higher when managing a sizable customer base as well as large, well-resourced customers. Consequently, discretionary branch expenses are expected to have an impact on branch financial performance.

Aggregation

The leadership (i.e., servant leadership) and climate (i.e., branch support climate and branch goal achievement climate) measures were considered as direct and referent-shift consensus variables, respectively (Chan, 1998). To support aggregation from the individual level to the branch level of analysis, we conducted intraclass correlation (ICC) analyses to investigate whether there was appropriate agreement to justify aggregation. For servant leadership, branch support climate, and branch goal achievement climate, respectively, ICC(1) values were .25, .13, and .25; and ICC(2) values were .66, .47, and .67. We also calculated r_wg values which were .93 for servant leadership, .85 for support climate, and .84 for goal achievement climate. These values are sufficient to justify aggregation (LeBreton & Senter, 2008), which allowed us to proceed with our planned analyses.

Confirmatory Factor Analyses

We conducted confirmatory factor analyses (CFA) using maximum likelihood estimation to assess the discriminant validity among all study constructs (e.g., servant leadership, branch support climate, branch goal achievement climate, and branch OCBs). We compared the hypothesized model with alternatives in which (a) branch support climate and branch goal achievement climate were collapsed into a single factor; (b) branch support climate and branch OCBs into a single factor; (c) the climate variables and servant leadership were collapsed into a single factor; and (d) a single-factor model in which all four variables loaded onto a single factor. The hypothesized four-factor model fit the data acceptably (comparative fit index [CFI] = .90; standardized root mean square residual [SRMR] = .08; Tucker–Lewis index [TLI] = .88), whereas the fit for the alternative models was substantially worse (CFI = .78, .77, .73, .61; SRMR = .10, .13, .11, .15; TLI = .76, .74, .70, .56) for alternative models (a), (b), (c), and (d), respectively. The CFA results are summarized in Table 1. Taken together, these findings provide evidence for discriminant validity. We thus proceeded to test the hypothesized effects.

Table 1.

Model Comparison for Confirmatory Factor Analyses.

	χ²	df	TLI	CFI	SRMR	AIC
Hypothesized	348.01	164	.88	.90	.08	1,835.60
(a) Three-factor model	552.49	167	.76	.78	.10	2,034.08
(b) Three-factor model	571.48	167	.74	.77	.13	2,053.07
(c) Two-factor model	647.52	169	.70	.73	.11	647.52
(d) One-factor model	875.98	170	.56	.61	.15	2,351.57

Note. The hypothesized model represents servant leadership, branch support climate, branch goal achievement climate, and branch OCBs as separate factors. Model (a) collapses branch support climate and branch goal achievement climate into a single-factor; Model (b) collapses branch support climate and branch OCBs into a single factor; Model (c) collapses the climate variables and servant leadership into a single factor; and Model (d) tests a single-factor model. χ² = chi-square test of model fit; df = degrees of freedom; TLI = Tucker–Lewis index; CFI = comparative fit index; SRMR = standardized root mean square residual; AIC = Akaike information criterion; OCBs = organizational citizenship behaviors.

Data Analyses

All hypotheses were simultaneously tested using a path model in Mplus 8.1 (Muthén & Muthén, 1998–2017). Full information maximum likelihood (FIML) was used to estimate missing data because it produces unbiased parameter estimates and standard errors (Enders & Bandalos, 2001). Indirect effects were tested with bias-corrected 95% confidence intervals (CI) derived from a bootstrap approach with 10,000 replications. In the analysis, we controlled for leader tenure with the organization and discretionary branch expenses as described above.

Results

Table 2 shows the mean values, standard deviations, and correlations among the variables included in this study. Servant leadership was positively and significantly correlated with both branch support climate and branch goal achievement climate. Branch support climate and branch goal achievement climate were positively and significantly correlated with branch OCBs. Branch financial performance did not have significant zero-order relationships with servant leadership, branch support climate, branch goal achievement climate, or OCBs.

Table 2.

Mean Values, Standard Deviations, and Correlations Among Study Variables.

Variable	M	SD	1	2	3	4	5	6
1. Branch expenses	0.64	0.68
2. Leader tenure	15.09	11.52	−.04
3. Servant leadership	3.60	0.49	−.08	.03
4. Branch support climate	3.74	0.52	−.22*	−.11	.79**
5. Branch goal achievement climate	3.84	0.41	−.16	−.08	.54**	.61**
6. Branch OCBs	4.13	0.53	−.01	−.14	.31**	.44**	.20*
7. Branch financial performance	3.13	2.23	.73**	.09	.09	−.11	−.06	−.12

Note. N = 103. Branch expenses is in tens of thousands of dollars; branch deposit volume is in tens of millions of dollars. OCBs = organizational citizenship behaviors.

p < .05. **p < .01.

Overall, the hypothesized path model fit the data well (χ² = 11.38, df = 4; CFI = .97; TLI = .87; SRMR = .03; Akaike information criterion [AIC] = 1,785.97). As a robustness check, we ran a series of post hoc alternative models by adding paths to the hypothesized model to ensure that no particular aspect of the model was responsible for any aspect of fit or misfit. All of the alternative models failed to improve upon the hypothesized model. Moreover, all of the significant paths in our hypothesized model were unchanged across all of the alternative models.¹ In combination, the overall pattern of fit statistics along with the robustness checks supports the hypothesized model’s specification.

Hypothesis 1 predicted that servant leadership has a positive direct effect on branch financial performance. As shown in Figure 2, servant leadership was positively related to branch financial performance (b = .95, p < .01). Hypothesis 1 was therefore supported.

Figure 2.

Unstandardized path coefficients for the hypothesized model.

Hypothesis 2a predicted that servant leadership is positively associated with branch support climate, whereas Hypothesis 2b predicted that servant leadership is positively associated with branch goal achievement climate. Figure 2 reveals that servant leadership was positively related to both branch support climate and branch goal achievement climate (b = .83, p < .01 and b = .45, p < .01, respectively). Therefore, Hypotheses 2a and 2b were supported. Hypothesis 2c predicted that servant leadership is more positively associated with branch support climate than branch goal achievement climate. In support, we found that the difference between coefficients is positive and statistically significant (Δb = .39, p < .01).

Hypothesis 3a predicted that branch support climate is positively associated with OCBs, and Hypothesis 3b predicted that branch goal achievement climate is negatively associated with branch OCBs. As described in Figure 2, branch support climate was positively related to branch OCBs (b = .54, p < .01). Thus, Hypothesis 3a was supported. However, branch goal achievement climate was not related to branch OCBs (b = −.16, ns). Hence, Hypothesis 3b was not supported.

Hypothesis 4 predicted that branch OCBs are negatively associated with branch financial performance. As shown in Figure 2, branch OCBs were negatively related to branch deposit volume (b = −.71, p < .01). Hypothesis 4 was supported.

Finally, Hypothesis 5a predicted that servant leadership has a negative indirect effect with branch financial performance through support climate and branch OCBs, whereas Hypothesis 5b predicted that servant leadership has a positive indirect effect with branch financial performance through goal achievement climate and branch OCBs. Table 3 summarizes the direct, indirect, and total effects linking servant leadership to branch financial performance. Using bias-corrected 95% CIs for the estimates of indirect effects (calculated through a bootstrap analysis with 10,000 replications), results revealed that servant leadership’s indirect effect was negative and significant through support climate and branch OCBs (point estimate = −.32; 95% CI = [−0.66, −0.10], excluding zero). Servant leadership’s indirect effect on branch financial performance through goal achievement climate and branch OCBs was positive, as predicted, but was not significant (point estimate = .05, 95% CI = [−0.06, 0.22]). Consequently, Hypothesis 5a was supported, but Hypothesis 5b was not supported. Table 3 indicates that the overall indirect effect linking servant leadership to branch financial performance was negative and significant (point estimate = −.27; 95% CI = [−0.54, −0.09], excluding zero). Hypothesis 5c was thus supported.

Table 3.

Summary of Direct, Indirect, and Total Effects Linking Servant Leadership to Branch Financial Performance.

	Coefficient	95% CI
	Coefficient	Lower bound	Upper bound
Direct effect	.95**	0.35	1.61
Indirect effect	−.27*	−0.54	−0.09
via support climate and branch OCBs	−.32*	−0.66	−0.10
via goal achievement climate and branch OCBs	.05	−0.06	0.22
Total effect	.69**	0.11	1.31

Note. N = 103. OCB = organizational citizenship behaviors.

p < .05. **p < .01.

After accounting for the indirect effects, servant leadership’s total effect on branch financial performance remained positive (point estimate = .69; 95% CI = [0.11, 1.31], excluding zero), but weaker than its direct effect (point estimate = .95; 95% CI = [0.35, 1.461], excluding zero). Overall, these results suggest that servant leadership’s relative influence on employee support and goal achievement increases group OCBs and decreases performance, constraining servant leadership’s overall positive effect on branch financial performance.

Discussion

This study examines two important and unconsidered issues regarding servant leadership. The first is whether servant leadership has a stronger, positive relationship with employee-related versus performance-driven aspects of climate. The second is whether servant leadership’s relative focus on people more than production produces a behavioral trade-off for employees that negatively affects unit financial performance. Overall, results reveal that servant leadership has a positive direct effect, a negative indirect effect, and a smaller but positive total effect on branch financial performance. Results underscore important theoretical implications and directions for future research.

Theoretical Implications

We first describe theoretical implications for servant leadership’s concurrent focus on people and production, and then consider implications related to its relative priorities.

Servant leadership is not exclusively follower-focused

Our results challenge Andersen’s (2009) assertions that servant leaders are exclusively follower-focused while supporting Greenleaf’s (1977) conclusion that servant leaders attend to both social and financial performance-based concerns within an organization. Servant leadership’s multidimensional foci suggests the need to reconsider theoretical models of servant leadership because modern models insinuate that servant leaders attend to followers’ social and relational needs with little direct regard to task accomplishment. For example, prevailing conceptual models emphasize servant leadership’s effect on follower attitudes and social outcomes (e.g., OCB, sustainability, and corporate social responsibility) with scant attention to financial measures of organizational effectiveness (van Dierendonck, 2011). Others depict a distal relationship between servant leadership and task-oriented goals such as performance (Liden, Panaccio, et al., 2014). These perspectives do not adequately account for Greenleaf’s (1977) conclusion that servant leaders are directly concerned with employee growth and task accomplishment and are morally obligated to benefit both.

Servant leadership’s dual focus on employee growth and task accomplishment suggests an important avenue for both leadership and climate research. Research is needed to uncover relationships between leadership and multiple climates (Kuenzi & Schminke, 2009). Examining multiple climates introduces opportunities to investigate relationships among various types of leadership and climates that represent competing organizational tensions (Liden, Panaccio, et al., 2014), such as innovation and stability. Leadership’s dual emphasis on these competing tensions may engender a paradoxical, constructive climate that enhances followers’ OCBs and creative behavior (Marinova et al., 2019). It may also facilitate an ambidextrous strategic orientation that improves an organization’s financial performance (Ou et al., 2018). In addition, our results underscore the need to concurrently examine the impact of multiple climates and their interactions on financial performance. A configural approach is one method for studying the dynamic interplay between multiple climates on financial performance (Schulte et al., 2009).

Servant leadership prioritizes people more than production

Another key finding from our study—that servant leadership is more strongly associated with branch support climate than branch goal achievement climate—indicates that concern for people and concern for production are not equally important priorities for servant leaders. This result supports Greenleaf’s (1977) assertion that servant leadership prioritizes employees’ social concerns more than an organization’s financial performance concerns. In Greenleaf’s view, this relative emphasis is necessary to rebalance an organization’s tendency to prioritize profits over people. He noted that servant leaders must move “institutions (while keeping them intact and functioning), from where they are, with the heavy emphasis on production, to where they need to be, with the heavy emphasis on growing people” until individual meaning and significance are equal in importance to the organization as other goals (Greenleaf, 1977, p. 143). Future studies are needed to investigate the degree to which servant leaders across industries and across managerial levels within an organization vary in their relative emphasis on people and production. Such an endeavor will provide greater clarity regarding servant leaders’ relative priorities in different competitive and managerial contexts.

Servant leadership’s relative focus introduces a behavioral trade-off for employees

Our results suggest that servant leaders’ effect on people relative to production encourages employees to increase helping behaviors at the expense of the unit’s subsequent financial performance. The resource allocation perspective suggests that employees cannot simultaneously perform discretionary behaviors and in-role performance behaviors because time is a finite resource (Bergeron, 2007). Multiple studies report a curvilinear relationship between OCB and performance such that more frequent OCBs have a diminishing, and eventually negative, return on task performance (Ellington et al., 2014; Rapp et al., 2013; Rubin et al., 2013). Future research is needed to examine boundary conditions that mitigate OCBs’ negative effect on task performance. High social density, task interdependence, autonomy, interpersonal skill, time management skill, and low accountability attenuate the diminishing returns of OCB frequency on task performance (Ellington et al., 2014; Rapp et al., 2013; Rubin et al., 2013). Additional factors such as an organization’s serving culture (Liden, Wayne, et al., 2014), employee serving values, stakeholder salience (Agle et al., 1999), beneficiary contact, and job impact on beneficiaries (Grant, 2007) may incline followers to maintain a behavioral focus on enhancing organizational outcomes. Future research is needed to investigate the degree to which these moderating factors mitigate or even reverse servant leadership’s negative indirect effect on financial performance.

Building upon our finding that employees experience behavioral trade-offs as a result of servant leadership’s relative priorities, servant leaders themselves may also encounter trade-offs as a function of their organization’s or their stakeholders’ relative expectations that impact their personal well-being or their effectiveness for the stakeholders they serve. For instance, strong organizational cultures that overemphasize financial performance at the exclusion of its people may create normative environments in which servant leaders experience higher levels of role conflict, stress, and burnout because organizational demands attenuate their ability to invest in employee growth. Consequently, we concur with existing calls for future research to consider the psychological and physiological consequences servant leaders experience in their attempts to satiate their moral obligation to multiple stakeholders (Eva et al., 2019; Liden, Panaccio, et al., 2014).

In contrast with a task culture, an overly people-focused culture may overemphasize internal relational dynamics, detracting servant leaders’ attention from efforts to benefit organizational stakeholders. In this environment, servant leaders’ “inclination to serve the needs of others first and foremost may hinder them from taking actions that serve the wider goals of the organization” (Sun, 2013, p. 554). In support, corollary evidence suggests that too much of a relational focus can impair organizational performance. Hartnell et al.’s (2016) findings revealed that CEO relational leadership in combination with a relationship-oriented culture had a negative effect on organizational performance. Hence, a valuable direction for future research is to investigate whether task-focused and relationship-focused organizational cultures amplify or attenuate servant leadership’s effectiveness for different stakeholders.

Beyond an organization’s social contextual cues, the incongruence, or misalignment, among a broader set of stakeholders’ (e.g., employee, organization, customer, and community stakeholders) needs may introduce trade-offs that impair servant leaders’ ability to benefit everyone. Stakeholder theory introduces the possibility that multiple stakeholders’ needs may not be complementary and may thus introduce competing demands that require leaders to choose whose needs to meet (Laplume et al., 2008; Mitchell et al., 1997). Servant leaders’ normative moral obligation to benefit all stakeholders without harming any may make them more prone to experience moral dilemmas when they encounter stakeholders whose interests are antagonistic (Liden, Panaccio, et al., 2014). For instance, CEOs in publicly owned companies have a responsibility to derive short-term value for shareholders, but they are also compelled to make long-term internal investments in human capital and research and development (R&D) as well as external contributions to the community via corporate social responsibility. Stakeholders’ short-term and long-term time horizons represent one such trade-off that servant leaders may encounter. Multi-stakeholder research is thus needed to illuminate how and when servant leaders meet the needs of multiple constituents with divergent goals.

Although our predicted relationships were largely supported, branch goal achievement climate’s influence on branch OCBs was nonsignificant. This nonsignificant relationship may be due to two factors. First, branch support climate has a much stronger correlation with branch OCB than branch goal achievement climate. This evidence suggests that relational contextual cues are a more important driver of employees’ relational behaviors than task-oriented contextual cues. Second, countervailing influences may account for the nonsignificant effect. For some groups, branch goal achievement climate may negatively influence OCBs because it drives employees to focus on in-role task performance rather than extra-role OCBs. For other groups, goal achievement climate may positively influence OCBs because difficult unit goals underscore the importance of working together and helping each other to accomplish unit objectives. These offsetting influences may suppress goal achievement climate’s relationship with branch OCBs. Future research should use multi-level modeling to consider moderating factors such as task interdependence, group cohesion, and group efficacy to delineate when goal achievement climate is significantly associated with branch OCBs.

Practical Implications

Our findings have several practical managerial implications. First, servant leaders engender environments that reinforce employee support and goal achievement. This form of equanimity should be encouraged in today’s workplace in light of workforce diversity and the growing complexity of the managerial role (Mor Barak, 2014) in a global economy. Our results reinforce the value of educating or training managers and employees about servant leadership’s value. This training might emphasize that servant leadership is not a manipulative way to influence others, but rather a form of altruistic leadership anchored in the belief in serving others and focusing on the greater good. Altruistic behavior is undertaken for its own sake, not for the sake of obtaining something else.

Second, it would be useful to educate managers about the behavioral trade-offs employees may encounter as a result of servant leadership’s relative priorities. This education needs to articulate the notion that helping others and performing extra-role behaviors should not come at the expense of financial performance. Employees need to understand the balancing act associated with directing energy to in-role and extra-role behavior. Relatedly, servant leaders’ attentiveness to multiple stakeholders underscores the value of teaching servant leaders how to align stakeholders’ interests. Alignment can be accomplished by identifying common goals among stakeholders and communicating the indirect benefits of their behaviors to stakeholders who may not profit directly from their immediate focus. Aligning stakeholder interests also helps servant leaders mitigate perceptions of an agency problem whereby stakeholders expect servant leaders to attend to their interests at the expense of other stakeholders’ interests.

Limitations

Results should be considered in light of several limitations. First, servant leadership, branch support climate, and branch goal achievement climate were rated by the same source. Although servant leadership and branch support climate assess different aspects of the work group (servant leadership reflects leader behaviors and branch support climate reflects characteristics of the work group as a whole), they both reflect elements of the group’s social milieu—concern and support for employees. Because employees rated both variables at the same point in time, the correlation between servant leadership and branch support climate may be inflated due to response bias. Group-level correlations are susceptible to shared response bias when scales have similar content or when social processes or collective moods produce common method bias (Ostroff et al., 2002). Results from our discriminant analysis, however, suggest that method bias does not explain relationships uncovered in our analysis.

Second, our ICC(2) value for branch support climate (.47) may be considered to be somewhat low even though sufficient agreement among raters, ICC(1) = .13; r_wg = .85, justified aggregating it to the group level. ICC(2) values reflect the reliability of group mean differences (Bliese, 2000); low ICC(2) values attenuate the ability to detect emergent relationships using group mean values (Bliese et al., 2018). Empirical and theoretical arguments suggest that the ICC(2) value for branch support climate is not problematic for three reasons. First, small average group sizes, such as those found in this sample (n = 5.3), are more likely to yield low ICC(2) values (Bliese et al., 2018). Given branch support climate’s low ICC(2) value, the tests of its relationships with servant leadership and branch OCBs were somewhat conservative yet still significant. Second, branch support climate’s ICC(2) value is consistent with extant research that also reported significant effects with constructs that have similar or smaller ICC(2) values and were accompanied by ICC(1) and r_wg values that supported aggregation (e.g., Chen et al., 2009; D’Innocenzo et al., 2016; Lanaj & Hollenbeck, 2015; Mathieu et al., 2007; Porck et al., 2019). Third, we theoretically defined servant leadership and branch support and goal achievement climate as group-level constructs (reflecting shared perceptions of the leader’s behaviors and of the unit’s policies, procedures and practices); our ICC(1) and r_wg values provided support for modeling the constructs at the group level. Taken together, the low ICC(2) value for branch support climate resulted in a conservative test of its relationships with servant leadership and branch OCBs.

A third limitation is that our results should not be interpreted as an exhaustive test of the effects of servant leadership’s people focus on performance. Indeed, there may be circumstances where servant leadership’s effect on support climate facilitates other important outcomes such as job satisfaction, perceived organizational support, or team cohesion. These questions would be interesting areas for future research.

Fourth, our research design cannot draw definitive conclusions about the causal sequence linking servant leadership to branch financial performance because leadership, climate, and OCB were measured concurrently. Although our hypothesized model was informed by extant theory, it is possible that climate precedes leadership in the model. We investigated this alternative model in a post hoc analysis. Results revealed that the alternative model fit the data worse than the hypothesized model (χ² = 65.03, df = 4; CFI = .70; SRMR = .15; AIC = 1,839.62). Moreover, support climate and goal achievement climate had neither a significant direct effect nor an indirect effect on branch financial performance through servant leadership and branch OCBs. Studies with longitudinal data are needed to determine the causal sequence between leadership and climate, in particular, as well as specify causal processes through which servant leadership indirectly influences unit financial performance. These limitations, however, are partially mitigated by our use of an objective indicator of branch performance 4 months after survey data were collected. This temporal separation is a notable strength of this study given that a large majority of servant leadership studies employ cross-sectional research designs (Eva et al., 2019; Lee et al., 2020).

Fifth, using branch deposit volume as our measure of financial performance limits the generalizability of our results. Although branch managers were responsible for increasing deposit volume through new and existing customer account relationships, we acknowledge that branch managers have additional job-related demands (e.g., operational and customer service responsibilities) that could impair their ability to focus on increasing deposits. Future research should account for additional avenues that facilitate and constrain servant leaders’ impact on financial performance. Moreover, whereas we found a negative effect of branch OCBs on a specific measure of branch financial performance (i.e., deposit volume), other performance metrics relevant to the banking industry—such as consumer loan volume and proactive customer service—may also be affected negatively by internally focused helping behaviors. Conversely, servant leadership may have a positive influence on employee retention which, in turn, may positively impact other organizational performance measures. Future research is needed to evaluate whether our findings are generalizable across a broader range of performance outcomes.

Finally, the sample in our study was overwhelmingly female. Liden, Wayne, et al.’s (2014) study on servant leadership was conducted among store general managers and hourly employees in 76 restaurants. Their sample was based on 93% male leaders and 7% female leaders (compared with 16.5% male leaders and 83.5% female leaders in our study). They similarly found that male servant leaders were associated with employee and organizational effectiveness. Although our study and Liden et al.’s study represent two ends of a spectrum, we concur with their call for future research to investigate the extent to which leader gender influences followers’ appraisal of and receptivity to servant leadership. Interestingly, Liden, Wayne, et al. (2014) speculate that women may be more likely to be rated as servant leaders than males. A comparison of mean values across studies (after adjusting the Liden et al. measure to reflect a 5-point scale), however, indicate that the male-dominated sample had a higher average servant leadership rating (3.86) than the female-dominated sample in our study (3.55). We suspect that leader–follower gender similarity may be one explanatory factor that influences the differences in followers’ servant leadership ratings.

Conclusion

Servant leadership matters for employees and organizations, but its overall effectiveness for the organization is constrained by its indirect effect on branch financial performance through support climate and branch OCBs. Our results support Greenleaf’s (1977) assertion that servant leaders attend to both employee support and financial performance, but they prioritize the former more than the latter as indicated by servant leadership’s stronger positive relationship with branch support climate than branch goal achievement climate. This study also supports the resource allocation perspective of OCBs by demonstrating a negative relationship between OCBs and unit performance. Servant leadership’s supportive emphasis thus incurs a residual performance-related cost by increasing OCBs. We hope this study is a catalyst for future research to consider additional avenues that facilitate or constrain servant leadership’s positive effects for multiple stakeholders.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Elizabeth P. Karam

Associate Editor: Michelle Bligh

Notes

Author Biographies

Chad A. Hartnell is an assistant professor in the J. Mack Robinson College of Business at Georgia State University. His research examines leadership and organizational culture, how they interrelate, and the intervening mechanisms through which they influence organizational, unit, and individual effectiveness.

Elizabeth P. Karam is an assistant professor in the Rawls College of Business at Texas Tech University. Her research explores the role of leadership in affecting outcomes for individuals, teams, and firms when combined with other organizational elements.

Angelo J. Kinicki is the Dean’s Scholar in Residence at Kent State University and an Emeritus Professor of Management at the W.P. Carey School of Business, Arizona State University where he held the Weatherup/Overby Chair in Leadership. His research interests include the multi-level effects of organizational culture, climate, and leadership on effectiveness. He is also a busy international consultant and is a principal at Kinicki and Associates Inc.

Nikolaos “Nikos” Dimotakis is an associate professor and a William S. Spears Fellow of Business in the Department of Management at Oklahoma State University. His research focuses on affective and motivational processes, seeking to understand how individuals perceive, and react to, their environment and interactions with others.

References

Agle

B. R.

Mitchell

R. K.

Sonnenfeld

A. J.

(1999). Who matters to CEOs? An investigation of stakeholder attributes and salience, corporate performance, and CEO values. Academy of Management Journal, 42, 507–525.

Andersen

A. A.

(2009). When a servant leader comes knocking. Leadership & Organization Development Journal, 30, 4–15.

Barbuto

J. E.

Jr. Wheeler

D. W.

(2006). Scale development and construct clarification of servant leadership. Group & Organization Management, 31(3), 300–326.

Bergeron

D. M.

(2007). The potential paradox of organizational citizenship behavior: Good citizens at what cost? Academy of Management Review, 32, 1078–1095.

Bergeron

D. M.

Shipp

A. J.

Rosen

Furst

S. A.

(2013). Organizational citizenship behavior and career outcomes: The cost of being a good citizen. Journal of Management, 39, 958–984.

Bliese

P. D.

(2000). Within-group agreement, non-independence, and reliability: Implications for data aggregation and analyses. In Klein

K. J.

Kozlowski

S. W. J.

(Eds.), Multilevel theory, research, and methods in organizations: Foundations, extensions, and new directions (pp. 349–381). Jossey-Bass.

Bliese

P. D.

Maltarich

M. A.

Hendricks

J. L.

(2018). Back to basics with mixed-effects models: Nine take-away points. Journal of Business and Psychology, 33, 1–23.

Bolino

M. C.

Klotz

A. C.

Turnley

W. H.

Harvey

(2013). Exploring the dark side of organizational citizenship behavior. Journal of Organizational Behavior, 34, 542–559.

Bolino

M. C.

Turnley

W. H.

Bloodgood

J. M.

(2002). Citizenship behavior and the creation of social capital in organizations. Academy of Management Review, 27, 505–522.

10.

Bolino

M. C.

Turnley

W. H.

Gilstrap

J. B.

Suazo

M. M.

(2010). Citizenship under pressure: What’s a “good soldier” to do? Journal of Organizational Behavior, 31, 835–855.

11.

Chan

(1998). Functional relations among constructs in the same content domain at different levels of analysis: A typology of composition models. Journal of Applied Psychology, 83, 234–246.

12.

Chen

Kanfer

DeShon

R. P.

Mathieu

J. E.

Kozlowski

S. W.

(2009). The motivating potential of teams: Test and extension of cross-level model of motivation in teams. Organizational Behavior and Human Decision Processes, 110, 45–55.

13.

Davis

J. H.

Schoorman

F. D.

Donaldson

(1997). Toward a stewardship theory of management. Academy of Management Review, 22, 20–47.

14.

D’Innocenzo

Luciano

M. M.

Mathieu

J. E.

Maynard

M. T.

Chen

(2016). Empowered to perform: A multilevel investigation of the influence of empowerment on performance in hospital units. Academy of Management Journal, 59, 1290–1307.

15.

Ehrhart

M. G.

(2004). Leadership and procedural justice climate as antecedents of unit level organizational citizenship behavior. Personnel Psychology, 57, 61–94.

16.

Ehrhart

M. G.

Schneider

Macey

W. H.

(2014). Organizational climate and culture: An introduction to theory, research, and practice. Routledge/Taylor & Francis.

17.

Ellington

J. K.

Dierdorff

E. C.

Rubin

R. S.

(2014). Decelerating the diminishing returns of citizenship on task performance: The role of social context and interpersonal skill. Journal of Applied Psychology, 99, 748–758.

18.

Enders

C. K.

Bandalos

D. L.

(2001). The relative performance of full information maximum likelihood estimation for missing data in structural equation models. Structural Equation Modeling, 8, 430–457.

19.

Eva

Robin

Sendjaya

van Direndonck

Liden

R. C.

(2019). Servant leadership: A systematic review and call for future research. The Leadership Quarterly, 30, 111–132.

20.

González-Romá

Fortes-Ferreira

Peiro

J. M.

(2009). Team climate, climate strength and team performance: A longitudinal study. Journal of Occupational and Organizational Psychology, 82, 511–536.

21.

González-Romá

Peiro

J. M.

Tordera

(2002). An examination of the antecedents and moderator influences of climate strength. Journal of Applied Psychology, 87, 465–473.

22.

Graham

J. W.

(1991). Servant leadership in organizations: Inspirational and moral. The Leadership Quarterly, 2, 105–119.

23.

Grant

A. M.

(2007). Relational job design and the motivation to make a prosocial difference. Academy of Management Review, 32, 393–417.

24.

Greenleaf

R. K.

(1970). The servant as leader. The Robert K. Greenleaf Center.

25.

Greenleaf

R. K.

(1977). Servant leadership: A journey into the nature of legitimate power and greatness. Paulist Press.

26.

Greenleaf

R. K.

(1996). Seeker and servant: Reflections on religious leadership. Jossey-Bass.

27.

Hartnell

C. A.

Kinicki

A. J.

Lambert

L. S.

Fugate

Corner

P. D.

(2016). Do similarities or differences between CEO leadership and organizational culture have a more positive effect on firm performance? A test of competing predictions. Journal of Applied Psychology, 101, 846–861.

28.

Hernandez

(2012). Toward an understanding of the psychology of stewardship. Academy of Management Review, 37, 172–193.

29.

Hoch

J. E.

Bommer

W. H.

Dulebohn

J. H.

(2018). Do ethical, authentic, and servant leadership explain variance above and beyond transformational leadership? A meta-analysis. Journal of Management, 44, 501–529.

30.

Hofmann

D. A.

Morgeson

F. P.

Gerras

S. J.

(2003). Climate as a moderator of the relationship between leader-member exchange and content specific citizenship: Safety climate as an exemplar. Journal of Applied Psychology, 88, 170–178.

31.

Hong

Liao

Jiang

(2013). Missing link in the service profit chain: A meta-analytic review of the antecedents, consequences, and moderators of service climate. Journal of Applied Psychology, 98, 237–267.

32.

Huang

Qiu

Yim

F. H. K.

Wan

(2016). The impact of CEO servant leadership on firm performance in the hospitality industry. International Journal of Contemporary Hospitality Management, 28, 945–968.

33.

Hunter

E. M.

Neubert

M. J.

Perry

S. J.

Witt

L. A.

Penney

L. M.

Weinberger

(2013). Servant leaders inspire servant followers: Antecedents and outcomes for employees and the organization. The Leadership Quarterly, 24, 316–331.

34.

Jiang

Chuang

C. H.

Chiao

Y. C.

(2015). Developing collective customer knowledge and service climate: The interaction between service-oriented high-performance work systems and service leadership. Journal of Applied Psychology, 100, 1089–1106.

35.

Kansas City Federal Reserve Economic Review. (2003). The role of community banks in the U.S. economy. https://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/2q03keet.pdf

36.

Koopman

Lanaj

Scott

B. A.

(2016). Integrating the bright and dark sides of OCB: A daily investigation of the benefits and costs of helping others. Academy of Management Journal, 59, 414–435.

37.

Kozlowski

S. W. J.

Doherty

M. L.

(1989). Integration of climate and leadership: Examination of a neglected issue. Journal of Applied Psychology, 74, 546–553.

38.

Kuenzi

Schminke

(2009). Assembling fragments into a lens: A review, critique, and proposed research agenda for the organizational work climate literature. Journal of Management, 35, 634–717.

39.

Lanaj

Hollenbeck

J. R.

(2015). Leadership over-emergence in self-managing teams: The role of gender and countervailing biases. Academy of Management Journal, 58, 1476–1494.

40.

Laplume

A. O.

Sonpar

Litz

R. A.

(2008). Stakeholder theory: Reviewing a theory that moves us. Journal of Management, 34, 1152–1189.

41.

LeBreton

J. M.

Senter

J. L.

(2008). Answers to 20 questions about interrater reliability and interrater agreement. Organizational Research Methods, 11, 815–852.

42.

Lee

Lyubovnikova

Tian

A. W.

Knight

(2020). Servant leadership: A meta-analytic examination of incremental contribution, moderation, and mediation. Journal of Occupational and Organizational Psychology, 93, 1–44.

43.

Lemoine

G. J.

Hartnell

C. A.

Leroy

(2019). A moral identity framework of leadership: A comparative and integrative review of authentic, ethical, and servant leadership. Academy of Management Annals, 13, 148–187.

44.

Liden

R. C.

Panaccio

Meuser

J. D.

Wayne

S. J.

(2014). Servant leadership: Antecedents, processes, & outcomes. In Day

D. V.

(Ed.), The Oxford handbook of leadership and organizations (pp. 357–379). Oxford University Press.

45.

Liden

R. C.

Wayne

S. J.

Liao

Meuser

J. D.

(2014). Servant leadership and serving culture: Influence on individual and unit performance. Academy of Management Journal, 57, 1434–1452.

46.

Liden

R. C.

Wayne

S. J.

Meuser

J. D.

Liao

(2015). Servant leadership: Validation of a short form of the SL-28. The Leadership Quarterly, 26, 254–269.

47.

Liden

R. C.

Wayne

S. J.

Zhao

Henderson

(2008). Servant leadership: Development of a multidimensional measure and multi-level assessment. The Leadership Quarterly, 19, 161–177.

48.

Ling

Liu

(2017). Servant versus authentic leadership: Assessing effectiveness in China’s hospitality industry. Cornell Hospitality Quarterly, 58, 53–68.

49.

Linuesa-Langreo

Ruiz-Palomino

Elche-Hortelano

(2017). New strategies in the new millennium: Servant leadership as enhancer of service climate and customer service performance. Frontiers in Psychology, 8, Article 786.

50.

Marinova

S. V.

Cao

Park

(2019). Constructive organizational values climate and organizational citizenship behaviors: A configurational view. Journal of Management, 45, 2045–2071.

51.

Mathieu

J. E.

Maynard

M. T.

Taylor

S. R.

Gilson

L. L.

Ruddy

T. M.

(2007). An examination of the effects of organizational district and team contexts on team processes and performance: A meso-mediational model. Journal of Organizational Behavior, 28, 891–910.

52.

Mitchell

R. K.

Agle

B. R.

Wood

D. J.

(1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review, 22, 853–886.

53.

Mor Barak

M. E

. (2014). Managing diversity: Toward a globally inclusive workplace. SAGE.

54.

Muthén

L. K.

Muthén

B. O.

(1998–2017). Mplus user’s guide (8th ed.).

55.

Nahrgang

J. D.

Morgeson

F. P.

Hofmann

D. A.

(2011). Safety at work: A meta-analytic investigation of the link between job demands, job resources, burnout, engagement, and safety outcomes. Journal of Applied Psychology, 96, 71–94.

56.

Naumann

S. E.

Bennett

(2000). A case for procedural justice climate: Development and test of a multilevel model. Academy of Management Journal, 43, 881–889.

57.

Naumann

S. E.

Bennett

(2002). The effects of procedural justice climate on work group performance. Small Group Research, 33, 361–377.

58.

Neubert

M. J.

Hunter

E. M.

Tolentino

R. C.

(2016). A servant leader and their stakeholders: When does organizational structure enhance a leader’s influence? The Leadership Quarterly, 27(6), 896–910.

59.

Organ

D. W.

(1997). Organizational citizenship behavior: It’s construct clean-up time. Human Performance, 10, 85–97.

60.

Ostroff

Kinicki

A. J.

Clark

M. A.

(2002). Substantive and operational issues of response bias across levels of analysis: An example of climate-satisfaction relationships. Journal of Applied Psychology, 87, 355–368.

61.

Ostroff

Kinicki

A. J.

Muhammad

R. S.

(2013). Organizational culture and climate. In Weiner

I. B.

Schmitt

N. W.

Highhouse

(Eds.), Handbook of psychology: Industrial and organizational psychology (Vol. 12, pp. 643–676). John Wiley.

62.

Otero-Neira

Varela-Neira

Bande

(2016). Supervisory servant leadership and employee’s work role performance: A multilevel mediation model. Leadership & Organization Development Journal, 37, 860–881.

63.

A. Y.

Waldman

D. A.

Peterson

S. J.

(2018). Do humble CEOs matter? An examination of CEO humility and firm outcomes. Journal of Management, 44, 1147–1173.

64.

Overstreet

R. E.

Hazen

B. T.

Skipper

J. B.

Hanna

J. B.

(2014). Bridging the gap between strategy and performance: Using leadership style to enable structural elements. Journal of Business Logistics, 35, 136–149.

65.

Ozyilmaz

Cicek

S. S.

(2015). How does servant leadership affect employee attitudes, behaviors, and psychological climates in a for-profit organizational context? Journal of Management & Organization, 21, 263–290.

66.

Peterson

S. J.

Galvin

B. M.

Lange

(2012). CEO servant leadership: Exploring executive characteristics and firm performance. Personnel Psychology, 65, 565–596.

67.

Podsakoff

N. P.

Whiting

S. W.

Podsakoff

P. M.

Blume

B. D.

(2009). Individual-and organizational-level consequences of organizational citizenship behaviors: A meta-analysis. Journal of Applied Psychology, 94, 122–141.

68.

Podsakoff

P. M.

Ahearne

MacKenzie

S. B.

(1997). Organizational citizenship behavior and the quantity and quality of work group performance. Journal of Applied Psychology, 82, 262–270.

69.

Podsakoff

P. M.

MacKenzie

S. B.

Lee

J. Y.

Podsakoff

N. P.

(2003). Common method biases in behavioral research: A critical review of the literature and recommended remedies. Journal of Applied Psychology, 88, 879–903.

70.

Porck

J. P.

Matta

F. K.

Hollenbeck

J. R.

J. K.

Lanaj

Lee

S. M.

(2019). Social identification in multiteam systems: The role of depletion and task complexity. Academy of Management Journal, 62, 1137–1162.

71.

Rai

Prakash

(2016). How do servant leaders ignite absorptive capacity? The role of epistemic motivation and organizational support. Revista de Psicología del Trabajo y de las Organizaciones, 32, 123–134.

72.

Rapp

A. A.

Bachrach

D. G.

Rapp

T. L.

(2013). The influence of time management skill on the curvilinear relationship between organizational citizenship behavior and task performance. Journal of Applied Psychology, 98, 668–677.

73.

Rubin

R. S.

Dierdorff

E. C.

Bachrach

D. G.

(2013). Boundaries of citizenship behavior: Curvilinearity and context in the citizenship and task performance relationship. Personnel Psychology, 66, 377–406.

74.

Schaubroeck

Lam

S. S. K.

Peng

A. C.

(2011). Cognition-based and affect-based trust as mediators of leader behavior influences on team performance. Journal of Applied Psychology, 96, 863–871.

75.

Schein

E. H.

(2010). Organizational culture and leadership (4th ed.). Jossey-Bass.

76.

Schneider

Ehrhart

M. G.

Mayer

D. M.

Saltz

J. L.

Niles-Jolly

(2005). Understanding organization-customer links in service settings. Academy of Management Journal, 48, 1017–1032.

77.

Schulte

Ostroff

Shmulyian

Kinicki

(2009). Organizational climate configurations: Relationships to collective attitudes, customer satisfaction, and financial performance. Journal of Applied Psychology, 94, 618–634.

78.

Schwepker

C. H.

Schultz

R. J.

(2015). Influence of the ethical servant leader and ethical climate on customer value enhancing sales performance. Journal of Personal Selling & Sales Management, 35(2), 93–107.

79.

Smith

C. A.

Organ

D. W.

Near

J. P.

(1983). Organizational citizenship behavior: Its nature and antecedents. Journal of Applied Psychology, 68, 653–663.

80.

Sun

P. Y.

(2013). The servant identity: Influences on the cognition and behavior of servant leaders. Leadership Quarterly, 24, 544–557.

81.

van Dierendonck

. (2011). Servant leadership: A review and synthesis. Journal of Management, 37, 1228–1261.

82.

Vigoda-Gadot

(2007). Redrawing the boundaries of OCB? An empirical examination of compulsory extra-role behavior in the workplace. Journal of Business and Psychology, 21, 377–405.

83.

Walumbwa

F. O.

Hartnell

C. A.

Oke

(2010). Servant leadership, procedural justice climate, service climate, employee attitudes and organizational citizenship behavior: A cross-level investigation. Journal of Applied Psychology, 95, 517–529.

84.

Zhang

X. A.

Ullrich

van Dick

(2015). Getting everyone on board: The effect of differentiated transformational leadership by CEOs on top management team effectiveness and leader-rated firm performance. Journal of Management, 41, 1898–1933.

85.

Zhou

Miao

(2014). Servant leadership and affective commitment in the Chinese public sector: The mediating role of perceived organizational support. Psychological Reports, 115, 381–395.

86.

Zohar

Hofmann

D. H.

(2012). Organizational culture and climate. In Kozlowski

S. W. J.

(Ed.), The Oxford handbook of industrial and organizational psychology (pp. 643–666). Oxford University Press.