CEO Servant Leadership, Narcissism, And Company Financial Performance

August 16, 2016

Servant leadership is a belief in and practice of “leadership that places the good of those led over the self-interest of the leader, emphasizing leader behaviors that focus on follower development and de-emphasizing glorification of the leader” (Hale and Fields, 2007, p. 397). Servant leaders see themselves as a resource, not the source or oracle from which all organizational knowledge, wisdom, and direction must emanate.

In previous blog posts I’ve reviewed studies on servant leadership published in high quality, peer-reviewed journals that showed servant leaders enhance trust and team performance, facilitate team confidence and effective team behaviors, and encourage employees to be good citizens and perform above and beyond formal job descriptions. There is a growing body of credible evidence that shows the efficacy of servant leadership.

Screen Shot 2016-08-16 at 12.40.39 PMAn important addition to the research on servant leadership is a study of 126 CEOs from the software and hardware technology industries published in the journal Personnel Psychology. This study suggests a way to identity people who are most likely to engage in servant leader behavior – leaders that promote personal integrity and the interests of others over and above the self-interest – and then demonstrates these leaders can potentially improve their company’s financial performance (Peterson, Galvin, and Lange, 2012). It’s a simple but well-designed study that has important practical implications.

Screen Shot 2016-08-14 at 12.28.23 PM copyThe diagram to the left show’s the study’s hypothesized relationships. Results confirmed that servant leadership did have a significant positive relationship with company return on assets (ROA), even after controlling for age, tenure, prior company performance, and transformational leadership. That’s an important finding because transformational leadership has been shown to be the strongest behavioral indicator of leadership effectiveness. Examples of questions used to measure servant leadership were “The CEO seems to care more about the organization’s success than his/her own”, “The CEO values honesty more than profits”, and “The CEO emphasizes the importance of giving back to the community.”

Organizational identification, defined as “the degree to which the CEO perceives his/her self-identity as intertwined with the organization’s identity or defines him/herself in terms of the attributes of the organization” (p. 573) was shown to have a stronger than hypothesized effect on servant leadership. Based on this finding, the authors suggest that “organizations should promote people into their top management teams who have a “we” rather than a “me” mentality” (p. 589). The study further showed that if the CEO was also the founder of the company, he/she was more likely to to have this orientation toward the collective and stewardship mindset that goes beyond the strict pursuit of financial returns.

Finally, the study showed a strong negative relationship between CEO narcissism and CEO organizational identification, meaning that to the extent the CEO was narcissistic, he/she would be less likely to think in terms of what is good for “us” rather than what is good for “me”, and subsequently then less likely to display servant leadership behaviors. “The desire for narcissists to promote themselves above all else is inconsistent with the spirit of servant leadership” (p. 586). The authors conclude:

The selection of the “right” type of leader for the organization is critical because senior leaders, especially CEOs, are in a position to imprint their leadership values, as well as to recruit, retain, and socialize employees and other stakeholders who identify with these values. If a servant leadership mentality is desired, the behaviors begin with the CEO….A clear implication of our study is that organizations desiring servant leadership behaviors are well advised, to the degree possible, to be aware of individual differences during the selection process. Even simple indicators such as a candidate’s clearly evident arrogance, which could be related to narcissism, could make a difference in whether they adopt a strong organizational identity and desire to be a steward of the organization and hold it in trust. (p. 590)

We absolutely should be looking for the signs of extreme narcissism in the people we trust with the privilege to lead. Don’t let anyone convince you that you are not authorized or qualified to recognize reliable signs of narcissism, including arrogant self-interest.  It’s our shared responsibility to disqualify narcissists from positions of leadership.  The evidence presented in this study is clear that your company will reap greater financial rewards to the extent that you value, encourage, and promote servant leaders.

Related Posts:

Next Level Servant Leadership: Arthur Brooks At TED 2016

Is A Narcissistic Leader Good For Your Organization? 

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Comments (4)

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  1. Julian Summerhayes says:

    Thanks Bret for sharing. The Q. is do we need servant leaders in a self-learning, self-organizing system like holacracy?

    Julian

    Bret L. Simmons Reply:

    You are probably focusing on the bigger question of in those specific types of systems, are people we call leaders necessary. I think in any system we will always need people that practice leadership – the more the better – and this posture toward others is the one I prefer

  2. Alice says:

    I’ve seen this in action many times as I work with the owners and CEOs of closely held companies. Many are the founders or inherited the company. The companies that are winning and thriving have Servant Leader. The ones who struggle have narcissistic or troubled leaders.

    Bret L. Simmons Reply:

    Welcome, Alice! Agree 100% – thanks for sharing your thoughts