Here is a question I love to answer. Does servant leadership deliver superior financial performance results? The answer – unequivocally yes.
The reason I love this question is that I meet skeptic after skeptic that cannot follow this logic. It is not plausible that you could serve the people you lead and deliver superior financial performance.
This is a deep-rooted objection that is embedded in much of our teaching about leadership. False assumptions like:
- Leaders with superior financial results are mean, tough, son-of-a-guns.
- Leaders that serve and care about the people are weak-kneed, soft, wimpy people.
“You can’t serve the people well without delivering superior results.”~ Cheryl Bachelder
The first serious research in support of this premise came in Jim Collins’ book, Good To Great. He demonstrated that 28 companies exhibited superior, long-term performance results that beat the general stock market by an average of seven times in fifteen years.
These companies had what Collins’ coined Level V Leaders. Here is his definition of Level V Leaders – essentially leaders in service to the enterprise:
Level 5 Leaders channel their ego needs away from themselves and into the larger goal of building a great company. It is not that Level 5 Leaders have no ego or self-interest. Indeed, they are incredibly ambitious-but their ambition is first and foremost of the institution, not themselves.~ Jim Collins
The next serious research on the topic is in a lesser known book called Seven Pillars Of Servant Leadership by James W. Sipe & Don M. Frick. These authors took the financial performance of the eleven publicly traded good to great companies and compared them with eleven companies most frequently cited as servant-led.
The eleven companies studied by Collins averaged a 17.5% return. The servant-led companies averaged a 24.2% return, both outperforming the S&P return of 10.8%.
There are additional studies that build on this body of research and support the fact that purpose-driven, people-centric, service-minded companies simply outperform the rest. Which overtime, has led me to the well-founded conclusion that serving the people and the enterprise is by far the best path to superior financial performance.
“Good leaders must first become good servants.”~ Robert Greenleaf
Over the last five years, we have been building such a case study at Popeyes® Louisiana Kitchen restaurants. We like to say “how we do business is more important than what we choose to do”.
First we chose our most important constituent, our franchisee, as our focal point. They are the investors and entrepreneurs that drive the performance of our restaurant chain.
We then chose to serve their interests, by making their sales and profitability our number one goal.
And most importantly, we chose to work with our franchisees in close partnership (the ‘how’) which has been the accelerator to our business performance.
Today our financial performance is best in class in our industry. By Wall Street measures, our stock appreciation over the last five years is over 300%. Our stated purpose – Inspire servant leaders to achieve superior results.
If you don’t believe that you can serve and deliver superior financial performance, please follow this blog over the next few weeks as I discuss the behaviors and traits of servant leaders. They may be “different” than you think. Stay tuned.