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

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.