When “Serving Others” hurts Performance: What managers should know about servant leadership
In recent years, servant leadership has become one of the most celebrated leadership styles in business. Leaders who prioritize employee development, support, and empowerment are often assumed to produce both happier teams and better results.
A study by DIG researchers professor Therese Egeland, professor Vidar Schei and associate professor Alexander Madsen Sandvik suggests a more nuanced reality. Servant leadership can simultaneously strengthen collaboration and undermine financial performance, depending on how it shapes the work climate.
- Our findings clarify both the benefits and pitfalls of servant leadership for firms, highlighting that its relational advantages may come at the expense of financial outcomes under certain conditions. This research contributes to a more nuanced understanding of when and how servant leadership is advantageous for organizational success, they find.
The key insight: Leadership shapes the ‘rules of the game’
Leadership does not just influence individuals—it creates motivational climates at the firm level. Servant leadership tends to foster a mastery climate focused on learning, development, and cooperation, while weakening a performance climate focused on competition, targets, and measurable outcomes.
Read the full scientific article here
Two types of performance - often in tension
The research distinguishes between relational performance and financial performance.
Servant leadership showed a strong link to relational performance measured as helping behavior.
Financial performance includes revenue, profitability, and efficiency. Here the picture is more complex: reduced emphasis on performance climate can be associated with weaker financial outcomes. Higher employee autonomy reduces the negative impact on financial performance, as employees can better balance collaboration and delivery.
Why this matters for professional organizations
In any knowledge-intensive organization, value creation depends on both collaboration and commercial discipline. Servant leadership improves internal collaboration but can weaken performance pressure if not balanced properly.
The hidden mechanism: Climate, not behaviour
The effects are indirect. Leaders shape norms and signals that define what is rewarded in the organization. These signals influence outcomes more than individual behaviour alone.
Some advice - what managers could do
Many corporations, especially in professional services, already operate in environments where performance expectations are strong, visible, and persistent. In such contexts, the risk is not that performance focus disappears, but that it crowds out learning, cooperation, and long-term capability building.
The managerial challenge, therefore, is one of balance, not substitution.
Resist the temptation to overcorrect toward results
When financial performance is under pressure, managers often respond by reinforcing targets, KPIs, and short-term output measures. The study suggests that this instinctive response can be counterproductive if it weakens mastery-oriented signals such as learning, support, and mutual help.
Servant leadership contributes by legitimizing:
- Learning and skill development
- Helping behavior across roles and teams
- Long-term improvement over short-term wins
Balance climates, rather than choosing one
The key practical implication is not to replace a performance climate with a mastery climate, but to hold both in productive tension.
Leadership works largely through climate - managers should pay close attention to the signals they send. What is recognized and gets promoted?
Small, consistent signals can make the difference between a healthy balance and a culture that slowly drifts too far in one direction.
Bottom line:
Servant leadership creates real value for culture and collaboration, but it is not a ‘free lunch.’ Managers must deliberately design organizational climates that support both people and performance.