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To Keep Your Agents: Consider Servant Leadership

Dec. 1, 2010

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By Fernando Jaramillo, Douglas B. Grisaffe, Lawrence B. Chonko, and James A. Roberts

Introduction

Sales force retention is a critical objective facing managers. The costs of high turnover rates can be substantial and include lost sales, abandoned sales territories and costs associated with recruitment and training. Industries, such as Real Estate, that heavily rely on a sales force to generate and maintain revenue, are especially attuned to this issue. Research has shown that salespeople develop turnover intentions when they are: dissatisfied with their jobs, uncommitted to the organization and find their jobs overly stressful (Babakus et al. 1999). One consideration leaders may find helpful for addressing these issues is the adoption of a servant leadership approach. In a research study of 501 full-time salespeople, we discovered that servant leadership affects turnover intention through a complex chain-of-effects that involves the organization's ethical climate, person-organization fit, and organizational commitment.

Servant Leadership: Serving the Needs of Others

Managers who adopt a servant leadership approach strive to serve the needs of others, and place the needs of others above the attainment of organizational or individual goals. Servant leaders appear to be driven by core personal values of honesty and integrity, and by their nature, they value humility, equality, and respect for others (Russell 2001). In addition to these elements of servant leadership, Ehrhart (2004) identifies seven major behaviors of a servant leader:

  1. Forming relationships with subordinates
  2. Empowering subordinates
  3. Helping subordinates grow and succeed
  4. Behaving ethically
  5. Having conceptual skills
  6. Putting subordinates first
  7. Creating value for those outside the organization

Research abounds to reveal that subordinates respond favorably to the employee-oriented approach of servant leadership and demonstrate increased intrinsic motivation, job satisfaction, and lower role stress. Our particular research uncovers an expansion of the positive effects resulting from servant leadership behavior to include an improvement in turnover intention.

Servant Leadership's Effect on Ethical Organizational Climate

The ethical climate of the organization, which is highly influenced by the behaviors and outlook of the leader, shapes employee perceptions that influence retention. Specifically, as identified by Grisaffe and Jaramillo (2007), salespeople who believe that the firm operates at a higher ethical level:

  • Think that the firm cares about them
  • Exhibit greater pride working for the company
  • Believe that their job allows them to grow and develop
  • Think that their job is challenging
  • Report higher levels of sense of achievement
  • Are less stressed with their jobs
  • Report positive job attitudes

As employees perceive organizations as more ethical, their intention to want to continue working there increases. Our research of servant leadership, as it pertains to the development of an ethical organizational climate, shows a positive relationship between servant leadership and salesperson's perceptions of the ethical level of the organization. We can therefore conclude that leaders who adopt a servant leadership approach will positively affect their follower's perceptions about the ethical standards of the organization and thereby increase employee job satisfaction as well as the likelihood of retention.

Servant Leadership Effect on Person-Organization Fit

Person-organization fit speaks to the compatibility between employee and company values, beliefs, and goals. When employee-company values are not aligned, both employee and employer become dissatisfied with the relationship, and the employee will likely leave or be terminated. Person-organization fit is typically viewed as an important antecedent of salesperson's attitudes, especially those attitudes that influence retention. Our findings indicate that sales people report a higher level of person-organization fit when they believe that their supervisor is a servant leader who embraces the organization's values. Servant leadership behavior therefore, enhances the salesperson's belief that the supervisor's values (i.e. concern for others, integrity, fairness) align with the values of the organization. The servant leader helps subordinates assimilate better and/or feel like they truly fit at the organization, which enhances the subordinate's perception of person-organization fit.

Servant Leadership Effect on Organizational Commitment

Organizational commitment involves the level of attachment and identification an employee feels for his/her employer. The results of our research demonstrate that servant leadership positively effects organizational commitment, enhancing employee attitudes about the employing organization. As employees become more committed to the organization, they express a deeper desire to stay with the organization. This is especially relevant to sales-driven organizations such as real estate, where agents can easily transition from agency to agency. By developing organizational commitment, managers can create a sense of employee dedication thereby increasing the likelihood of their commitment to the agency and their retention.

Conclusion

Servant leadership is well established as a leadership style that creates positive benefits to organizations. In particular, this study reveals that adopting an employee-oriented approach will also improve turnover intention, a common problem in sales industries such as real estate. The key concept to embrace in order to successfully implement servant leadership is an ordering of priorities that places the needs of employees as most important. Leaders who operate from this perspective serve as role models to their employees and reap the benefit of improved employee attitude and job satisfaction. Another especially pertinent benefit of servant leadership in real estate is the impact this leadership style has on customer relationships. Real estate agents certainly understand that forming solid relationships with customers is an essential key to overall success. Research shows that servant leadership plays a fundamental role in a firm's journey toward developing a service-oriented culture (Lyte, Hom, and Mokwa 1998). Essentially, employees learn how to treat their customers by observing how their managers treat them. While it may on the surface appear counter intuitive to place employee needs as a top priority, even above company objectives, this study, as well as supporting research, demonstrates that servant leadership has myriad benefits to the organization and is an effective tool to retain employees.

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References

Babakus, Emin, David W. Cravens, Mark Johnston, and William C. Moncrief (1999), "The Role of Emotional Exhaustion in Sales Force Attitude and Behavior Relationships," Journal of the Academy of Marketing Science, 27 (1), 58-70.

Ehrhart, Mark G. (2004), "Leadership and Procedural Justice Climate as Antecedents of Unit-Level Organizational Citizenship Behavior," Personnel Psychology, 57 (March), 61-94.

Grisaffe, Douglas B. and Fernando Jaramillo (2007), "Toward Higher Levels of Ethics: Preliminary Evidence of Positive Outcomes," Journal of Personal Selling & Sales Management, 27, 4 (Fall), 355-371.

Lytle, Richard S., Peter W. Hom, and Michael P. Mokwa (1998), "SERV*OR: A Managerial Measure of Organizational Service-Orientation," Journal of Retailing, 74 (4), 455-489.

Russell, Robert F. (2001), "The Role of Values in Servant Leadership," Leadership & Organization Development Journal, 22 (2), 76-83.

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About The Authors

Fernando Jaramillo, PhD

Associate Professor of Marketing, University of Texas at Arlington

Fernando Jaramillo's research interests include marketing strategy and sales force management. Dr. Jaramillo's research has appeared in multiple journals including the Journal of Personal Selling & Sales Management, International Journal of Research in Marketing, Journal of Business Research, Journal of Business Ethics, Journal of Marketing Theory & Practice, and the Journal of Marketing Education. He is a member of the editorial review boards for the Journal of Business Research, the Journal of Personal Selling & Sales Management, and the Journal of Marketing Theory & Practice.

Douglas B. Grisaffe, PhD

Assistant Professor of Marketing, University of Texas at Arlington

Doug Grisaffe teaches research methodology and applied statistics in UTA's Master of Science in Marketing Research (MSMR) program. He is the former Vice President, Chief Research Methodologist for Walker Information, a research and consulting firm in the area of employee and customer satisfaction and loyalty measurement. His ongoing research involves forces that build or diminish strong connections between employees, customers, and companies. Doug's publications appear in journals such as Journal of Service Research, Journal of Personal Selling & Sales Management, Marketing Letters, and Human Resource Management Review.

Lawrence B. Chonko, PhD

The Thomas McMahon Professor in Business Ethics, University of Texas-Arlington

Lawrence B. Chonko, PhD is The Thomas McMahon Professor in Business Ethics and chair of Marketing at the University of Texas at Arlington. He is a recipient of the Southwestern Business Dean's Association Innovative Achievement Award and the American Marketing Association Sales Interest Group, Lifetime Achievement Award. His scholarly work has appeared in a variety of journals, nine of which have received "best paper" recognition, one nominated for "Best Sales Papers" of the 20th Century and one selected as having the most impact on the discipline by the Journal of Business Research. Prof. Chonko has authored or co-authored 15 books and served as Editor of the Journal of Personal Selling and Sales Management.

James A. Roberts, PhD

Ben H. Williams Professor of Marketing, Hankamer School of Business, Baylor University

Dr. Roberts has published extensively in the sales literature and for the past 15 years has focused his research efforts on the impact of materialism on well-being.

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