American Journal Of Business Education – May/June 2012 Volume 5, Number 3 Servant Leadership As A Teachable Ethical Concept Marty McMahone, University of Mary Hardin-Baylor, USA ABSTRACT This paper considers a different approach for developing ethical organizations. It argues that the practice of servant leadership provides a systematic training approach that should develop a more ethical culture. Servant leadership can serve as a “character ethic” that is teachable to individuals or organizations. The advantages and potential problems of using servant leadership as a basic organizational ethic are examined. A key advantage of servant leadership is that it might improve both the ethical climate and the internal work environment of an organization. Finally, the paper considers ethical scorecards that should show that companies currently practicing servant leadership tend to be more ethical. Keywords: Servant Leadership; Ethics; Character Ethics; Ethics Training INTRODUCTION E thical failures in business have continued to fuel a trend toward the development of strong ethical training in business and education. The call for strengthening ethics education comes from government organizations, from educators and from the business world. There seems to be agreement that we need to do a better job of teaching ethics. It is not difficult to see why. A productive free market system requires some level of trust. Investors who cannot trust that they can know and understand the profit potential of a business will not be inclined to invest. Customers who cannot trust products will not be inclined to buy. Employees who cannot trust their bosses will be less inclined to give their all to the work of the business. Unethical behavior undermines business productivity. In a highly competitive global environment, that can be deadly. The problem with the argument for increasing ethics education, however, is the basic question of whether or not ethics education has any value in actually making people ethical. Most business schools have been teaching ethics for some time. Stark (1993) noted that 90% of the nation’s business schools had some kind of ethical training. At that time, there were also three academic journals dedicated to the topic of business ethics and at least 16 research centers in operation. All of that was in place before the loudly publicized ethical failures of the late 1990s. It is possible, of course, that some involved in major ethical lapses were not exposed to ethics education, but it is more likely that many, if not most, were. The problem does not seem to be with the amount of ethics education so much as with the effectiveness of it. However, even if some ethical failures come from those with good ethics education, that does not invalidate ethics education. Hartmann (1998) notes that students do not always learn or apply principles from other subject areas effectively. Management principles, for instance, only really matter to those who want to work effectively in organizations. Managers often fail to apply the principles of management in the work setting. Yet, we do not suggest that there is no point in teaching management principles because of the failures. Similarly, Hartmann argues, we cannot afford to stop teaching ethical principles simply because a few do not listen. The question of how to make ethical study more effective still remains significant, however. Character ethicists have long argued that the primary goal of ethics education should be developing people of good character rather than attempting to solve impossible case studies. Unfortunately, they have not generally been able to offer a character ethic that seems to work well in the business environment. Attempting to apply a philosophically developed, individualistically-oriented and often vague character approach to the business world has proven challenging. The partial solution I want to offer comes not so much from the field of ethics as from the practice of leadership. My thesis in this paper is that the practice of servant leadership provides a basis for ethics that can help © 2012 The Clute Institute 339 American Journal Of Business Education – May/June 2012 Volume 5, Number 3 to develop more ethical behavior in the business environment. Servant leadership can be taught to students as a significant part of ethics education and can also be developed in organizations as a way to improve the ethical climate of the business. To demonstrate the thesis, I will begin with a look at some of the problems inherent in traditional ethics education. Next, I will consider both the value and the limitations of character ethics approaches, leading to an organizationally-oriented approach centered in servant leadership. I will then consider the areas where servant leadership fits well as an organizational approach to developing character. As a first step in demonstrating the proof of this thesis, I will examine two lists of ethical companies and compare the percentage of servant leadership organizations on the list with the percentage of such organizations in the larger business sphere. THE PROBLEM OF BUSINESS ETHICS EDUCATION Business ethics is usually based on the general moral philosophy that has dominated the broad study of ethics. That philosophical background is rich and valuable as a starting point for ethical discussion, but it also has weaknesses when applied to specific business issues. Stark (1993) noted that business ethics discussions have suffered from the problem of being too general, too theoretical and too impractical. If a business ethicist wants to address questions like “is capitalism morally justifiable?” students and managers alike are likely to consider the question useless. Business students are also likely to consider everything else the ethicist says with skepticism. This can lead to the ethics classes seeming irrelevant compared to the hard data oriented classes in accounting, finance and economics. For business ethics to work, it has to have some traction in a world dominated by self-interest, mixed motives and difficult balances. Ethics education often has two primary facets. First, students are introduced to several approaches to attacking an ethical question. While various books might consider anywhere from two to ten different systems, the three approaches that are most commonly considered are rules, consequences and character. These approaches are then applied to numerous dilemmas to consider how they might work. While this approach can provide the opportunity to think about ethical struggles, it has some problems, especially for business applications. Ethical study has also generally focused on how individuals make good decisions. Even with business ethics cases, the cases tend to assume that an individual is attempting to make a decision in a specific case without any consideration of the corporate environment. Rost has argued that most concepts of ethics relate to acting ethically in relation to another person or small group. The ethical approaches give little help in dealing with the problems of the corporation (Rost, 1995). Rost proposed a framework that could be used to evaluate the value of a corporate approach to ethics. This framework provides a way of evaluating whether an approach to ethics accomplishes what is needed to create ethical corporations. There are five elements in Rost’s framework (Rost, p. 139-140): 1) Have a large group orientation. 2) Be oriented toward process 3) Be oriented toward producing a virtuous organization, not just virtuous individuals 4) Develop a clear understanding of the common good and how people promote it (Note: Rost admits this is going to be very difficult in a pluralistic society) 5) Needs to be genderless and transcend religious boundaries I will return to these criteria after discussing servant leadership’s ethical orientation to see if servant leadership can begin to answer some of the concerns cited. SERVANT LEADERSHIP AS A CHARACTER ETHICS PARADIGM Character or virtue ethics tends to focus on the idea that ethical behavior generally comes out of ethical people. If we want to develop industry leaders who act ethically, we need to develop people with good character. If a corporation wants to see ethical behavior from its employees, it needs to have virtuous people working in the organization. Even more to the point, the organization itself needs to have a virtuous orientation. Character-based ethics approaches can be rather subjective and obscure, but they also provide the best opportunity to develop people 340 © 2012 The Clute Institute American Journal Of Business Education – May/June 2012 Volume 5, Number 3 who act out of good motives. An even more important strength of character ethics, from a business perspective, is that it has a learning component. The organization can emphasize the continual growth of the person (or the organization) by developing motivational dispositions (Whetstone, 2001). The strength of servant leadership as an ethical approach is that while it can be a personal approach to leadership, it can also be a system that is taught to an entire organization. It can be taught to students as individuals, but it can also become the defining method of establishing leadership throughout an organization. As the concept has become more popular, many corporations have done exactly that. Companies like Synovus Financial, TD Industries, Nordstroms and Southwest Airlines have systematic approaches to developing servant leaders throughout their organizations. They have generally done so to develop leaders rather than to create an ethical environment. Nevertheless, it remains true that these companies have shown that servant leadership can be taught as an organizational concept. If servant leadership is primarily about leadership technique, though, can it also be an ethical system? At the time that I first started thinking and writing about this, servant leadership was generally introduced as a separate issue from business ethics. Sauser (2005) concludes his argument about the connection of religion to ethical application in business with the idea that servant leadership could apply the ethic of love to the business world, but he still sees servant leadership and ethics as different things. Searle and Barbuto (2011) made a more thorough attempt to connect servant leadership to positive psychology. They argue that servant leadership characteristics will facilitate positive individual and organizational behaviors. They provide a framework of propositions that connect servant leadership to positive outcomes. The framework is a theoretical starting point for considering how servant leadership might impact positive behavior, but the authors leave consideration of proof for later research. A look at the fundamental concepts of servant leadership shows that servant leadership can be defined as an ethical principle. Greenleaf (1977) defined the servant leader as “servant first.” More importantly, he developed a rather clear “acid test” of servant leadership that reveals the strong ethical nature of the practice: “Do those served grow as persons; do they, while being served, become healthier, wiser, freer, more autonomous, more likely themselves to become servants? And will the least privileged in society benefit or not be further deprived?” A servant leader’s first concern is with the growth of others, not with self. That basic concept would go a long way toward developing more ethical leadership. Greenleaf’s final element in the definition sets a strong standard for societal impact. In terms of developing an effective corporate ethic, the effect on society is probably the area where servant leadership seems least likely to help. Yet, if Greenleaf’s test were the standard, even considerations like impact on the environment and community must be considered in making decisions. Other advocates of servant leadership also argue that leadership begins with character. Blanchard and Hodges (2005) argue that leaders must first overcome their ego’s desire to be served and learn to focus on serving others. They contend that a heart motivated by self-interest cannot be the heart of an effective leader. Autry (2001) describes character as the foundation of good leadership. A person must practice authenticity, vulnerability and love for others in order to lead others. Hunter (2004) argues that leadership is a skill that is learned by first developing a character that is based in moral maturity and commitment to doing the right thing. What these and other servant leadership advocates all emphasize is that leadership is much more about the kind of person one is than it is about techniques and practices. The primary consideration here is that the character aspects that make up a servant leader are things that will make for more ethical behavior. Hunter describes the character of a servant leader as patient, kind, humble, respectful, selfless, forgiving, honest and committed. In sum, Hunter argues that the love described in the thirteen chapter of the biblical book of I Corinthians is the very basis of leadership. One idea that I have borrowed from Hunter illustrates this well. When I begin teaching leadership, I ask students about the characteristics of a great leader that they have known personally. I then write those characteristics down and save them. Later when I talk about Hunter’s idea that love is the basis of leadership, I show how closely their terms match up with Hunter’s description of love. There are seldom more than two or three traits that do not match up perfectly with the eight character traits Hunter describes. Servant leadership argues that if leaders practice love, they will exemplify the character that will make people want to follow them. Of course, all this talk of love and character sounds mushy. Whetstone (2002) indicates that servant leadership is often described as unrealistic because it is seen as soft and failing to recognize our “will to © 2012 The Clute Institute 341 American Journal Of Business Education – May/June 2012 Volume 5, Number 3 power.” It is also threatening to some who have gained power in a hierarchical structure. In a similar vein, Giampetro-Meyer et al. (1998) note that servant leaders are seen as not being aggressive, not willing to articulate a vision, and not striving for short run profits. It is certainly true that this image of servant leadership may make many in corporations hesitant to implement such an approach, but the image is incorrect (except, hopefully, for the idea that servant leaders will not strive for short run profits). Most of the problem centers in the poor understanding many people have of love as a soft feeling. Hunter (2004) makes it clear that loving someone does not mean failing to hold them accountable. In fact, it is unloving to fail to hold someone accountable to the standards of excellence that a company has set. Servant leaders can and should be aggressive, but they will be aggressive about the right things: protecting the values of the company, defining a clear vision, keeping employees focused on living up to the standards of the organization, etc. Collins (2001) makes a similar argument in his description of what he calls Level 5 leaders. He notes that great leaders are a mix of humility and intense personal will. Although Collins avoids the term “servant leader” (primarily because of concerns that it is seen as weakness), his picture of great leaders is of those who care about the organization and not themselves, but who also have a total commitment to maintain high discipline standards within the organization. EVALUATING SERVANT LEADERSHIP AS AN ORGANIZATIONAL ETHIC The very qualities that make a person an effective servant leader define a character that should make ethical decisions. We are not looking just for an individual ethic, however, so the more important question is whether servant leadership can work as an organizational ethical system. To consider this, I return to Rost’s framework. First, an organizational ethic needs to have a large group orientation. Servant leadership has been shown to work in that way. Hunter (2004) noted that approximately one-third of the Fortune magazine “100 Best Companies to Work For” list were involved in developing servant leadership as a core operating principle of the company. Even though those corporations were more interested in leadership style than in ethics, they have demonstrated that the approach can be developed institutionally. Second, Rost argues that the approach must be oriented toward process. This seems to be the weakest point for servant leadership. Rost appears to be looking for a systematic approach to decision making that can be followed in a step-by-step format. Servant leadership often rejects systematic approaches and expects people to act out of good character. Nordstrom’s, for instance, has been known for telling employees “act according to your best judgment.” However, I would argue that this is also the weakest of Rost’s points in the framework. I am not convinced that an ethical process is the best way to ethical conduct. Processes can easily be directed toward a self- serving goal. They also do not fit the way that most people make decisions. Even though I generally teach students a simple process for ethical decision making, I am convinced that most people will come to ethical conclusions primarily by the direction of gut instinct. The advantage of servant leadership is that the practice of the disciplines of servant leadership should help to develop better gut instincts. Rost’s third principle is that the approach must develop a virtuous organization, not just virtuous individuals. Searle and Barbuto have provided some argument in this direction in their framework. It seems likely that an organization controlled by those seeking to put others first would be more likely to be virtuous in its decisions toward outsiders. In fact, one of the primary selling points of the servant leadership model has been the effective customer care and support that is generated by the organizations that practice it. Servant leadership organizations are known for treating customers well. Fourth, Rost argues that the approach should develop a clear understanding of the common good and how people promote it. This is not an easy commitment in a pluralistic society. Servant leadership clearly does have a picture of the common good. It involves the need to help other people develop into the best they can be. If Greenleaf’s test is used, it also involves seeking to improve the situation of even the most disadvantaged in society. That would seem to represent a picture of the common good from within the organization. It is not clear whether Rost believes the approach needs to develop a picture of the common good that even those outside the organization would buy. That seems unlikely, however, since our society has pretty well conceded the impossibility of a universal understanding of what is best for society. 342 © 2012 The Clute Institute American Journal Of Business Education – May/June 2012 Volume 5, Number 3 Finally, Rost argues that the approach needs to be genderless and transcend religious boundaries. As an approach to leadership or to ethics, servant leadership simply makes no reference to gender. It is not clear that servant leadership organizations are better at being color and gender blind than other organizations, but their goal of developing and growing all people should lead that way. The modern servant leadership movement does have strong roots in Christian thinking. Robert Greenleaf was a Quaker who desired to develop a thorough ‘theology of institutions.” Many of those who are leading advocates of servant leadership are also Christians, including Blanchard, Hunter, Autry and Depree. Many writers use Jesus as a model of servant leadership. On the other hand, servant leadership does not require adherence to a particular religious belief. An organization can hold people accountable to principles of love, patience and honesty without referencing the Christian scriptures. The character that is required for servant leadership, therefore, represents a solid foundation for ethical behavior within an organization. Those who seek first to grow and care for others should tend to make ethical choices—especially since most unethical choices are going to be heavily rooted in self-interest. Servant leadership also has the ability to serve two functions. It can be taught to individual students as a foundation for character that will enable them to resist negative corporate pressures. It can also be taught to organizations to make both the organization and the individuals within the organization more ethical. WEAKNESSES AND ISSUES The most obvious question that seems to be raised by this argument is whether servant leadership would only really help with the ethical treatment of employees without really changing the nature of how an organization deals with the rest of society. As one of my graduate students put it, if an Exxon employee decides to serve the corporation by doing something that will damage the environment and hurt the people of Ecuador, would he not still be practicing servant leadership? Servant leadership should be effective in developing an organization that will make good choices in relation to employees and even toward customers and stockholders, but will that make the corporation a good corporate citizen? It only will if the last line of Greenleaf’s test is kept as part of the standards of leadership. It is not enough to simply seek to grow one’s followers. For servant leadership to be a complete ethical approach, the idea of “caring for the least of society” must remain part of it. That may not always be the case, since that extension by Greenleaf is the least rewarding to the organization in terms of creating a more profitable company. It also will do no real good for a company to simply say that it wants to be a servant leadership corporation. Just as a long value statement that adorns the wall of the employee break room but has no impact on the decision making of employees is of little worth, a hollow commitment to servant leadership will not impact the ethical environment of the company. For a company to develop a positive organizational character through servant leadership, it must make serving part of the way that employees are evaluated. The old adage that “what gets measured gets done” is unlikely to go away in organizations. Corporations that claim servant leadership, and even those who sincerely want to practice it, but who do not implement means to evaluate the practice are unlikely to gain much from the process. Hunter (2004) has developed a 360 degree-style leadership skills inventory that can be used to evaluate the practice of servant leadership. The inventory involves evaluation by superiors, peers and direct reports along with a personal evaluation. That inventory is followed by an action plan on the part of the employee to address weaknesses in developing servant character. Without some form of measurement that is tied into the compensation and promotion structure of the organization, it is unlikely that genuine servant leadership will take root in an organization. A critique by Eicher-Catt (2005) raises another potential issue with servant leadership. Eicher-Catt criticizes the servant leadership model as a myth that fails to live up to what it claims. In a detailed language analysis, she argues that the juxtaposition of the words servant and leadership fail to create a gender-neutral concept. Her argument is founded in the idea that the ideas of service have feminine characteristics and the ideas of leadership have masculine ones. In an environment in which senior managers are often male and lower-level managers are often female, she argues that the organizational chain of command could enact “leadership” roles while encouraging lower management staff to exhibit more “servant” characteristics. Thus, servant leadership could become a means to seek submission on the part of others, especially the feminine. Eicher-Catt has significantly misconstrued servant leadership. Top management that is doing what she describes is clearly not practicing servant © 2012 The Clute Institute 343 American Journal Of Business Education – May/June 2012 Volume 5, Number 3 leadership. The very idea of servant leadership focuses on the idea of being “servant first.” Nevertheless, I do think she points to a concern for which we need to pay special attention. Any leadership or management technique, if it is used solely as a technique, has the potential to be nothing more than manipulation. For servant leadership to be effective as an approach to organizational ethics, it must be genuinely practiced from the top down. It cannot be just a tool used by management to get more work from employees. EVALUATING SERVANT LEADERSHIP CORPORATIONS While the argument that servant leadership should lead to ethical behavior works in theory, can it be shown to be true in organizations? There are several complicating factors in trying to determine this. First, there is the question of how to determine whether or not an organization actually incorporates servant leadership into its corporate approach. Second, there is the difficulty of objectively evaluating the ethical behavior of organizations. Third, there is the problem that not all that many organizations even attempt to practice servant leadership as a corporate system. While servant leadership has become a hot topic in leadership discussions, and many individual leaders have apparently attempted to implement it, it still remains a relatively small segment of the business world. This latter problem cropped up in this attempt to evaluate the effectiveness of servant leadership. The approach used in this study was to consider the Ethisphere rankings of the “World’s Most Ethical Companies” as an objective standard of highly ethical corporations. In 2011, this list identified 110 companies as practicing exemplary ethical behavior. The advantage of this list is that it involves an outside organization that attempted to objectively measure ethical behavior. The problem with the list is that an organization had to actively seek to be included. It is not a random evaluation but rather one that only includes companies that considered it worth the effort to “apply” to be on the list. The basic hypothesis to be evaluated was that a higher percentage of servant leadership organizations would appear on this list than appear in the general corporate world. While the problems with this approach were evident from the start, it made for a manageable attempt at objective evaluation. This approach helped to deal with the problem of objectively evaluating companies in relation to ethics, but it ran solidly into the problem of identifying and counting servant leadership organizations. Ethisphere’s list of most ethical companies included 110 international organizations. These companies represented more than 30 different industries. There is no set number of companies that can make the list in any one year. Companies that have the highest “EQ” scores in each industry are included in the list. I examined each of the companies on the list to determine which ones should be counted as having a servant leadership orientation. I counted any companies that are clear in their commitment to servant leadership, such as Baptist Health, Wegman’s, and Marriott International. I also counted organizations that might not use the term but which placed significant emphasis on empowerment, growing individual employees into leaders and caring for both employees and society. I attempted to hold to a high standard that probably excluded at least a few companies that might be rightfully considered servant leadership organizations. I found 23 companies on the list. That means that 21% of Ethisphere’s list of the most ethical companies in the world could be considered to have a servant leadership orientation. Is that number statistically significant? The difficulty in answering that question is that there does not seem to be a good answer to the question of what percentage of companies are attempting to practice servant leadership. Irving and McIntosh (2009) indicate that servant leadership practice is most developed in the United States and Europe. Even in the United States, though, there does not seem to be a clear understanding of how many companies are actually attempting to practice it. Fortune Magazine’s “Best 100 Companies to Work for” list generally includes 30 to 35% servant leadership companies (Hunter 2004). While advocates of servant leadership would argue there are not 30% of businesses using the practice, there does not seem to be a definitive measure of how many companies do practice it. At the least, the practice seems to have had less impact on ethics than it does on making a company a great place to work. It should be noted, though, that if only American companies from the Ethisphere list are considered, the percentage does rise to 30%. A lack of dependable information makes this test of the effectiveness of servant leadership as an ethical approach unworkable. Even organizations such as the Greenleaf Institute for Servant Leadership seem to have little idea of how significantly the practice permeates the workplace. Without that number as a comparison, the number on the Ethisphere list has no real meaning. Even with that number, the fact that Ethisphere’s list was developed from companies that had to apply would have also limited the value of that list. It is not the list of the world’s most 344 © 2012 The Clute Institute American Journal Of Business Education – May/June 2012 Volume 5, Number 3 ethical companies. It is, rather, a list of the most ethical companies among those who are willing to try to make the list in the first place. CONCLUSION AND A BETTER PATH Unfortunately, the pitfalls of this approach to evaluating the ethical benefits of practicing servant leadership proved to be insurmountable. The selection process for the Ethisphere rankings raised significant questions about the viability of the study from the start. The difficulty in establishing a comparative percentage for servant leadership organizations in the general population of businesses also makes it impossible to determine if there is a statistically significant proportion of servant leadership organizations in the Ethisphere list. While the approach of using the Ethisphere list appeared to be a quick way to test the possibility of servant leadership as an ethical system, it proved insufficient to show anything meaningful. In order to find meaningful data, a study needs to start from a group of companies that would represent a logical cross-section and then evaluate them by an empirical ethical standard. One possibility for this would be to use a service like Covalence EthicalQuote to provide the ethical scoring and then evaluate the companies that they already score based on their leadership approach. This still leaves the difficulty of determining which companies to classify as servant leadership organizations, but it provides a more random listing of companies and one that includes companies that score low on ethical standards as well as those with high scores. Therefore, one could compare the average scoring for servant leadership organizations against those that do not practice servant leadership. One complicating factor would be how to evaluate companies that claim to practice servant leadership but clearly do not. It seems likely that those who claim the behavior but do not actually practice it would score differently from those who do. However, there would be a significant danger of the researcher biasing the results if aware of how the companies were likely to score on the ethics evaluation. Servant leadership does fit the standards that Rost devised for evaluating the applicability of an ethical approach to a business. The types of practices associated with servant leadership would seem to argue that companies oriented toward servant leadership should practice better ethics. However, further study will still be necessary to show evidence that it does have that impact in an organization. AUTHOR INFORMATION Marty McMahone (B.S., M.S., M.Div., Ph.D.) is the McBryde Professor of Business at the University of Mary Hardin-Baylor (UMHB). His Ph.D is from the Institute of Church-State Studies at Baylor University. Since 1998, he has taught full time at UMHB in the fields of leadership, ethics and information science. His primary area of teaching interest is the intersection of faith and public life, especially in relation to business. His primary research interest relates to the application of servant leadership in organizations. E-mail: [email protected] REFERENCES 1. Autry, J. A. (2001). Servant leader: how to build a creative team, develop great morale, and improve bottom-line performance. 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