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4 Big Benefits of Servant Leadership

By Melissa Maldonado, Director of Customer Support

Traditionally when we think about leadership in organizations, we think about a top-down, authoritarian hierarchy. When many dealers started working years ago, this was the typical structure and there was a general belief that a high-pressure sales environment drove financial success.

But a large and growing body of research suggests otherwise. It turns out that high-pressure environments create workplace stress and disengaged employees, which is bad for business.

Business experts agree that a servant leadership model is far more effective when it comes to keeping employees engaged, which in turn leads to higher productivity and satisfied customers.

Examples of companies that practice servant leadership include Southwest Airlines, Costco, Zappos, REI, Quiktrip, Aflac, Marriott, Nordstrom and Starbucks. Not coincidentally, many of these organizations have also made the Fortune Magazine’s “100 Best Companies to Work For” list.

Southwest Airlines is probably the most well-known example of a company where servant leadership has paid dividends. Herb Kelleher’s philosophy of putting employees first has resulted in a highly engaged, low-turnover workforce and 35-plus consecutive years of profitability, which is an unheard-of record in the turbulent airline industry.

Practicing servant leadership can deliver the following big benefits to your dealership.

Makes Recruiting Easier

Employee turnover rates in dealerships are still high, and that turnover is expensive. The Center for American Progress estimates that replacing a single employee costs approximately 20% of that employee’s salary.

The labor market is tight right now. To attract the best talent, you need to differentiate your organization. It’s not just about offering the best pay or benefits; you need to offer a complete package. People want to work at a company that offers them a sense of purpose and belonging, a career path, a strong culture and they want to be recognized and genuinely appreciated for their efforts.

Increases Employee Retention

With traditional management styles, the needs of the company are often put ahead of the needs of the employees. With servant leadership, the needs of your employees are your first priority, always. No decision is made without figuring how it impacts the employees. This helps to nurture a strong sense of loyalty from the employees to the company.

Many leaders in dealerships have cultivated a high-pressure work environment, especially in the sales department. Although this type of environment may generate short-term excitement and gains, studies show that long-term, high-pressure environments cause employees to become disengaged.

To start making changes to your culture, take a long-term view of profitability. Instead of focusing on sales and numbers, find a way to make your employees love their jobs. If they love what they do, you won’t have to worry about making the numbers.

Increased Productivity

According to Gallup, 67% of employees say they are sometimes, very often or always burned out at work. Also, per Gallup, employees who are often burned out are 63% more likely to take a sick day and 23% more likely to visit the emergency room. This negatively affects productivity and can drive up healthcare costs in your dealership.

In studies by the Queens School of Business and the Gallup Organization, disengaged workers had 37% higher absenteeism, 49% more accidents, and 60% more errors and defects.

Servant leadership encourages employees to find a work-life balance, and supports them in their efforts to do so.

Healthy Bottom Line

There are many hidden costs involved with disengaged employees and a high-pressure work environment. Health care costs induced by stress reduce companies’ profits by 10%. Organizations with low employee engagement scores experience 18% lower productivity, 16% lower profitability, 37% lower job growth and 65% lower share price over time.

To help alleviate workplace stress, a lot of companies offer perks like gym memberships, flex time and other benefits. However, a Gallup poll shows that employees prefer workplace wellbeing to material benefits.

Employee wellbeing comes from one place, and one place only: a positive workplace culture.

Transforming a workplace culture is a big job. It takes dedication, time and most of all, leadership. But the leadership tactics of yesteryear weren’t designed to create the ideal workplace culture of today. Which is why servant leadership is the better business model for today.

To quote Jim Sinegal, co-founder and ex-CEO of Costco: “Culture isn’t the most important thing. It’s the only thing. Culture drives every decision you make. Culture is everything.”

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