Servant leadership and job satisfaction: the moderating roles of the leader’s decision making process and organisational structure.

The continued erosion of employee job satisfaction at work has become the Achilles’ heel of otherwise highly performing organisations. The Gallup organisation estimates the total cost of low job satisfaction in America alone at between US $450 and $550 billion annually, most of which is associated with absenteeism, turnover, and lower productivity. An anomaly to this trend, however, are organisations who adopt servant leadership behaviours as represented by some of the Fortune’s 100 Best Companies to Work for in America which tend to foster higher levels of employee satisfaction. Corroborating prior studies on leadership and job satisfaction, the current study therefore focuses on the underlying process by which leadership affects job satisfaction. Since leadership does not operate in a vacuum but is constrained by the organisational environment it operates under, the effects of servant leadership are largely determined by the context in which it operates. This study specifically investigates the boundary conditions created by the leader’s decision making process (involvement and dominance) and organisational structure (formalisation and centralisation) and their impacts on the servant leadership job satisfaction relationship. Two independent studies were undertaken to test the hypotheses: A vignette experiment with 1,569 business and economics students from a leading Australian university and a cross-sectional survey among 336 middle managers of small to medium enterprises in Australia. Findings from the studies showed that leader involvement moderated the servant leadership job satisfaction relationship independently. Similarly, the interaction effect of formalisation and centralisation, leader involvement and formalisation and leader dominance and centralisation moderate the servant leadership job satisfaction relationship. These findings point to the role of the leader’s decision making process and organisational structure as boundary conditions for servant leadership to impact employee job satisfaction. The study suggests that when servant leadership behaviours are employed by a leader who is highly involved in the decision making process and operates under a formalised structure, its effects on job satisfaction are augmented. On the contrary, when the leader is dominant and operates under a centralised structure, the servant leadership effects are considerably minimized. Addressing the recommendation to take into account the leadership context, the current study extends previous research on servant leadership and job satisfaction by explaining how organisational structure affects this relationship. In more practical terms, the study findings highlight the importance of selecting and developing organisational leaders who practice servant leadership behaviours and are highly involved in the decision making process to engender a high level of employee job satisfaction.