While Service-Based Leadership stresses that the leader must serve the needs of his or her constituencies, not all constituent needs have equal weight or importance.
Owners or shareholders are usually the smallest constituent group in numbers, but their needs are paramount. Why? Because it is their capital that has been invested in the enterprise and their need for return on investment that permits the continuation of the business. If it is not making a profit, if it cannot gain credit based on a potential for future profit, if it cannot meet its cash needs for payroll or to pay vendors, it will quickly go out of business and the needs of all other constituencies will become irrelevant.
Obviously, a return on investment is important. Consider why an owner would want to earn 2% in a business when he could invest his money in a less risky investment and earn a better return. While there may be other reasons for continuing to own a business—such as prestige; a sense of obligation to family, community, or employees; or the expectation of improved future performance—over the long haul owners will not be willing to risk their capital on a poor-performing venture.
Next in order of importance are the needs of customers. Without sufficient customers patronizing the business, it will not be profitable or viable. If not viable, it will not last long-and all constituencies lose.
Ultimately, customers are attracted by price and the quality of products and services. Taken together, quality and price create a sense of value—the value perceived by customers. If enough customers perceive value, they will frequent the enterprise to spend their money and will make it successful. If not, the business will ultimately fail.
This statement brings us to our third constituency—the employees. They are the ones who execute the owners’ vision for quality of product and service. They are the ones whose daily interaction with customers creates the value customers seek. Properly led, valued, and supported, employees will enthusiastically commit to serving the business’ customers thereby fostering levels of business that enable it to thrive.
Organizational Models
The basis for the traditional hierarchical organizational model is the military concept of “chain of command.” In this model, management is represented as the sequence of authority in executing the will of the owners—and certainly management plays that essential role. But in addition to not representing the importance of customers, it also places the employees at the bottom of the chain—thereby visually relegating them to the position of least consequence.
The Service-Based Organizational model depicts the importance of satisfying customers, as well as the important role of employees. The organization’s leaders are placed at the bottom, clearly emphasizing their role in serving the needs of all constituencies.
Excerpted from Leadership on the Line - The Workbook.
Thanks and have a great day!
Ed Rehkopf
This weekly blog comments on and discusses the club industry and its challenges. From time to time, we will feature guest bloggers - those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking club managers throughout the country and around the world.
Club Resources International - Management Resources for Clubs!
Instead of the traditional view that employees are easily replaceable elements in an organization, people who must be trained to do narrow, well-defined tasks and who must be closely watched and supervised at all times, the concept of empowerment says that today’s more educated and sometimes more sophisticated employees need and want to contribute more to their employer and workplace. Yet many clubs marginalize their employees by refusing to listen to them and by failing to let them contribute to the enterprise in any meaningful way.
Now we have brought out Leadership on the Line - The Workbook, a companion piece to the book that reinforces and expands upon the requirements of Service-Based Leadership in simple, easy-to-understand terms. Its focus is on building strong relationships with followers and serving the needs of all constituencies - boss, members, peers, and employees. With Service-Based Leadership members are treated well because employees are valued, trained, supported, and empowered by their leaders.
“Now the Institute has taken another client: Miami International Airport, which many travelers will tell you needs customer service training like an airplane needs wings. Surveys rank its service among the nation’s worst. The airport’s terminal operations employees are taking classes taught by Institute instructors, learning leadership practices, team building, staff relations and communication skills-many formulated by Walt Disney himself.
3rd Posted Comment: “I agree with the posters who feel that senior management should lead by example and treat their subordinates with dignity and respect. It just seems like common sense, that when employees are happy and feel well treated, this will filter down to the way they treat the customers. Everyone in an organization deserves to be treated well and this makes for optimum performance.”
Attitude and morale are also important ingredients in hospitality and service operations where friendliness, good cheer, and enthusiasm are necessary requirements for success. While hiring the right people with the right personal qualities has always been a safe bet when building service teams, the very act of creating teams brings its own challenges. As pointed out in 
Maggie was a retired schoolteacher starting a second career. She applied for a sales associate position with a well-known hotel and conference center. While she had no sales experience, her maturity, calm demeanor, and articulate style impressed the Director of Sales.
With 
“For employees to feel empowered, you have to create a culture that nourishes and sustains it. By conscientiously and sincerely working to become the best Service-Based Leader you can be . . . you will create an environment where employees will recognize their empowerment and enthusiastically act on it in all they do.”
