How Servant Leadership Makes Gen Z Stay: Examining the Mediating Influence of Caring and Self-interest Ethical Climate

Abstract

The ethical climate plays a crucial role in protecting organizations from the negative impacts of unethical employee behaviour. Among the various typologies of ethical climate, the self-interest ethical climate (SIEC) is considered the most detrimental in fostering ethical behaviour, as it contributes to high turnover intention (TI). In contrast, the caring ethical climate (CEC) promotes a supportive culture that enhances employee retention. The entry of Generation Z (Gen Z) into the workforce presents new challenges for companies, as this generation exhibits higher TI than previous generations. This study examines the role of servant leadership (SL) in influencing SIEC and CEC, as well as the mediating role of SIEC and CEC in the relationship between SL and TI. A cross-sectional quantitative method was employed, surveying 314 Gen Z employees in Indonesia. The analysis was conducted using PROCESS Hayes Model 4. The findings indicate that SL significantly predicts SIEC, CEC and TI. Additionally, SIEC predicts TI and mediates the relationship between SL and TI, whereas CEC does not. This study highlights the importance of minimizing SIEC in organizations to improve Gen Z employee retention. However, rather than a high CEC, Gen Z employees are more likely to stay in companies that provide competitive financial rewards.