Trust’s Role in Organizational Success

“When trust goes up, cost goes down and speed goes up.”  –Stephen M. R. Covey

Trust is core to our social interactions. We gravitate towards people and organizations that act with integrity. We reward them if they have our best interests in mind. If a person or organization breaks our trust, it could end that relationship. For companies, it hurts the organization internally. This broken trust returns the favor by hurting the company’s relationship with its customers.

The Current State of Trust

The annual Trust Barometer has been published. The results are fascinating (and some are not-at-all surprising). Globally, trust is going up. Unfortunately, the United States is pulling down the average. The US saw its largest decline in a year, ever. There was a drop of 9 points across the general population and 23 points amongst the informed public. Businesses in the United States are facing an environment where factors in Americans’ personal lives affect their relationships with brands at the store as shoppers and at work as employees. Remedies for tarnished trust in the market and in the organization share similar underpinnings, but the actual solutions are very different. The way employees are treated at work affects the public’s perception of that company. Getting one’s house in order is a logical place to start, since it will improve the work environment while providing some incremental improvement for your customers.

Trust’s Impact at Work

The current view of your average company isn’t particularly rosy. 56% of the general population believes that a typical company is in it for the investors or owners. Only 65% of people trust the company for which they work. Trust is vital to the most basic of business processes, and the only way to have a smooth operation is to create a high-trust atmosphere.

It’s difficult to clearly distinguish the difference in organizational performance through passive observation. It is much clearer in sports. You can measure success through wins and losses amongst a set of teams that play each other. In the 1997–1998 NCAA Men’s Basketball season, the top two teams had the highest trust scores, with one nearly winning the NCAA Tournament. The team with the lowest trust score only won 10% of its conference games and fired its coach at the end of the season. Take a moment to meditate on that.

People who work at high-trust companies are more productive, healthier, feel better at work and are better colleagues. Paul J. Zak, a Professor at Claremont Graduate University, surveyed over a thousand employees across industries and around the globe. The difference between working in a high-trust and low-trust environment is stark. When your compare trust scores of companies in the top quartile versus the bottom quartile, those in high-trust companies report 106% more energy at work, 76% more engagement, 29% more satisfaction with their lives, 50% higher productivity, 13% fewer sick days, 74% less stress, and 40% less burnout. The impact of trust at work is quite clear. Investing in improving trust yields happier workers who work harder, faster and longer.

Connecting Trust to Strategic Planning and Execution

There are myriad strategic frameworks out there from which to choose. Regardless of the path you choose, the vehicle to get there is the same. All of the thinking and research and planning and Executive consensus building in the world can’t create action without generating understanding, buy-in and support from those who will bring it to life.

One of the foundational approaches to developing a strategic plan is to create a vision, align the executive team around that vision, and execute. If a team doesn’t trust its leader, they won’t believe the vision is credible. If they have doubts about the vision, then they become both less willing and less capable of effectively aligning their team with that vision. And without getting each team’s primary focus on bringing a strategic plan to fruition, there’s little way to execute it. If a coach can’t get each member of the team to run the same play, they can’t possibly beat a well-organized squad.

McKinsey has done a great deal of research around understanding the distinct impacts of strategy versus execution. The conclusion is that great strategy matters, especially as it becomes more disruptive. For less disruptive or fast-follower strategies, execution deserves the lion’s share of credit. In other words, most of the time execution is the difference between winning and losing. If employees lack trust in their leadership and management, then both strategy and execution are at risk. Trust enables companies to enact strategy.

The Recipe

Trust is just like neapolitan ice cream. One needs to achieve excellence in each section of the dairy triad.

The strawberries need to taste like strawberries, the chocolate like chocolate and the vanilla like vanilla. If one of them tastes like a snozzberry, then you have a problem. Just like neapolitan ice cream, trust has three parts that need to be there in equal measure. Getting a good balance of all three will put your organization in the top quartile of trusted companies.

Trust is composed of credibility, respect and fairness. The focus has to become part of the organization’s culture. Creating a high-trust atmosphere doesn’t happen overnight. It requires long-term dedication. Here’s what an organization needs to design strategy around:

• Credibility: Make sure that communications are open and accessible. Create balance between organizational competence and resources. Carry out the strategic vision with consistency and integrity year after year.
• Respect: Invest in professional development and show appreciation for a job well done. Collaborate with employees in relevant decisions by insuring two-way communications. Design strategies that take frontline input into account. Make work fun, improve team communication and take the mental and physical well-being of employees seriously.
• Fairness: Enact rewards programs that are balanced and fair. Create checks and balances that avoid favoritism in hiring and promotions by evaluating HR processes. Provide greater transparency into the decision-making process and address tough conversations head-on.

Parting Thoughts

We are currently experiencing a trust deficit in business. It’s up to Executive leaders to create mandates around improving trust. Employees who have trust in their direct managers have a greater sense of trust in the business. That trust has been positively correlated to employee retention, strategic alignment and department performance.

If you want to get everything you can out of your team, then the business needs to maintain trust from bow to stern. Just by making minor changes today, you can make a big difference around you.