Why Trust Matters

Trust is an important, but notoriously hard to quantify, driver of organizational performance. Although often overlooked, the level of trust leaders inspire in their organizations creates a very real, and direct, financial impact. In an excellent article, Stephen Covey wrote the following about the effects of trust in the workplace:

When trust is low, in a company or in a relationship, it places a hidden “tax” on every transaction: every communication, every interaction, every strategy, every decision is taxed, bringing speed down and sending costs up. … By contrast, individuals and organizations that have earned and operate with high trust experience the opposite of a tax — a “dividend” that is like a performance multiplier, enabling them to succeed in their communications, interactions, and decisions, and to move with incredible speed (Covey, 2009).

What’s the bottom line? Your business performance is being impacted by trust.

Low trust isn’t always the result of an unhealthy workplace.   Organizational trust is a function of two converging beliefs (Scholtes, 1998):

  • Benevolence: The extent to which I believe you care about me and will continue to back me up.
  • Aptitude: The extent to which I believe you are competent and capable.

Without benevolence and aptitude, your team may like, or even respect, your organization and the people in it, but it won’t exhibit high levels of trust. Individuals and organizational systems need to be seen as both benevolent and highly competent in order to allow the benefits of high trust to emerge.

As a leader, before you can ask others to trust you, you have to show them that you’re trustworthy. Your team takes its cues from you, so model the behavior you’d like others to follow. If you’re unsure whether or not you team considers you a trustworthy leader, Jim Kouzes and Barry Posner pose four questions in The Leadership Challenge that can provide clarity:

  1. Is my behavior predictable or erratic?
  2. Do I communicate clearly or carelessly?
  3. Do I treat promises seriously or lightly?
  4. Am I forthright or dishonest?

(Kouzes & Posner, 2002)

Regardless of the level of trust present in your organization, here are a few tips to improve it (and none involve falling backwards!).

  • Assess organizational policies, procedures, and rules and think about how “fair” they are from the perspective of the employees. Are they being applied consistently and equitably? People often use “fairness” as a heuristic for quickly assessing trustworthiness.
  • Demonstrate faith in employees by reducing the costly structures required to supervise and monitor them while they’re working. Implement programs and structures focused on delegation of authority and teamwork. For example, limit processes requiring hierarchies of signatures that signal distrust.
  • Model integrity by being honest with employees, communicating your plans, and following through on all commitments. When you are unable to fulfill a promise, restore integrity by acknowledging the broken promise, check-in to understand the impact, clean up the mess, and make a new promise to behave differently in the future.
  • Be sensitive and attuned to individuals’ feelings, thoughts, and experiences in your organization. Respect employees’ emotions by maintaining a dialogue about how organizational dynamics impact their work-life.
  • Create transparency through open-door policies and share information internally. Make sure that strategic decisions are communicated up and down the organization, and share financial outcomes to build a culture of openness.

Trust impacts every business interaction.  As a result, it’s not surprising that high-trust companies have been shown to outperform low-trust companies by nearly 300% (Covey, 2009).  As a leader, it’s your responsibility to recognize this and go first, by exhibiting both trusting and trustworthy behaviors.  Not only will you enhance your organization’s performance, you may also build some meaningful relationships in the process.

Covey, Stephen. “How the Best Leaders Build Trust.” LeadershipNow.com. 2009. Web. 22 July 2015.

Kouzes, James M., and Barry Z. Posner. The Leadership Challenge. 3rd ed. San Francisco: Jossey-Bass, 2002. Print.

Scholtes, Peter R. The Leader’s Handbook: Making Things Happen, Getting Things

This article originally appeared on LinkedIn.

Jessica Carlson

Jessica Carlson

Consulting Manager & Head of Talent

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