Why organisations must strive to build high-trust culture?
Political rhetoric and sloganeering aside trust deficit is for real. Almost everywhere we turn, trust is on the decline. According to Randstad's World of Work 2012 - Asia Pacific, trust is in short supply, it states that, a third of employees across the region don't trust their leaders. Add to this the fact that only a meager 11 percent of employers rate trust as the most important attribute of a successful leader - clearly underestimating the importance of trust. An Employee Outlook survey conducted by UK's CIPD in 2012 reveals that only 36 percent felt a level of trust in their senior leaders. A more recent Edelman Trust Barometer 2013 finds that while 50 percent of respondents trusted business in general to do what is right, only 18 percent trusted business leaders to tell the truth. Cut to India, according to a study, Learning Across Culture in the Human Age, conducted by Right Management and Tucker International, rates Indian business leaders the worst at building and maintaining trusting relationships.
With organisations facing challenging times and continued economic uncertainty, trust becomes even more important. While leaders - social, political and corporate - agree that trust is important, they more often than not think it to be just another one of those 'soft issues'. In his book, ‘The Speed of Trust’ management consultant and author, Stephen Covey challenges the assumption that trust is merely a soft social virtue - a nice to have. Instead he demonstrates that trust is a hard economic driver, a learnable and measurable skill that makes organisations more profitable, people more successful and relationships more energising.
Given the crisis and importance of trust, it becomes all the more important to ponder over a few questions - is there a measurable cost to trust, what is the return on trust and is there a tangible benefit to high trust?
Experts reckon that trust is perhaps the most important element of a successful workplace. Companies whose employees trust them tend to have a more engaged workforce and a high efficiency work environment. On the flip side, organizations that have lost employee trust are not as successful. While high-trust creates flatter organisations distributing information, responsibility and influence across the workforce; a low trust creates hidden agendas, politics, interpersonal conflict, and protective communication. In a low trust climate, everything slows down. Ultimately it creates disengagement and unwanted employee turnover, which in turn causes low morale and impacts productivity.
In fact, in its 2010, Ethics & Workplace survey, conducted by Deloitte, 65 percent of Fortune 1000 executives believed that trust will be a factor in voluntary employee turnover in the near future. Trust facilitates the implementation of strategy. Doesn't it stand to reason that if levels of trust between employees and their managers, or the organisation in general, are low; it will be more difficult to implement policies, practices, and eventually strategies of which they are a part?
Return on trust, RoT, too can be measured by examining the financial performance of high-trust organizations. Research by the Great Places to Work Institute, publisher of the Fortune 100 Best Companies to Work For list, has shown that between 1997-2011, high trust companies outperformed the Russell 3000 and S&P 500, posting annualised returns of 10.32 percent versus 4 percent and 3.7 percent, respectively. Additionally, those best companies provide 4 times the returns than market average for comparative low-trust companies and typically experience a 50 percent lower turnover rate. Yet another recent Watson Wyatt study shows that high trust companies outperform low trust companies by nearly 300 percent - reasons enough to build a high trust organisation.
In a global, virtual and multicultural world, trust is bound to become a powerful element for collaborative climate. As organisations strive to create an atmosphere of trust in untrusting times, it must be kept in mind that creating a high-trust climate must go beyond one-on-one relationships with employees, to building credibility around the entire organization, its people, its brand and its reputation.