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Trust: why it’s important and how leaders create it

Creating trust within a business culture is a key foundation of leadership success, observes Nick Bron for Leadership Review.

Employees need to trust their leaders and the decisions they make, and have faith that the organisation is being steered along the right path for all concerned.

Trust is hard to measure and doesn’t come with an absolute ROI, and business leaders might be tempted to shift their efforts and focus away from such an intangible commodity. So before tackling the ‘how’ of creating trust in leadership, it is worth recapping on the ‘why’, to reinforce the pivotal role trust plays, and what happens when trust is absent.

INSPIRATION

Douglas Conant, ex-CEO of Campbell’s Soup and now a respected leadership author and keynote speaker, explained the role trust played in turning around the fortunes of his former company in a recent Harvard Business School interview, saying: “Before you have the moral authority to lead your team, you have to inspire trust. Trust is the one thing that changes everything. In a high-trust culture, it’s so much easier to get things done.”

Conant invested as much effort in changing the company culture of Campbell’s Soup as he did on transforming its position in the market. He personally ran an intensive leadership development programme and dedicated his time to communicating with his 20,000 employees - often recognising outstanding performance with personally written notes.

Prior to Conant becoming CEO, the Campbell’s Soup share price had halved in three years. Within five years, Campbell's cumulative total shareholder return was far outperforming the S&P 500.

BENEFITS OF TRUST

When change management is required, trust is critical in getting buy-in from employees for the new vision. Having employees embrace and implement change because they trust your leadership and believe in your ability is far better than overseeing employees who carry out change because they fear for their jobs.

Trust also gives staff confidence to experiment – and creating a risk-taking environment is becoming ever more critical in today’s fast-changing digital economy, as the recent Leadership Review article ‘Why innovation starts with your culture’ explains.

With high levels of trust, management and staff openly discuss what is going wrong as well as what is working, seek answers and move forward together to fix any problems. Trust oils the machinery of a successful enterprise.

In his Forbes opinion piece ‘The Most Valuable Business Commodity: Trust’, prominent CEO and business writer David K. Williams argues that learning from failure is as least as important as having success.

He explains: “My team has weathered more challenges and storms than most companies. What sets us apart, I believe, has been our willingness to be transparent in our journey. We own our failures, we learn from them, and we share them publicly so that others can learn from our failings as well, which has helped us to bounce back higher than before when we fall.”

DANGERS

What of the flip-side? The cost to a business of not creating trust is a host of undesirable outcomes that will harm business efficiency and company morale. These include:

  • A blame culture, allied to a failure to learn from mistakes;
  • Individuals take credit for other people’s ideas and work;
  • Back-stabbing and office politics;
  • Lack of collaboration: staff are less likely to share and build on each other’s ideas;
  • Fear infects decision-making;
  • Finally, the best staff leave.

In a Bloomberg Business article ‘Everything You Know About Leadership Is Wrong’, Liz Ryan, an expert on the modern workplace and former Fortune 500 human resources executive, highlights the difference between cultures based on trust and those built on fear. She writes: “The best people won’t play this outdated game. They won’t submit to a fear-based culture. They are leading the way for the rest of us, out of the box (and the cubicle) and into the human workplace.”

Ryan says she has personally witnessed how leadership training often misses the human dimension and, worse, creates an artificial barrier between leaders and non-leaders in organisations.

To retain the best employees in today’s workplace, leaders have to create a culture that allows staff to thrive and prosper, with their ideas heard, trusted and tried.

BALANCE

Carmencita Bua, COO of global innovation design consultancy Continuum, advocates a balanced approach to leadership in her Fast Company article ‘Three Ways to Show Balanced Leadership’.

Bua urges modern business leaders to “actively listen to your employees and help them find ways to bring their natural interests into their work”. But this has to be balanced with a leader’s drive for successful outcomes. Bua explains: “When necessary, dissent openly with your team and give different scenarios to approach any given challenge.”

MODELLING TRUST

While trust isn’t only the preserve of the leader, if the leader and leadership group don’t embody trust, why would they expect employees to do so? Modelling trust is, for many business leaders and experts, at the core of creating trust throughout an enterprise.

Human Resource authority Dave Bowman expands on this topic in his article ‘The Five Best Ways to Build – and Lose – Trust in the Workplace’. He writes: “Trustfulness – and trustworthiness – can exist only if top management sets the example, and then builds that example into every department and unit.” The article echoes and reinforces many of the points made by Ryan, Welch and Williams.

MEASURING TRUST

How can companies measure trust in a meaningful way? There is no clear method. Conant chose to use the Gallup Employee Engagement Index to track the progress of “social value” at Campbell’s Soup. But not everyone is convinced that trust levels can be easily quantified.

So if it can’t be measured, is it worth the effort?

To justify ignoring the widespread advice about creating trust in a business because it is too hard to measure would seem to be a self-defeating approach. With successful business leaders on the ground testifying that a lack of trust means an even harder road, the picture for future business leadership is clear and, to reinterpret an old saying, “fail to create trust, trust that you will fail”.

 

Referenced sources for this article

Pulling Campbell’s Out of the Soup
Dina Gerdeman
HBS Working Knowledge

Why innovation starts with your culture
Leadership Review

The Most Valuable Business Commodity: Trust
David K. Williams
Forbes

‘Everything You Know About Leadership Is Wrong’
Liz Ryan
Bloomberg Business

The Five Best Ways to Build – and Lose – Trust in the Workplace
Dave Bowman
TTG Consultants

The writer of this article has donated his fee to the Phoebe Hewitt fund. If you'd also like to make a donation, please visit:
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