I believe that trust is the cornerstone of healthy, long-lasting relationships—be it in life or business. It’s like the glue that holds everything together. From personal experience, prioritizing trust has not only made my relationships more functional but also more fulfilling and resilient.
It’s fascinating to learn that my observations align with what is recognized in the professional world. It looks like trust isn’t just a feel-good factor; it directly impacts profitability. Let me share a bit about what I’ve discovered from a study that really opened my eyes to the quantifiable side of trust.
Peter Sommerer, ex-executive and CEO of public tech companies, in his patented publication Method for trust management in complex organizations1 discusses how modern businesses, especially those with intricate structures, are starting to see trust as a vital, measurable part of management. Trust should not be seen as something fluffy or intangible. It’s about the tangible impacts on operations and profits.
In organizations with multiple layers and complex relationships, trust isn’t just nice to have; it’s a must-have. As businesses move away from rigid hierarchies towards more fluid, project-based setups, managers and teams must rely heavily on each other without the usual direct oversight. This shift makes trust essential for smooth operations and cutting down unnecessary costs—essentially replacing the old-school bureaucratic checks with mutual confidence.
Here’s something that really puts things into perspective: according to Sommerer’s findings, trust has tangible economic implications, where high trust levels correlate with lower costs and increased output. On the other hand, distrust can lead to economic inefficiencies and reduced productivity. He shows that organizations that have a level of trust of 100% within their teams can see their benefits increase by up to 25%!
Table 1: Relative costs and benefits of varying levels of trust
| Relative costs and benefits of varying levels of trust | |||||||||||
| Trust | 0% | 10% | 20% | 30% | 40% | 50% | 60% | 70% | 80% | 90% | 100% |
| tanh(T) | 0.0000 | 0.0997 | 0.1974 | 0.2913 | 0.3799 | 0.4621 | 0.5370 | 0.6044 | 0.6640 | 0.7163 | 0.7616 |
| 1-tanh(T) | 1.0000 | 0.9003 | 0.8026 | 0.7087 | 0.6201 | 0.5379 | 0.4630 | 0.3956 | 0.3360 | 0.2837 | 0.2384 |
| norm. #1 | 0.3283 | 0.2955 | 0.2635 | 0.2326 | 0.2035 | 0.1766 | 0.1520 | 0.1299 | 0.1103 | 0.0931 | 0.0783 |
| costs (%) | 90.0% | 86.7% | 83.5% | 80.4% | 77.5% | 74.8% | 72.4% | 70.2% | 68.2% | 66.5% | 65.0% |
| benefits(%) | 0.0% | 3.3% | 6.5% | 9.6% | 12.5% | 15.2% | 17.6% | 19.8% | 21.8% | 23.5% | 25.0% |
| incr. Benefits (%) | 3.3% | 3.2% | 3.1% | 2.9% | 2.7% | 2.5% | 2.2% | 2.0% | 1.7% | 1.5% | |
| R-max: | 90% | R-min: | 65% | ||||||||
Concretely, “If individuals start to react to low trust levels by reducing their efforts in order to compensate for the reduced expectations, lower outputs will result, which in turn will lead to lowered expectations, thus creating a classic downward spiral of an organizations performance.” Even more, “manufacturers, who enjoy high level of trust amongst its retailers, do enjoy 78% higher sales from high-trust retailers as compared to retailers who have low trust for the manufacturer.”2 Imagine that—trust boosting sales by nearly 80%!
So, whether you’re leading a team, managing a company, or just navigating personal relationships, remember this: investing in trust is not just about building a positive environment. It’s about setting up a foundation for success and growth.
The 3 Pillars of Trust
Now that the importance of trust within organizations is clear, here’s all you need to know about the foundation of trust: HBR suggests that there are three pillars of trust3:
Authenticity requires leaders to be true to themselves in front of their teams. Howard Schultz, the former CEO of Starbucks, is often cited for his authentic leadership style. He shared his personal struggles and doubts during the company’s difficult times, which made him relatable and trustworthy in the eyes of his employees.
Empathy is about understanding others’ feelings and perspectives. Empathetic leadership might be exemplified by a manager who rearranges project deadlines to accommodate an employee going through a personal crisis, thereby building loyalty and trust.
Logic necessitates that leaders provide a clear rationale for their actions. When Satya Nadella took over as CEO of Microsoft, he laid out a logical vision for transforming the company’s culture and business strategy, which helped employees understand the direction and rationale behind significant changes. This pillar also implies that what is said and promised gets done and delivered.
All 3 pillars are necessary to create and maintain a trustworthy relationship. Once you’ve identified weaknesses in the pillars of trust in a specific context, it’s time to actively work on them. Here are tips and strategies to bolster each pillar:
Cultivating Authenticity
For authenticity, it’s essential to create an environment where diverse team members can share their knowledge freely:
- Value Diversity: Recognize that high-performing teams often consist of heterogeneous members who bring different perspectives. A leader’s authenticity encourages others to be genuine, creating a rich tapestry of shared knowledge that benefits the common good.
- Speak Your Truth: Pay less attention to what you think people want to hear and more to what you need to tell them. This honesty will foster respect and credibility, as people tend to trust leaders who are sincere and forthright.
- Admit Mistakes: Be open about errors and use them as learning opportunities. This not only humanizes you as a leader but also encourages a culture where mistakes are viewed as a part of the growth process, not something to be feared or hidden.
Enhancing Empathy
Empathy is about understanding and sharing the feelings of others. To improve empathy within your leadership:
- Focus on Others’ Needs: In meetings, shift the focus from your requirements to ensuring that everyone gets what they need from the interaction. This creates a supportive atmosphere where all team members feel their needs are important.
- Stay Engaged: Remain actively engaged in conversations until you’re certain that everyone has a clear understanding of the topic. This often means listening more than speaking and asking questions to ensure comprehension.
- Put Away the Electronics: During meetings, leave your phone and laptop aside to be fully present. This demonstrates respect for others’ contributions and signals that you value their input over outside distractions.
Strengthening Logic in Leadership
When there’s a perception that your judgment is flawed or your promises go unfulfilled, trust in your logic is compromised. To build confidence in your ideas and decisions:
- Use Evidence and Communicate Clearly: Support your proposals with data and articulate your plans with precision. Clear communication prevents misunderstandings and shows that your decisions are well-considered, not arbitrary.
- Deliver on Promises: Make sure to follow through on commitments. This not only reinforces trust but also sets a standard for reliability and accountability within your team.
- Provide Context for Decisions: Help your team understand the ‘why’ behind your actions. When people understand the reasoning, they’re more likely to trust the logic that led to a decision.
By addressing these aspects of the three pillars of trust—logic, empathy, and authenticity—you can create a solid foundation on which trust can be built and maintained. You can troubleshoot most trust issues by relating them to one or more pillars. Paul Zak further researched the subject a decade later. His 2017 published results4 pointed to tangible ways of fostering and managing trust, rooted in neuroscience: recognizing excellence, creating opportunities for achievable challenges, facilitating holistic growth, building intentional relationship. The more important aspect, however, may be for the leader to display trust in their team. Zak gives additional examples of this can be achieved, starting by letting the team work in the way they best prefer and letting them pick their projects. Additionally, management can increase trust by sharing information, as it reduces uncertainty for the team, and, ultimately, by showing vulnerability as a leader.
As a leader, your continuous commitment to developing these qualities will resonate deeply with your team, creating a more cohesive, empowered, and trusting work environment.
Trust isn’t just a soft skill or an abstract concept; it’s a critical component of a high-performing organization. Addressing trust issues not only is essential for open communication, enhanced performance, employee retention, resilience, and personal accountability, it is also directly linked to an organization’s financial performance. Leaders must be vigilant in recognizing the signs of trust issues and proactive in creating a culture that nurtures trust at every level. The investment in building trust is an investment in the very foundation of your company’s success.
