America’s trust in its leaders is at a low ebb. Fewer than half of those surveyed in recent polls characterized President Bush as trustworthy, while Congress fared no better. The Catholic Church continues to reel from its clergy abuse scandals. The Supreme Court, union leaders, and the news media are all distrusted by large segments of the public, according to pollsters.
And business executives? Last year, only 2 percent of respondents to a Roper poll described CEOs of very large companies as “very trustworthy.” In a 2005 survey of 800 organizations by Mercer Human Resource Consulting, just 40 percent of workers trusted management “to always communicate honestly.” That trust could be even lower in 2006, thanks to such factors as the oil companies’ huge profits, the spread of outsourcing, and the criminal trial of former Enron executives Kenneth Lay and Jeffrey Skilling.
Dan McCauley, a principal in the Chicago office of Mercer Human Resource Consulting, says that workers’ trust in management has been declining since the onset of downsizing and restructuring in the late 1980s and early 1990s signaled the end of traditional job security. The corporate scandals of the past few years have exacerbated the slide, says McCauley; so has the widening pay differential between executives and front-line employees. “There’s a fundamental perception that executive teams have their own interests at heart,” says McCauley. “That seems to be becoming very embedded in the workforce mind-set.”
How much do employees value trusted leaders? One answer was provided a few years ago by the Global Leadership and Organizational Behavior Effectiveness (GLOBE) research program, an international network of social scientists and management scholars. Starting in 1993, the GLOBE program conducted a massive, multiyear study of cultural influences on leadership, surveying more than 17,000 middle managers in 62 societies. The study’s investigators wanted to find out, among other things, which attributes of effective leadership are universally endorsed and which are culturally contingent. Not surprisingly, they found that trustworthiness in leaders is prized in all cultures, says Paul J. Hanges, a principal investigator for the study and professor of industrial and organizational psychology at the University of Maryland.
A 36 Percent Raise
A quantitative value for trust in management comes from a pioneering study released last November by two economics professors at the University of British Columbia. Analyzing the responses to three large, recent Canadian surveys, John Helliwell and Haifang Huang found that four nonfinancial job characteristics contribute significantly to employees’ life satisfaction: trust in management, a variety of tasks, a job that requires skill, and time enough to do the job. Of the four, trust in management was by far the most valued. Improving it by 1 point on a 10-point scale raises life satisfaction by the same amount that a 36 percent pay raise does, the professors concluded. (The equivalents for task variety, skill required, and sufficient time were 21 percent, 19 percent, and 11 percent, respectively.)
“[T]he current situation probably reflects the existence of unrecognized opportunities for managers and employees to alter workplace environments, or for workers to change jobs, so as to increase both life satisfaction and workplace efficiency,” noted Helliwell and Huang.
Do companies reap a financial payoff for improving trust in management? Many observers see a strong correlation, at least, between workplace trust and corporate performance. For his part, Mercer’s McCauley says a considerable body of research indicates that companies with higher levels of employee engagement (or commitment) have higher productivity, better safety records, and less turnover — all good for the bottom line. Trust, in turn, is a key factor driving employee engagement.
Tell the Truth
So how can you boost employee trust? A 1997 survey of 57 organizations by Development Dimensions International Inc. (DDI), a Pittsburgh-based HR consultancy, identified the most important trust-reducing and trust-building behaviors by leaders (see “A Manager’s Guide to Trust” at the end of this article). In general, the biggest “trust trap” a manager can fall into is to behave in a way that tells employees he cares more about his own welfare than theirs, says Bob Rogers, president of DDI.
To build trust, “you have to spend time with subordinates,” says Rogers. “You have to listen and show some empathy. You have to spend time coaching and facilitating. Your job is not so much to evaluate, but to make your subordinates successful, and to recognize their achievements.” Three of the best corporate leaders in this regard, he says, are Herb Kelleher of Southwest Airlines, Fred Smith of FedEx, and Ken Freeman of Kohlberg Kravis.
But individual efforts to build trust will fall short if management is not collectively trustworthy. Rogers recalls working with the six top executives of a large chemical company subsidiary that was undergoing radical changes. “I interviewed them individually and asked them what the company’s top 3 priorities for the next one to three years were,” he says. “When I finished, I had 18 different priorities.” How much trust could employees have in them, asked Rogers, if they couldn’t agree on what was important? The executives subsequently settled on a handful of priorities, then devised a communications strategy to let employees know what they were and how they could help achieve them, says Rogers.
How can you keep trust from eroding in difficult times, when workers are worried about layoffs or diminishing benefits? It’s not easy. “You have to be sincere and tell the truth,” says Rogers. “You can be optimistic, but you can’t mislead.” DDI itself had to confront the problem when it recently outsourced a portion of its software development to a company in India, says Rogers.
McCauley says communication and trust go hand-in-hand, and advises managers to “be very frank about the realities of the business, about the tough decisions they may be faced with making.” Most employees, he says, understand the challenges of the current business climate; they appreciate candor from the top and a steady flow of information about the business.
If managers don’t level with employees, warns McCauley, they’ll rely on other sources for information — and that information could be wrong, or incomplete, or presented in a misleading context. Trust may then give way to suspicion, and managers could have a hard time restoring their credibility.
Edward Teach is articles editor of CFO.
A Manager’s Guide to Trust
Top Trust-Busting Behaviors:
Top Trust-Building Behaviors:
Source: Development Dimensions International 1997 survey of 1,108 employees (management and nonmanagement) at 57 organizations. Respondents by country: U.S., 80.5%; France and Singapore, 7.8% each; United Kingdom, 4.3%.