All material subject to strictly enforced copyright laws. © 2021 Insider Engage is part of Euromoney Institutional Investor PLC.
Terms & Conditions | Privacy Policy | Modern Slavery Act | Cookies
Company Culture

The anatomy of trust

Trust is an economic lubricant. It underpins our ability to make ethical decisions, the speed of our learning, our imagination, our collaborative approach and our agility, says Catherine de la Poer - all attributes of the future-ready organisation

Giving a hand
Credit:
kieferpix/Getty Images/iStockphoto

You might say I’m a little obsessed with trust, and I have been ever since I read Paul J Zak’s book ‘Trust Factors’. Being the data nerd I am, anything that can be corroborated with hard facts and data is going to grab my attention.

Paul J Zak is a neuro-economist. Yes, this is a real job. Zak spent much of his career studying trust, what it is, why it matters and he’s got the science to back up what he says.

With this article, I’m setting out to summarise much of Zak’s work. Importantly, I’m going to attempt to contextualise the importance of trust in relation to operationalising psychological safety and why future-ready organisations will compete on the basis of workforce mental health and wellbeing.

This is by no means a soft topic; I want to illustrate in no uncertain terms the commercial reality of winning or losing in the new world of work.

Let’s begin with an investment opportunity. Company A and company B want to raise funds in order to expand their global footprint. You are the investor with £100,000 to invest. On paper, company A shows exceptional 12-month growth, revenue and profit. Both companies have a convincing story to tell when it comes to the market opportunity, both have exceeded expectations in regards to recent chemistry meets with the senior leadership team and Q&A around the business model.

However, when digging a little deeper, you spot a worrying trend in regards to staff absenteeism and churn rate at company A. In fact, a recent happiness survey has highlighted low scores across two factors: (i) confidence in management’s decision-making and future direction; and (ii) honest two-way communication.

Which company is going to get your investment? It will be interesting to see if what I share with you about trust influences the final choice of company for your investment.

The context has changed...

Let’s begin by putting some context around the topic of trust and why it’s become so relevant to an organisation’s ability to thrive in the 21st century. We are moving away from the view of organisations as machines to seeing organisations as organisms. Speed and agility are undoubtedly the new currencies, which means hierarchy, bureaucracy and detailed instruction are no longer helpful.

Instead, we must embrace a model where leaders communicate a clear direction or purpose, where the style of leadership puts a coaching approach front and centre, enabling action, and where super teams are built around end-to-end accountability.

According to Zak, trust “was among the strongest predictors economists have ever found to predict investment and per capita income growth”.

“Trust is an economic lubricant reducing the frictions that occur during economic activity. This same mathematical relationship can also be applied to describe interpersonal interactions within organizations,” he writes.

Defining trust

A turning point in the study of trust was the discovery of the role of the neuro-chemical Oxytocin. Oxytocin influences trust by increasing our emotional connection with others - that is, our empathy. Empathy is the ability to walk in the shoes of another person. When our empathy is enhanced, we are predisposed to want to help others.

What is particularly interesting is there are a number of neuro-chemicals that promote or inhibit Oxytocin. A primary inhibitor is a stress hormone called epinephrine (adrenaline); a secondary inhibitor is testosterone.

When we understand trust as a chemical messenger that is tied to the human operating system of ‘think – feel – do’, we can start to evidence why putting human health and wellbeing at the heart of organisational strategy, and the need for diverse and inclusive boards, are performance multipliers.

What is a high trust culture?

Culture is not what you are, it’s something you do - it’s behaviour. Think for a minute about people with whom you have a high trust relationship. Now think about people with whom you have a low-trust relationship. What’s different?

Trust is the one thing that changes everything. Below are the eight factors that Zak identified as critical to the release of Oxytocin in the brain. Each of them individually can help to build trust across teams and departments, cross-functionally and at an organisational level.

The single most effective is ‘Caring’ – intentionally building trust with colleagues, 84% trust impact.

O – Ovation: recognition for contribution

X – eXpectation: facing a challenge as a group

Y – Yield: when colleagues choose how to do a project

T – Transfer: colleagues craft their own jobs

O – Openness: information is shared

C – Caring: intentionally build relationships with colleagues

I – Invest: enabling whole person growth; personal + career

N – Natural: leaders are honest and vulnerable

High trust leadership

Forget positional leadership of the past, which was built on power, IQ, title and job level, this is disappearing. 21st century leadership is about driving results through influence, building inclusive teams, staying close to customers and operating in an environment of change and interruption.

Trust is essential because speed and agility are contingent upon empowering people and a willingness to experiment and fail fast.

Numerous studies over decades point to effective leadership being tied to emotional intelligence. When we take control of our thoughts and emotions, we’re able to be intentional about the way others experience us, our behaviour.

Remember, behaviour - in particular, leader behaviour - is the building block of organisational culture or “what it feels like to work around here”.

The four competencies of emotionally intelligent leaders are: being authentic (trust + transparency); vision (massive transformative purpose); innovation (test and learn, experiment); and coaching (asking powerful questions, listening to understand).

According to DDI’s Global Leadership Forecast 2018, organisations with a mentoring/coaching culture have 20% lower turnover, higher leader quality and can fill 23% more of their open roles immediately.

I don’t know how many open roles you have at the moment but imagine if you adopt a coaching style of leadership, that immediately reduces the number by almost a quarter.

21st Century problems

Below are three 21st Century problems viewed through the lens of trust.

Problem 1

Certain skill-sets are quickly being automated, our people are disengaged/in survival mode/each man or woman for themselves.

Is a robot going to take my job? Am I competent to do my job anymore? Juxtapose these concerns with the fact that the war for (digital) talent is only just beginning and the challenge of defining open-source talent (e.g. the contingent workforce, the gig economy, talent-on-loan). Should I up-skill, re-skill or re-deploy?

Over the next decade and beyond, open and transparent communication will be critical to attract and retain different workforce segments and keep them engaged. This means understanding what really motivates humans to take action (intrinsic motivation).

Humans have four emotional needs: I belong (I’m part of a club/community); I’m unique (personalisation, you know me); I’m significant (you appreciate me); and I’m in control (I have autonomy).

Trust is the key factor to bring this sense of belonging to life within organisations.

In his bestselling book 'The Culture Code – The Secrets of highly successful groups', Daniel Coyle says: “Evolution has conditioned our unconscious brain to be obsessed with sensing danger and craving social approval. Belonging cues, when repeated, create psychological safety and help the brain shift into connection mode. Psychological safety is easy to destroy and hard to build.”

Problem 2

Leaders are increasingly being required to make decisions they have not been trained to make. It is therefore of critical importance to be able to trust yourself; to have the courage to take risks without having all the information, leaning into the sum of your experience (gut instinct). And finally, to have moral courage in particular. There will be difficult ethical decisions ahead involving workforce planning e.g. digital versus human workers.

Problem 3

Increasingly, HR’s value will be determined by its impact on the bottom line. If you are a public company, the new corporate governance code from the Financial Reporting Council included new requirements, as of January 2020, across: a well-defined purpose; assessing and monitoring culture; and better reporting on succession planning and diversity.

According to the UK Stewardship Code 2020: “Company culture supports the success of the strategy, and if a board embeds a culture that is supported by the employees, then companies should have a motivated and high performing workforce which delivers the outcomes necessary for long term success.”

HR’s ability to deliver on a high-performance culture starts with building trusted relationships, with colleagues in the executive team in particular, with the CFO + CEO. Well versed in financial data and measurement, HR has the opportunity to use data and analytics to showcase Capability in translating culture metrics into execution risk or opportunity.

In 'The Culture Code', Coyle demystifies the culture-building process by identifying three key skills that generate cohesion and cooperation, and explains how diverse groups learn to function with a single mind. The three core skills are: build safety (signals of connection to generate bonds of belonging and identity); share vulnerability (habits of mutual risk drive trust and cooperation); and establish purpose (narratives create shared goals and values)

Measuring trust

Trust always impacts two outcomes - speed and cost. In 2003, Warren Buffett, CEO at Berkshire Hathaway acquired McLane Distribution from Wal-Mart, for $1.5bn. The normal process is months of due diligence by lawyers. However, Buffet’s took a high trust approach involving one two hour meeting and a handshake. High trust = high speed, low cost.

So how is your organisation measuring up when it comes to trust amongst your individual leader community and at the team and organisational level. Below are three ways you might like to approach measuring trust.

Option 1 - Individuals

The trust equation (TQ) uses four objective variables to measure trustworthiness. These four variables are best described as credibility, reliability, intimacy and self-orientation.

TQ stands for trust quotient. The trust quotient is a number - like your IQ or EQ - that benchmarks your trustworthiness against the four variables.

The trust equation has one variable in the denominator and three in the numerator. Increasing the value of the factors in the numerator increases the value of trust. Increasing the value of the denominator - self-orientation - decreases the value of trust.

Option 2 - Teams

Recent research has uncovered two key characteristics that are essential for high trust/high performance teams: high-performance teams have high psychological safety; high-performance teams have team members who possess social and emotional awareness.

The NeuroTeamView assessment directly measures both of these concepts to generate a rich picture of overall team effectiveness and provide a platform for the creation of a high impact team development solution. It measures four specific scales and underlying behaviours to help teams identify barriers to team trust: capability, candor, caring and consistent.

Option 3 - Organisations

PR and consultancy firm Edelman publishes an annual Trust Barometer. For a business especially, lasting trust is the strongest insurance against competitive disruption, the antidote to consumer indifference, and the best path to continued growth. Without trust, credibility is lost and reputation can be threatened.

This year’s trust barometer found that of the four institutions featured in the study – business, government, NGOs and media, business was not only the most trusted institution among the four, but was also the only trusted institution with a 61 percent trust level globally, and the only institution seen as both ethical and competent.

How to unlock trust in your organisation

Self-regard is a critical building block for human wellbeing and underpins our ability to trust ourselves, if you haven’t learnt to trust yourself and or you feel unable or unwilling to trust others, hire a coach to better understand self and to help you re-frame thinking errors that are blocking your ability to love and trust yourself

Start measuring trust at an individual, team and organisational level, you can do so with a fairly rudimentary tool such as the trust quotient and a simple SurveyMonkey questionnaire.

Hire leaders that showcase personal attributes and competencies that create and unlock trust. Remember, the most critical trust factor is demonstrating Care for others.

Start every new relationship with the belief “I trust you”. Our beliefs power emotion which in turn power behaviours. Becoming emotionally self-aware is integral to understanding the contexts in which we might struggle to trust others. Why not run an experiment, testing each of Zak’s OXYTOCIN factors.

Consider making salaries transparent in your organisation – transparency on pay and promotion is one of three factors that determine whether an employee believes that the company is Inclusive or not.

Conclusion – what if?

We’ve learnt that trust is an economic lubricant, in fact, trust underpins our ability to think well; to make ethical decisions, speed or velocity of learning, imagination, collaboration, and agility. These are all attributes of the future-ready organisation.

As such, I would argue that human relationships and trust in particular, offers the biggest opportunity or the biggest risk for organisations.

Trusted relationships combined with open channels of communication give humans the motivation or energy to execute. Leader behaviour is the key component to releasing or inhibiting the release of Oxytocin in the brain.

In fact, understanding that trust is a chemical, poses a compelling question. What if, through best-in-class data and analytics, HR is able to evidence, once and for all, that human health and wellbeing, of which trust and psychological safety are the main constituent parts, is the single most potent qualitative measure for organisational performance.

Combined with a renewed focus on massive transformative purpose – for example, social and or environmental impact - that’s a future I’m excited about.

Share
More...
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree