3 Ways A Culture of Trust Drives Productivity

Trust: It’s a word everyone understands but few can accurately define or measure. It seems at once essential but fluffy, complex yet simple. According to the Human Capital Institute, trust can be defined as “the willingness to put oneself at risk based on another individual’s actions.”

What does that mean in a business context? And how can trust be measured in economic terms like risk, speed, and cost? Research has shown that high-trust organizations have a total return to shareholders (stock price plus dividends) that is 286 percent higher than low-trust organizations. The top 25% of retail stores that rank high on trust achieve 7% above budget annual sales and 14% sales productivity gains. The impact of trust on productivity and efficiency is clear. 

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Surprisingly, the simplicity of trust lies in the economics: as trust increases, so does speed. Speed goes up in high-trust cultures because costs and risks go down. In organizations where trust is low, costs and risks go up, resulting in a trust tax that slows down work across the organization.

So it follows that as companies grow, trust often erodes because it becomes increasingly difficult to develop relationships, resulting in layers upon layers of bureaucracy that act as a poor substitute for trust. In fast-paced business environments where companies must evolve quickly to keep up with the speed of technology, building and maintaining trust at scale is more important than ever.

The complexity of trust is that it can be difficult to build, yet easy to break. While trust can take a long time to build, it is also delicate enough to be destroyed through a single action or misconception. Yet the benefits of investing time into building trust can lead to exponential results:

  1. Trust empowers employees to stay engaged. If employee disengagement is an epidemic that is reducing productivity across organizations in America, trust is the antidote. Research has shown that employees that feel more connected will invest more of themselves in their work. High trust levels yields a greater sense of self responsibility, greater interpersonal insight, and a greater sense of alignment in striving toward common goals. Fear is often abused by management and has been shown to result in negative workplace culture that reduces productivity. When people don’t trust their leaders, they relationship becomes transactional because employees are forced to wonder, “If the organization does not do right by me, why should I do right by them?”

  2. Trust reduces bureaucracy and increases speed. Because high-trust cultures remove fear, workers at every level can be honest about problems they are encountering without fear of backlash from middle management or distrust from upper management, allowing teams to do what’s right as quickly as necessary. High trust cultures remove six key relationship pitfalls: criticizing, complaining, comparing, competing, contending, and cynicism. In a study analyzing Sarbanes-Oxley, results were staggering: the costs of implementing Section 404 were $35 billion-exceeding the original SEC estimate by 28 times. Compliance regulations are a prime example of the dangerous relationship between low trust, low speed and high cost.

  3. Trust increases quality collaboration. Honesty and trust create a positive feedback loop that cultivate a culture of openness that improves collaboration within teams. In a study by Franklin Covey, better execution and stronger collaboration were all byproducts of high-trust cultures. Achieving high-quality collaboration relies on having shared and common goals, which are built on an eagerness to share truthful information–a quality that stems from trust. The more easily and quickly a team can provide honest feedback to each other, using tools such as Reflektive, which plug directly into existing workflows, the greater the trust and efficiency of the collaboration.

Because trust is the foundation of a healthy and productive work culture, investing heavily in creating trust within an organization will lead to exponential dividends–especially at scale for high-growth organizations.

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