FEE POSTS

Culture of Trust

September 16, 2020 | FEE Content, FEE Posts

by Bob Leonard and David Ross

It’s clear to most that the way we organize and lead our businesses must evolve to meet the challenges of our Volatile, Uncertain, Complex and Ambiguous (VUCA) world. After the pandemic is gone, we will still have to deal with our climate crisis – a problem that touches everything and is not going to go away for the foreseeable future. That requires a united front – collaboration throughout an organization.

A primary reason that organizations face difficulties in strategy execution is lack of trust in its leaders and of the organization itself. In a hyper-connected world… and one that is increasingly transparent, bad news travels fast. Unethical behaviors, self-dealing, relying on stock buy backs instead of doing the hard work of innovation, extremely lop-sided compensation schemes – all of these and more quickly become common knowledge throughout middle management, the rank and file and the external stakeholder community. They kill trust. They create hostility toward leadership. Employees and other stakeholders may cooperate grudgingly because they need that paycheck, or that contract, or that budget increase… but they will not collaborate. They will not innovate. They will not jump in and do all they can when trouble arises.

Too many companies allow culture to just happen. They take culture for granted not realizing how critical it is (and it’s only becoming more so). The 2020 Edelman Trust Barometer reveals that none of the four societal institutions that the study measures – government, business, NGOs and media – is trusted. A 2018 Gallup study found that barely a third of US employees were fully engaged in their work – “involved in, enthusiastic and committed.” 53% of employees were “not engaged”, and 13% (the maliciously compliant) were “actively disengaged”. People are fearful about the future and their role in it, yet do not believe that institutions have their best interests at heart. That should be a wake-up call for organizations to embrace a new way of effectively building trust.

In a VUCA world, and one that is becoming even more uncertain and volatile due to our climate crisis, organizations need employees and other stakeholders who will authentically work together, who will do whatever it takes to successfully deploy corporate strategies, who will suffer setbacks and still persist. And that requires a solid culture of trust.

Corporate culture is not intangible. It lives in every building, process and person that is part of the organization… and it’s here where change is possible. Effective organizations proactively manage their culture to align with their vision for the future and their business strategies. They work to understand the existing culture, and then work to design the desired culture… starting with an overt declaration of company values. Corporate values must not be generic platitudes engraved on a plaque; rather they need to be alive in every employee. They must be clearly understood and believed by all stakeholders.

These values might include a rejection of office politics, an embrace of genuinely serving customers, and C-suite accountability. This is not an exhaustive list. You should develop your own based on your corporate vision.

Start with Trust

It’s true that trust must be earned, but organizations that start with trust in their stakeholders can earn trust from their stakeholders relatively quickly. Trusting everyone creates an environment of trust. People understand that they are trusted, and also that they can lose that trust based on their actions.

There are certain characteristics visible in organizations that connote trust:

Risk taking: calculated risks are a part of business. Some risks won’t pan out. Success and failure is accepted at all levels and publicly addressed. Importantly, resulting in a “no blame” culture.
Fair treatment: employees believe they are treated fairly, regardless of their position within the organization.
Respect: employers support their employees’ professional growth and genuinely consider their ideas in decision-making processes.
Credibility: management is seen to be ethical in its business practices. Promises kept… even small promises, result in increased trust. All stakeholders have confidence that all other stakeholders mean what they say, and speak the truth.
Transparency: honesty is a key attribute that should permeate your company. Leaders can quickly set an example of honesty by admitting mistakes.
Empowerment: When dealing with complex, systemic issues like our climate crisis, the C-suite can’t know all the threats and opportunities that exist. By empowering employees to make decisions, velocity is enabled.
Collaboration: When stakeholders trust one another, they freely collaborate across functions and departments, and with supply chain vendors and distributors, addressing problems before they arise.

Nobody can overhaul a corporate culture on a dime. If you have a corporate culture that is hierarchical / command and control, your company is ill-suited to deal effectively with our VUCA world… an operating environment that requires agility, adaptability, flexibility, resilience, transparency and speed. You can’t blow up bureaucracy with a bureaucratic change process. You can’t build a culture of trust with a program full of oversight and verification. Trust must be earned.

How to Earn Trust

You know how to do this in your personal relationships – you tell the truth, people can count on you to keep your word, you work to understand the viewpoints of others. In a word, you are trustworthy.

Here are some trust building tactics:

Communicate your trust by overtly declaring employee empowerment, and then prove you mean what you say by delivering appropriate training.
Remove the trappings of hierarchy. Shutter the Executive Dining Room. Remove the reserved parking spaces. Examine all the obvious and more subtle ways in which executive management is treated as “better than”… and get rid of them.
Show all stakeholders that they can trust your statements around taking our climate crisis seriously. Appoint someone with the appropriate credentials to a position of authority, and give them the resources they need to be effective.
Redeploy all administrative functions designed to keep watch over staff in an attempt to ensure productivity. When employees are inspired, there are very few slackers, and those slackers will be clearly visible to all.
Admit mistakes in writing. If goals were not achieved, determine the reasons… the real reasons (even if that includes a poor executive decision). And communicate your plans to rectify the situation.

Organizations with high levels of trust are more productive, have higher employee morale and lower employee turnover, and they perform better financially. Commitment flourishes in an environment of trust. To fully commit, stakeholders need to believe they are operating within an organization that truly values fairness, honesty and loyalty.

Job security is an effective trust builder. High trust organizations don’t lay off workers when the inevitable tough time arrives. They reduce the work week to spread the pain equitably across the work force. That includes management. Managers may choose to continue working full time, but their compensation is scaled back. All stakeholders are made aware of what is going on and why. When good times return, the organization has saved what it would have spent on severance packages, and on the costs of rehiring, new hiring and training new employees.

Opportunity is Inherent in Uncertainty

A culture of trust enables an organization to discern and address opportunities that would remain hidden otherwise. Empowered employees will recognize these opportunities when they arise and will act on them.

Jim Hagemann Snabe, CEO of SAP, was horrified to learn that the giant German software company had amassed over 50,000 key performance indicators (KPIs) covering every job across the organization. He stated, “We had all this amazing talent and asked them to put their brains on ice.”

Give people the authority to act independently and the training to do so effectively.

It isn’t easy to foster a culture of trust… but it’s definitely worth the effort. Any kind of culture shift is a significant undertaking and takes time, patience and regular reinforcement. With a clear vision, strong leaders, and tools and experiences that support trusting behaviors, a culture of trust is possible.