How many times have we discussed the contributions of employee engagement and the loyalty it produces to an organization’s performance?
Trust is, as it is for many things in society, the bedrock for employee engagement. A culture that fosters trust reduces what academics call transactional “friction.” As a result, decisions are made and implemented faster and at lower cost, something critical in an age where speed takes on greater and greater value.
At a 2019 business conference, Brian Chesky, co-founder and CEO of Airbnb, commented that “things move at the speed of trust.” It could hardly be more true than in a business like Airbnb. Its platform, which brings those with rooms and travelers together, relies on a triangle of trust between the company, its landlords, and traveler-renters, all of whom operate to a great extent on a sight-unseen basis. The model requires a high level of trust.
“In spite of the economics, organizations apparently are doing a poor job of building positive employee experiences, whether through trust or other means.”
We can put some numbers on this. In a “meta-analysis” of several studies, Kurt Dirks and Donald Ferrin concluded that “trust in leadership positively affects employees’ job performance, overall job satisfaction, and commitment to their organizations.” One study of 6,500 Holiday Inn employees concluded that when they rated their trust in their manager on a five-point scale, a one-eighth point improvement in the average produced a 2.5 percent improvement in unit revenue, or $250,000 in added revenue per hotel.
In spite of the economics, organizations apparently are doing a poor job of building positive employee experiences, whether through trust or other means. A 2017 study by Deloitte reported that 80 percent of executives around the world rated employee experience (including trust) important or very important. Employee experience drives engagement. And yet in the Deloitte study, only 22 percent of executives felt that their companies were excellent at building a differentiated employee experience.
A new book by Sandra Sucher and Shalene Gupta examines trust at the institutional level. That is, it looks at relationships between a business organization and its stakeholders, including employees. As they put it, “to establish trust with your customers, you need to first establish it with your employees and create processes and standards internally to ensure your products or services are up to standard.”
Their model for doing this consists of four elements:
- Competence: Is the organization good enough at what it does to engender trust?
- Motives: Is leadership motivated “to serve the interests of others as well as your own” or is the effort merely window dressing?
- Means: Are methods employed perceived, among other things, as being fair?
- Impact: What are the results, good and bad, and do you take responsibility for them?
These are not simple and easy to achieve in theory or practice. Think, for example, of the obstacles that lawyers and public relations advisers can put in the way of leaders wishing to practice such principles.
Sucher and Gupta go on to say that, “How a leader earns trust is similar to how organizations earn it … There is one extra element as well: legitimacy—that is, whether followers believe the leader has earned their position.”
“This work suggests that trust can be engineered, at least at the organizational level.”
We know how to create a great place to work and how to engage employees, even if surveys conducted globally suggest that we’re not good at it. Thanks to the work of researchers like Sucher and Gupta, we are learning how to build the trust necessary to engage those employees. This work suggests that trust can be engineered, at least at the organizational level.
If that’s the case, it raises a question about whether individual leaders can be trained to foster trust among those they lead. Among other things, we are told that at the individual level it requires that a leader be willing and able to demonstrate vulnerability (that they are less than perfect), to listen more than tell, and to follow through on the expectations they have created. Or is this all too manipulative in its nature to contemplate?
For years, research in the service sector by my colleagues and myself has suggested that great service organizations are especially good at hiring for attitude and training for skills.