The Business Case for Trust

2 minute read

When trust goes down (in a relationship, on a team, in an organization, or with a partner or customer), speed goes down and cost goes up. This is what Stephen calls a“low-trust tax.”
— Covey, Conant (2016) The Connection Between Employee Trust and Financial Performance

Trust can be a difficult thing to grasp for many people – and manages – because it’s both something that is hard to measure, and at the same time we’ve been educated for long that “business is business” and the human side isn’t something to consider. Fortunately, this has been changing.

Given the difficulty in measuring trust objectively, and given how the discourse is framed in management circles, the usual way to confirm the effectiveness of trust is to look for correlation between self-reported trust levels and financial or growth metrics:

  • “During the three-year period from February 2013-February 2016 America’s most trustworthy public companies outperformed the S&P 500” by 7.2% in annualized returns (source)
  • An engaged workforce is 60% more likely to retain key employees (source).
  • “High-trust companies are 2 ½ times more likely to be high performing organizations” (source).

What I also find fascinating is that apparently trust in an organization is so mystical that many articles about it approach it very technically. For example the article I linked at the beginning reports that there are just three criteria:

  • Declaring Intent: tell why we’re doing what we’re doing.
  • Demonstrating Respect: you have to take care in respecting all stakeholders.
  • Delivering Results: show that you can do what you promised to do.

These three are surely useful (you can read the details in the article), however, it seems to miss the elephant in the room: trust is a personal, human relationship, that surely can be enhanced with some processes, models and trust, but if the individuals don’t have the proper soft skills, don’t truly mean what they say, break their word, don’t respect others and so on, everything else is just surface work that won’t ever work.

We need to address humans, before processes.

The other tricky aspect is that trust is a long-term strategy. Short term gains are possible, and visible, but it’s only in the long term that one can perceive its impact at company level. And this goes both in building it, and destroying it. While taking away certain things seems okay in the short term, the impact on the people as a whole in the long term can be crippling. A good manager has to acknowledge this delay in the impact of the choices.

I also found an interesting detail in terms of remote working:

  • “Virtual Workers (those working remotely three or more days per week) tend to report a significantly higher level of trust in their organizations than their non-virtual peers” having +8% in perception of having a highly effective leadership and +10% in having a collaborative environment (source)

This detail is interesting, even if it’s important to acknowledge that correlation is not causation. It could be either that the ability of working remotely is inherently a signal that the company says “we trust you, and your management of time”, a trait of remote workers, or a better insulation from company politics.


Thanks to Daniel Szuc for the link.