RealTime Leadership

Trust can be difficult to define and measure, but there is wide-spread agreement that high levels of trust correlate with high levels of employee engagement.  RealTime Performance has done considerable work helping companies define values and identify competencies, and in almost every instance, establishing and building trust is designated a critical component for leadership development and organizational culture.  This result holds up across all industries, job functions and leadership levels.  There is no doubt that trust is important, but how valuable is trust to employees and to companies?

New research (Helliwell and Huang 2008) has found that a 10% increase in trust is equivalent to a 36% increase in monetary compensation.  To get to this result, the researchers took a two-step approach. First, they determined that income has an impact on life satisfaction, no surprise there.  Then:

If the influence of income on life satisfaction is significant, then the income-equivalent values of other significant determinants can be measured as the size of the change in income that would have the same well-being effect  as a given change in the other variable of interest.

And in this case, the “other variable of interest” is trust in management.  Using this methodology they were able to assign a monetary value to increasing levels of trust in the workplace.  The results were independently verified using data from three major social surveys.

Let’s consider the staggering implications of this study.  If a company is able to increase trust by 10%, it has the equivalent effect on employee life satisfaction as handing-out a 36% raise in salary or bonus.  For a company with a $100 million dollar payroll, we’re talking about a $36 million dollar value.   In other words, investing in an initiative to build trust has enormous potential.

All of this research begs the question, “how does an organization build trust?”  Last week I interviewedRoss Smith, a manager at Microsoft who faced this issue within his 85-person Windows Security Testing group.  Ross and his team came up with innovative strategies involving productivity games, wikis, social networking and other Web 2.0 technologies. 

What I find most interesting about Ross Smith’s approach is the way he encouraged his team to develop its own initiative for building trust.  He did not impose a solution from the outside, rather, he asked his team, “how can we build trust?” thereby involving them in the solution.  By taking this strategy he also demonstrated trust in his team, that they would come up with a worthy and valuable strategy.

The following is the fourth in a series of five questions and corresponding answers on leadership. See questions: 

1.  How to motivate and inspire others?
2. What is the biggest challenge for leaders? 
3. What steps or strategies do you use to develop others?

4. How do you build trust with your team and peers?

There are a few things I try to keep in mind.  First, I always try to keep the interest of others above my own.   People will trust you if they believe you have their best interest at heart.  A good example of this in the recent news is the captain of the US merchant vessel that was hijacked.  He offered himself as ransom to the pirates in exchange for freeing the other crew members.  This took selfless courage.    In the future, you can be assured that this captain will have the trust of his crew. 

Another way I build trust is through openness and honesty.    To the extent possible, I try to release information and keep people informed of what’s going on.    I once met the manager of a lumber mill who refused to share any financial information with his workers because he was afraid they would focus on how much money he made.  By withholding this information, no one at the mill knew if the company was making money or losing money.  This, in turn, caused fear and anxiety.  Needless to say, the workers did not trust their leader and vice versa.  The mill was closed 18 months later.

A third way to build trust is to act consistently with your values and words.  This is also called walking the talk.   If you say you value the input of others, but refuse to listen to anyone and you only back your own ideas, people won’t trust you.   If you promise something will be done by Wednesday, don’t deliver on Friday. Failing to do what you promise erodes trust.

I recently talked with a senior manager at Microsoft, Ross Smith, who who shared with me his 2-year journey to establish and build trust with his 85-employee team in the Windows Testing & Security Group.   Ross’ efforts eventually led his group to create a public website where they invite discussion about trust.  They also created a Trust Blink Game where they use a fun yet simple game of pairwise voting to determine the collective wisdom around how best to establish trust. 

 The following behaviors, when utilized consistently, will help you establish trust:

• Can be counted on to speak with truth and candor
• Acts consistently with his/her words
• Takes accountability for his/her own mistakes
• Establishes trust and mutual respect when dealing with others
• Treats people fairly and consistently at all levels within the organization
• Encourages and supports others to speak with truth and candor
• Creates a safe and trusting work environment that encourages openness and honest dialogue

 The following is the third in a series of five questions and corresponding answers on leadership. (See questions #1 How to Motivate and Inspire Others? &  #2 What is the biggest Challenge for Leaders?).

3. What steps or strategies do you use to develop others?

The first step is to understand what people want for themselves.  I always ask my direct reports, where do you want to be in 5 years?  It’s surprising how many leaders simply assume they know where people want to go.   I want to know what they are passionate about.   Why do they work here?  Then I ask, how can I help you get there?  I may offer suggestions, but I like to hear what they have to say first.  If they come up with the development activity or plan, they are much more committed to it.

Once you establish the 3-5 year goal, then it is important to establish more immediate goals.  What are they going to work on in the next 3-6 months?   How can we measure progress?  Once the short-term goals are established, then comes the really hard part (at least for me), and that is on-going feedback.  People need feedback to improve.  As a leader, it is your responsibility to provide feedback to the people who work for you.  They deserve to know how they are doing.    For feedback to work it needs to be delivered at, or close to, the time of observation.