Why do smart leaders build high-trust cultures?

Wednesday, July 27, 2016 - 11:37

By AIM Education and Training

Back in 2014, the San Francisco Giants did the unimaginable, they won the Major League Baseball World Series. While they were ranked lowly when the season started, the Giants were able to drag themselves to the final against the odds. Facing off against the American League champions Kansas City Royals, the series went down to the final game. 

With the Giants struggling to put runs on the board, series MVP Madison Bumgarner took the mound and shut out the Kansas City offence - helping the Giants hold on to a 3-2 win.

After the match, 16-year veteran Tim Hudson said this was a huge achievement not just for himself (who had not won a world series in his 16 years) but also for the team, who were perceived to not have the talent nor the required leadership training to win. 

"That moment right there … you couldn't write a better script for it," he said. "It's a storybook ending."

However, it was the words of team CEO Larry Baer that are important. 

"There's a reason we're all here, and it's a culture that gets created," Larry Baer said after the game. "Everybody cares about each other in this organisation."

The Giants are one of the clearest examples of organisational success stemming from a culture of trust. Like Larry, CEOs should be more worried about the culture of their organisation as it can be a major driver of success.

What is a high-trust culture?

Culture is more than a staff training program, talent, innovation or strategy. In fact, in today's world - characterised by volatile markets and high-employee turnover - culture is now the essential element. It's so important that Professor of Management at Stanford Joel Peterson argued that it's the most potent aspect of an organisation. 

"I believe that trust is more powerful than power itself," explains Peterson. "It supports innovation and flexibility, and it makes life more enjoyable and more productive. People who live in high-trust environments thrive."

In his book "The 10 Laws of Trust", Peterson and fellow author David Kaplan explore the impact trusting cultures can have on companies. They found that once freed from micromanagement, employees tended to contribute more, while risk-taking and innovation became normalised.

"When a company has a reputation for fair dealing, its costs drop," Peterson noted. "Trust cuts the time spent second-guessing and lawyering."

It can often be the competitive edge many leaders are looking for. Take for instance research from the University of Sharjah, investigators found that trust was essential for a number of other positive organisational outcomes. Specifically, they discovered trust facilitated communication between people on different levels of the hierarchy as well as employee commitment to the organisation and their work.

Yet, trust is not just appreciated by management. Employees are attracted to trusting cultures, and managers and leaders with integrity. A survey from Sunsuper found that Australian workers believe trust and integrity are essential values all leaders should have. 

"Australian employees voted 'trust' as one of the characteristics they most value in a leader (23%), closely behind 'integrity' (27%)," said Mr Hartley. "So it's concerning that while trust is so highly valued amongst employees, the levels of trust Australians have in their managers is so low.

Leaders thus have an imperative to develop a culture based on trust, integrity and commitment.

How to develop a culture of trust?

Unlike other business processes and strategies, implementing a culture of trust is not an overnight endeavour. In fact, it takes time, effort and guidance, such as through professional leadership training.

Before any concrete undertakings can be started, a leader must define trust. Writer and commercial expert Joel Peterson believes that trust is the action of giving up control to another person. Like all initiatives within a business, trust begins at the top.

"You have to be intentional about building a high-trust environment. It doesn't just happen," he says. "It's just like diet or exercise."

To help leaders, Peterson and Kaplan provide three requisites that employees should use to determine if they should trust their leaders.

Firstly, trust should be based on character and specifically integrity. We cannot trust a leader that we cannot rely on. Second is competence; trust is based on a person's abilities and how well they can utilise them. Third is authority; when employees look to trust leaders, they focus on the leader's capability to deliver success.

"Leaders empower followers through trust," says Peterson. "And by empowering people, they create a virtuous cycle of productivity and flexibility and innovation."

The other side of the coin

When we engage with trust, we are always taking a risk - one that can end in betrayal. Yet, in many ways the risk is well worth it. 

However, embedding accountability in an organisation can limit this risk. Through mechanisms of transparency and measurement, employees can be kept in the loop and receive up-to-date information about outcomes and progress. The more accountable employees and leaders are to each other, the more trusting the relationship. 

Developing and maintaining relationships of trust takes dedication and coordination. However, the consequential benefits of a high-trust culture far outweigh the risk of betrayal. In the same way the Giants defied expectations to win the 2014 World Series, employees that believe in each other and their organisation can drive their companies to success.