How To Gain Trust From Employees

Table of Contents

List of Abbreviations

List of Figures

1 Overview
1.1 Introduction
1.2 What is Trust?
1.3 Importance of Trust for a Company

2 The Seeds of Employee Trust
2.1 Trust or Not To Trust - The Trust Model
2.2 Factors that Inspire Trust: Approach of the Trust Model
2.3 Fair Process
2.4 Enemies of Trust

3 Ways to Gain and Sustain Employee Trust
3.1 Necessary Organisational Structures
3.2 Role of Corporate Culture and Corporate Values
3.3 Important Leadership Soft Skills
3.4 How to Rebuild Damaged Trust

4 Conclusion
4.1 The Authors’ Comment to the Topic
4.2 Résumé

Appendix 1 Integral Total Management (ITM) Checklist

Bibliography

List of Abbreviations

illustration not visible in this excerpt

List of Figures

Figure 1: The trust model

Figure 2: Fair process and the two paths to performance

Figure 3: Culture elements

Figure 4: Possible actions to implement a culture of trust

Figure 5: Seven steps for rebuilding trust

1 Overview

1.1 Introduction

‘Trust permits risk, which permits change, which permits growth.’¹

You know when you have trust; you know when you don’t have trust. Trust is built and maintained by many small actions over time. In the business environment, trust is also earned, over time, through day-to-day actions- making the right choices even in difficult situations. There is a human need to trust and respect the leaders into whose hands we deliver ourselves.² Trust forms the foundation for effective communication, employee retention, and employee motivation and contribution of discretionary energy, the extra effort that people voluntarily invest in work. When trust exists in a company or in a relationship, almost everything else is easier and more comfortable to achieve. A manager will not get top performance out of any employee who does not trust him. Without the employees' trust managers will not get that spark of creativity from them that is so important. Employees will not innovate that one little idea that could have kept a company ahead of its competitor.

Yet, even in a company in which trust is a priority, things happen daily that can injure trust. Trust is the crucial ingredient of organisational effectiveness. Building it, maintaining it, and restoring it when it is damaged must be at the top of every manager’s agenda.

Trust is not a matter of technique, but of character; managers are trusted because of their way of being, not because of their polished exteriors or their expertly crafted communications. Gaining employees trust is about telling the truth, even when it is difficult, and being truthful, authentic.

Of course, there are no fixed rules of how to gain trust from your employees. But there are some easy but important guidelines that help managers creating a business environment where trust has the chance to build and maintain.

1.2 What is Trust?

Whether employee or manager, every human being intuitively knows when she or he has trust or when she or he has distrust. However, what is trust definitely and how could it be explained scientifically?

As all human behaviour is different, trust is described by different definitions. According to Rousseau, Sitkin, Burt and Camerer trust is ”[…] a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of another.”³

The well-known definition of Mayer, Davis and Schoorman describes trust as “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party.”⁴

These definitions state the personal or interpersonal type of trust, i.e. it bases on a person-to-person interaction. In addition, trust can be impersonal that consist of the relation of a person to an organisation rather than on the individuals filling the positions within the organisation. Formal reprimands and sanctions and their results of implementation determine the vulnerability of a person.⁵

Furthermore, trust can be classified in group trust, organisational trust and institutional trust. Group trust is similarly defined like interpersonal trust singly one trustee represents a group of persons.⁶ Organisational trust is an impersonal trust of an employee to her/his company and organisational leaders (employer).⁷ It is the feeling of confidence and support of an employee in her/his employer, the belief in the achievement of corporate goals and the faith of the benefit improvement for employees through organisational actions.⁸ Institutional trust bases on confidence and security because of for example laws and regulations protecting the individual’s rights and not harming the individual.⁹

For this paper, interpersonal and organisational trust are most important as they describe the relationship between an employee to her/his supervisor and the company.

In favour of a better improvement of trust within an organisation, Tway emphasises to understand trust as a construct. He “defines trust as the state of readiness for unguarded interaction with someone or something.”¹⁰ His model of the constructs includes three components:¹¹

- The capacity for trusting: The capacity and willingness to risk of trusting others that is developed during the total life experiences of a human being.
- The perception of competence: This is composed of the person’s ability to competently perform in a specific situation.
- The perception of intentions of a human being: The assumption that “actions, words, direction, mission, or decisions are motivated by mutually-serving rather than self-serving motives.”¹²

1.3 Importance of Trust for a Company

Like a building without a foundation, a company without trust can’t stand.¹³ Trust makes companies work.

There are numerous consequences resulting from the lack of employee trust, the most important ones are¹⁴:

- High employee turnover
- Low employee morale
- Reduced employee productivity
- High employee absenteeism rates

According to a report of the University of British Columbia, trust in management is the most valued determinant of job satisfaction.¹⁵ This report states that a small increase in trust of management is like getting a 36% pay increase. Conversely, if that same amount of trust is lost, the decline in employee job satisfaction is like taking a 36% pay cut.¹⁶ Falling levels of employee trust are a major threat to future corporate competitiveness. Low employee trust levels exact a high financial price. Employee trust levels and corporate performance are closely linked. In fact, the rate of three-year total returns to shareholders is almost three times higher at companies with high trust levels than at companies with low trust levels.¹⁷ A lack of trust and safety in organisational relationships results in low organisational commitment, decreased human relations and company performance, low employee morale and product quality, and increased absenteeism and turnover.¹⁸

When trust is high within a company, the exact opposite happens as when trust is lacking:¹⁹

- Lower levels of turnover
- Higher employee morale
- Lower organisational stress levels
- Increased employee productivity
- Reduced employee absenteeism

In companies with a high level of trust, employees want to come to work. They smile and laugh, have fun and are productive while at work. They care about the future and the success of their company because they are allowed to take ownership with the jobs that they do.²⁰ They understand what their role is within the company and strive for excellence in that role.²¹ Such employees are an important competitive advantage for the company. As a result, companies with trustworthy management do not experience the high cost of turnover as their employees stay. In a trusting environment, employees have more energy, take risks, innovate more frequently, collaborate with co-workers, are responsible, treat customers better and drive business results.²² Engaged employees take ownership of their jobs, have pride in their work, and invest time and energy to help the organisation succeed. They are more dedicated, work harder, accomplish more and speak more positively about their organisations than employees who are not actively engaged.²³ As a result, companies that foster trust are more profitable. Dozens of studies have shown a connection between engagement and business performance, to name only two:

- A Watson Wyatt Worldwide study found out that companies in which employees trusted their managers posted a 42% higher return on shareholder investment than those companies in which distrust was the norm.²⁴
- Research from the Great Place to Work Institute suggests that companies with highly engaged employees have been shown to have significant decreases in quality complaints, lower turnover, and higher revenue growth rates.²⁵ It also shows that business performance gains of between 30% and 40% can be realised by organisations whose employees feel highly committed and engaged in their work.²⁶ Companies with high morale and engagement have been shown to perform about 20% better on stock market price than their industry comparison groups.²⁷ Further, research shows that engaged employees often increase their quality of work - thereby reducing defect rates by up to 75%.²⁸

The bottom line is that there is a significant relationship between employee trust, engagement and performance, and between performance and results.

2 The Seeds of Employee Trust

2.1 Trust or Not To Trust - The Trust Model

According to the survey of the University of Chicago in 2002, four out of five of the 800 interviewed American employees had “only some” or “hardly any” confidence in their managers.²⁹ Given the pace of change in companies - mergers, downsizing, new business models, and globalisation - it is not surprising that employees’ trust is an important issue of today.

Trust does not happen automatically or even magically. By mentally weighting factors that can be assessed and influenced, employees decide whether to trust their managers or not. According to Robert F. Hurley, a professor of management at Fordham University in New York, employees have gone through a decision-making process when they choose to trust their managers.³⁰ This decision-making process can be identified, analysed and influenced.

Based on the social psychologist Morton Deutsch ’s research on trust, suspicion and the resolution of conflict, Hurley developed a model that can be used to predict whether an individual will choose to trust or distrust another in a given situation.³¹ Hurley has successfully tested this model for trust with hundreds of managers: By using this model, these managers were able to take concrete steps that made it easier for their employees to trust them.³²

Hurley ’s model for trust is based on the fact the people weight ten basic factors when deciding whether to trust someone.³³

illustration not visible in this excerpt

Figure 1: The trust model

Source: Harvard Business Review (2003, 2006), p. 6.

Three of the ten factors stated in the above figure relate to the decision maker alone (the trustor) and are therefore named as ‘decision-maker factors’.³⁴ Often, these three factors have little to do with the person asking for trust (the “trustee”), but they are the result of a complex mix of personality, culture and experience.³⁵ The remaining seven factors concern aspects of a particular situation and of the relationship between the parties. These are the factors that a trustee can most effectively address to gain the confidence of the trustor.³⁶ The more factors that score on the high end of the scale, the more likely the decision maker is to choose trust.

The following section 2.2 describes in detail how this model works and how managers should stick to Hurley’s model for trust to gain and maintain trust from their employees.

2.2 Factors that Inspire Trust: Approach of the Trust Model

The trust model founds on different factors that help to predict whether an individual will choose to trust or distrust in a given situation. The decision to trust can be defined by two groups: decision-maker factors and situational factors.³⁷

Decision-maker factors belong to the individual, the trustor. They made up the complex mix of personality, culture and experience. Within the situation the trustor has to decide whether to trust or not, the decision-maker factors can not be influenced as they represent the relative fixed aspects of the personal attitude every individual builds up during her/his lifetime.³⁸

“How tolerant people are of risk has a big impact on their willingness to trust - regardless of how the trustee is.”³⁹ The risk tolerance of a trustor describes the faith that things will work out. Natural risk takers do have faith and make their decision of trust in a short time. They do not think long about what could go wrong if glaring problems are absent. Risk avoiders are innately cautious and are the other way round. Often they need the feeling of control before placing trust in someone. Without clear decision for approval they are averse to act as they trust neither others nor themselves. At some level, culture differences influence risk tolerance of individuals - for example Americans have a higher tolerance for risk than Japanese.⁴⁰

Equal to the risk tolerance, the level of adjustment affects the amount of time people need to build up trust. People who are well-adjusted have a high level of confidence in themselves and the world. They believe that nothing bad will happen and that no one wants to mean mischief what makes them fast to trust. In contrast, poorly adjusted individuals see threats everywhere. Worries make them slow and reluctant to get into a comfortable position. Regardless of the trustee they need more time to trust others.⁴¹

In the content of business relationships a person thinks about her/his relative power before deciding to trust. Individuals possessing a position of authority within an organisation automatically are more likely to trust because of their ability to sanction other persons. A person with less relative power has little or no recourse and is more vulnerable. Thus, the person suspects to trust as she/he cannot be confident that the other serves her/his interests.⁴²

The remaining seven situational factors constitute aspects of the relationship between parties in a specific situation. Situational factors involve both parties - the trustor and the trustee. The trustee can and should address these factors describing aspects of a relationship the trustee is able to influence. The result will be increased confidence of the trustor and her/his trust that would probably not appear if the trustee only has to decide on her/his individual predisposition of trust.⁴³ Which factors the trustee has to include in interventions to gain trust depend on the specific situation and relationship between parties and should be evaluated continuously.⁴⁴

Security is the opposite of risk and relates to a given situation. Situational components of security can influence the decision to trust, e.g. an employee might trust her/his supervisor in good times for the company, but might also be suspicious in bad times for the company.⁴⁵ A general rule that has to be remembered is that: “The higher the stakes, the less likely people are to trust. If the answer to the question “What’s the worst that could happen?” isn’t that scary, it’s easier to be trustful.”⁴⁶

The number of similarities states human behaviour that individuals tend more to trust other who are similar. It is quite tribal, because often people tie up all differences and similarities to another person before making the decision to trust. Examples for similarities are common values (e.g. work ethic), membership in a defined group and shared traits of personality.⁴⁷ The natural mistrust against differences like other cultures or values is one reason why a company with a strong unifying culture could gain high levels of trust.

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¹ www.poemsforfree.com, 13.01.2008.

² See Boe (2002), p. 15.

³ Rousseau et al. (1998), p. 395.

⁴ Mayer et al. (1995), p. 712.

⁵ See Elangovan et al. (1998), p. 548.

⁶ See Rousseau et al. (1998), p. 395.

⁷ See Gilbert et al. (1998), p. 321-338.

⁸ Ibid., p. 322.

⁹ See Möllering (2003), p. 22-26.

¹⁰ wwww.humanresources.about.com, 02.01.2008.

¹¹ See www.humanresources.about.com, 02.01.2008.

¹² www.humanresources.about.com, 02.01.2008.

¹³ See Harvard Business Review (2003, 2006), p. 1.

¹⁴ See Boe (2002), p. 2.

¹⁵ See www.blogs.bnet.com, 27.12.2007.

¹⁶ Ibid.

¹⁷ See www.personneltoday.com, 27.12.2007.

¹⁸ See Boe (2002), p. 17.

¹⁹ Ibid., p. 3.

²⁰ See Boe (2002), p. 18.

²¹ Ibid.

²² See www.blogs.bnet.com, 27.12.2007.

²³ See www.personneltoday.com, 27.12.2007.

²⁴ See www.blogs.bnet.com, 27.12.2007.

²⁵ See www.personneltoday.com, 27.12.2007.

²⁶ Ibid.

²⁷ See www.personneltoday.com, 27.12.2007.

²⁸ Ibid.

²⁹ See Harvard Business Review (2003, 2006), p. 4.

³⁰ Ibid., p. 5.

³¹ Ibid.

³² Ibid.

³³ Ibid.

³⁴ See Harvard Business Review (2003, 2006), p. 5.

³⁵ Ibid.

³⁶ Ibid.

³⁷ See Harvard Business Review (2003, 2006), p. 3.

³⁸ Ibid.

³⁹ Harvard Business Review (2003, 2006), p. 3.

⁴⁰ See Harvard Business Review (2003, 2006), p. 3.

⁴¹ Ibid.

⁴² See Harvard Business Review (2003, 2006), p. 3.

⁴³ Ibid., p. 4.

⁴⁴ Ibid., p. 7.

⁴⁵ Ibid., p. 4.

⁴⁶ Harvard Business Review (2003, 2006), p. 4.

⁴⁷ See Harvard Business Review (2003, 2006), p. 4.