Trust is an essential attribute for establishing value-added relationships with customers, employees, regulators, and investors. In addition to developing trust as a leader, evidence-based research is clear that organizational trust directly impacts the bottom line in many different ways. Corporate trust builds resilience against market chaos, enhances attitudes, intentions, and relationships with key stakeholders. Several research studies link organizational trust with discretionary effort, also known as organizational citizenship behavior, the "holy grail" of performance management. Additionally, organizational trust influences an organization's ability to attract and retain top talent.
Today's Unfortunate Distrust Reality
A recent 2019 largescale study of over 34,000 participants across 28 world markets found no institution is viewed as competent and ethical. There is an increasing sense of inequity driving down trustworthiness. This same study found that businesses are considered as the most capable but lack ethical behavior. Also, non-governmental agencies are perceived as behaving the most ethically but lack competence. What is also concerning is that many companies this year made significant changes to how they operate, undermining reliability and stability perceptions. According to the U.S. Bureau of Labor Statistics, in April 2020, unemployment rates in 43 states reached their highest levels since unemployment data began being collected in 1976. Additionally, increased opportunistic mergers and acquisitions have led to further changes within organizations.
What makes an organization trustworthy?
A widely accepted evidence-based understanding of organizational trust is the perception of the organization's ability, purpose, and integrity.
Ability – the skills, competencies, and characteristics that enable an organization to influence within a specific area
Purpose – organizations moral obligations and responsibility to demonstrate concern for others interests
Integrity – the follow through on organizational promises in a manner that is acceptable by others
Interestingly, integrity is the most essential factor of all three organizational trust factors. Edelman's recent study found that integrity and purpose account for 76% of a business's trustworthiness and competence only accounts for 24%. Having competent leaders, being financially stable, providing quality products, and being a recognizable brand is not as important to organizational trust as acting with integrity and purpose.
Ideas for Restoring Organizational Trust
Today's marketplace realities make building and enhancing organizational trust an essential strategy for any business looking to thrive in the future. Companies wanting to restore organizational trust should start by focusing on delivering in the dimensions of purpose and integrity.
Improving Equity: Inequities in opportunities and wages are negatively impacting organizational trust. In America, black men earn 88% of what white men make, and black women earn 66% of what white men make. Additionally, almost 47% of the workforce is women; however, few women are in senior executive leadership positions. Conduct an equity audit of wage and employment opportunities. Additionally, establish reporting that can help bring visibility and accountability for continued growth and improvements.
Improving Organizational Openness and Transparency: In addition to the usual channels of one-to-one and open-door meetings, it is essential to provide additional channels for open communications. Share results, responsibilities, ideas, opportunities for improvement, company information, and expectations clearly to everyone. Review the organization's privacy and transparency guidelines to be explicit where the company draws the line. Communicate with emotion as well as rationale. Open communication is a two-way street for both employees and leadership to engage. The goal is to create safety by being open and candid to demonstrate caring and respect. Also, remember that communication sent is not communication received. Develop a dashboard to measure how the organization is progressing toward openness and transparency in all communication aspects.
Improving Consistency and Predictability: No one can predict the future, so this may seem incredibly challenging to be consistent and predictable in today's virtual, volatile, uncertain, complex, and ambiguous marketplace. A guiding principle to adopt is, to be honest with predictions about the unknown, even if dismal, rather than to avoid predictions or provide unrealistic optimistic predictions. Strategies for consistency and predictability should focus on leadership, teams, and systems: (1) behaving in ways that align with communicated expectations, (2) Increasing access to information for all stakeholders, (3) and establishing a cadence for communications and processes. Clarify expectations before decisions are made by involving others in decision-making processes. Creating a RACI chart for goals and strategies can provide improved clarity. Also, utilize dashboards to increase visibility and understanding of information used in decision-making processes.
If you would like to learn more about how you can improve trust at a leadership level check out this article on How Leaders can Move Relationships from Distrust to Trust. Also, if you are looking for help with individual or organizational development to thrive we would like to help (contact us).
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