Strategy & Operations » Leadership & Management » A question of trust

DO YOUR employees trust you? If you’re a CFO, this may be the first time you’ve been asked this question. However, it cuts to the heart of working relationships and even organisational performance. As a senior leader in your organisation, trust is an issue that you can’t afford to ignore.

A study of 10,000 employees, undertaken by the Kenexa High Performance, shows that 28% of employees don’t trust the senior leaders in their organisation. This lack of trust in leaders has a strikingly negative impact on staff retention, employee well-being and organisational performance.

Employees who distrust their leaders are nine times more likely to seriously consider leaving their organisation. They’re also 15 times more likely to report unreasonable work stress and seven times more likely to feel mentally and physically unwell.

The cost of trust

In many organisations, the CFO is now a strategic partner and adviser to the CEO. In such a relationship, trust is key. However, a lack of trust negatively affects more than one-to-one working relationships, but also the wellbeing and productivity of workers in general. For these reasons, there is a strong business case for building trust throughout an organisation, from the CEO and CFO down.

Trust is not just a leadership issue; it’s an individual issue, for everyone in the organisation. Every member of staff can and should strive to be trustworthy. There are clear benefits to organisations in having trustworthy employees, so trust should really be seen as a corporate asset. As such, it should rightly fall within the realm of the CFO.

Simply put, a lack of trust can shatter the brand and reputation of an organisation. There’s also the risk that you could lose your top talent: the very people you need to keep could end up leaving if they don’t trust the senior leadership team. Those who trust their leaders want to stay with the organisation.

From a financial perspective, improving the level of trust is likely to save the organisation money on hiring new staff. It may also reduce sickness and absence costs and bring about better organisation-employee relations. Gaining and maintaining trust can help the organisation foster an honest, ethical working environment, build a high-performance culture and develop an engaged workforce.

There’s an onus on the CFO to set the tone for ethical practice and behaviour in your organisation. The CFO is a role model, not only to those who work in the finance function but also to those on the board, to all staff and to everyone who supports and works in partnership with the organisation. For all of these reasons, who else is better placed to champion the issue of trust?

What constitutes trust?

Trust is about relying on and having confidence in the actions of another person, with no guarantee that he or she will behave as desired in return. When applied to leadership, trust is sometimes seen as an employee’s willingness to take a risk for a leader with the expectation that, in exchange, the leader will behave in some desired way. For example, an employee may take a risk in remaining at an organisation during lean times with the expectation that the leader will pull the organisation out of the slump. That choice requires trust in leadership.

What is it that makes people trust one another? Trust is not an absolute quality. Rather, we trust others a little, a lot, completely, not at all or any number of variations in between. According to organisational scientists, there are three fundamental attributes that primarily affect whether or not employees will trust their leaders.

These are:

• Integrity (are they honest?)
• Benevolence (do they care about me?)
• Competence (can they do their job?)

These attributes account for about 80% of what makes employees trust their leaders. Of these, integrity is the most important quality. It’s also the first principle of ACCA’s Code of Conduct and Ethics, where it is defined as being straightforward and honest in all professional and business relationships.

How to gain the trust of employees

It is possible for you and other members of the senior leadership team to gain the trust of employees by demonstrating these three qualities. But it’s not enough to be honest, benevolent and competent: you have to be seen to be so.

On an individual level, one of the easiest ways to cultivate employee trust is to start trusting the people around you. Listen to them; empathise with them; show your concern; be honest with them; be true to your word; treat them fairly. In other words, actively manage how you are perceived by others. Try to connect with people on a personal level. This could be as simple as shaking hands with them once in a while. To maximise trust, it is important that you can do your job well, but it’s even more important for you to be seen as a kind and honest person.

There are also steps that the organisation can take to engender trust. For example, our research shows that employees are twice as likely to trust their senior leaders if the organisation has published a mission statement, conducted an employee opinion survey, sponsored a quality improvement initiative, gathered customer satisfaction feedback, conducted yearly performance reviews or cross-trained employees. The more of these best practices that the organisation engages in, the greater the level of employee trust in the leadership.

Knowing which employees are generally less trusting can help your organisation to target these specific people in interventions. Our research found no significant difference between men and women when analysing whether certain groups of employees tend to trust their leaders more or less than others. However, we found that the percentage of people who trust their leaders seems to decline with age. Employees in their twenties are twice as likely to trust their leaders as employees in their forties or fifties. Upper and mid-level managers trust their leaders by 15 percentage points more than rank-and-file employees.

Trust is an essential quality in today’s organisations. The simple steps of acting as a trustworthy role model and advocating a business case for trust – to your CEO and other members of the leadership team – could improve staff retention, employee well-being and the performance of your organisation.

Dr Rena Rasch is research manager at the Kenexa High Performance Institute

The Trust Matters report can be downloaded free here