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The Principles of Trusted Leadership

Overview:
A rise in major corporate scandals combined with falling employee and consumer confidence in business ethics and integrity has raised the issue of trust to a heightened level of awareness. Creating, nurturing and defending a high-trust work environment is the responsibility of an organisation's leaders. This article provides a brief overview of the many issues of trust as they relate to business leadership, and outlines the practical actions that can be taken to increase trust and subsequently performance within an organisation.

Takeouts:

  • The higher the level of trust between stakeholders (leaders, employees, customers), the greater the level of commitment to achieving business objectives, with a corresponding lower level of policing, micromanagement and issues to be resolved.
  • Trust is built slowly and destroyed quickly. Business leaders often significantly underestimate the impact of how their words and actions contribute to either nurture or undermine the trust of their staff.
  • Rebuilding lost trust requires decisive action by leaders, involving many stages over time as opposed to a one-off event.


Enron. WorldCom. One.Tel. HiH/FAI. The Red Cross. All were once organisations in which staff and customers placed their trust. Now they're either on the corporate scrap-heap or recovering from severely damaged reputations.

But long before the stories of consumer outrage broke, key staff members had already lost trust. They showed it by either abandoning the slowly sinking ship, leaking damaging information to the media, or sometimes both at once.

It is clear that trust is essential for relationships and organisations to function effectively. It is crucial to understand that without a high trust environment, high performance is not possible - and it starts at the interpersonal level.

Trust in Relationships – Covey’s Take:

Stephen Covey coined the metaphor of the 'Emotional Bank Account' to explain how trust works in relationships. Covey believes all interactions are either making deposits into or withdrawals from people's 'accounts' - the balance of which represents the level of trust that exists in the relationship.

The basic equation is simple: the more deposits, the higher the balance and the greater the level of trust that is built. The more withdrawals, the less trust. Logically, the relationships with which we have the most contact require the most deposits. What is most interesting about Covey's model is that he believes one withdrawal can equal up to twenty deposits, depending on the nature of the withdrawal. Ouch!

So what represents a trust deposit? Covey outlines six to consider:

  1. Understanding the individual;
  2. Attending to the little things (e.g. kindnesses and courtesies);
  3. Keeping commitments;
  4. Clarifying expectations;
  5. Showing personal integrity;
  6. Apologising sincerely when you make a withdrawal.
These deposits form the basis of personal trust between individuals. But in business, individuals are part of a larger and more complex system than one to one interactions. Consequently, to understand trust in business relationships you must also consider how trust is formed in the organisation. As Galford and Sebold-Drapeau state in their recent book The Trusted Leader:

"…being trustworthy and building trust in an organisation are not one and the same thing. The former is an inherent part of a person; the latter requires developed talent and considerable skill."

Trust in the Big Picture

Beyond personal trustworthiness, at least two other levels of trust have been identified as important in defining business:
(a) Strategic Trust - trust in the organisation's mission, strategy and ability to succeed;

(b) Organisational Trust - trust that the organisation's policies and procedures will be fairly administered and implemented as stated.

A business can still function at a reduced capacity if one type of trust is low. For example, it is possible to have a deceitful manager and still believe in the organisation. It is also possible to not believe in the organisation but still believe in the people closest to you. However, years of organisational change through trends such as downsizing, upsizing, reengineering, mergers and restructuring have created countless situations where intentions have been misread or major promises have been breached. Times of change, crisis or when people leave the business are often when the trustworthiness of leaders and organisations become most evident. And almost inevitably it seems staff are given measurable reasons to mistrust the actions taken by those in authority.

The fruit of leadership distrust manifests itself in many ways. Insubordination, unethical conduct, conflict, high staff turnover, lower productivity, decreasing customer service and profitability are all possible symptoms that any organisation with trust issues may face. To build trust requires discipline and the dedication to address and overcome all the possible ways it can be destroyed.

So what erodes trust?

All factors that erode trust can be placed into one of three categories:

  • Inadequate communication
  • Misbehaviour
  • Unaddressed situations
While making 'deposits' one addresses these categories by building personal trust which in turn can positively influence organisational trust, however more effort is required at the organisational level. Documented agreements between the organisation and its staff that cover all levels (e.g. executive leadership, region/country, division and team) are a powerful tool against which actions can be taken and measured to increase trust.

All good agreements should cover five areas to be considered a genuine trust building document – consider how your corporate communications stake up:

  • Results - what is to be done when (not the method it is to be done by);
  • Guidelines - the boundaries within which results can be accomplished (eg. policies);
  • Resources - technical, financial, personnel or organisational support available;
  • Accountability - performance standards and evaluation timeframes;
  • Consequences - specifically, what does and will happen as a result of evaluation.

This framework creates a transparent working relationship. It also builds a buffer against a business failing to deliver on strategic and organisational trust. If all stakeholders know what is expected of them and have been empowered to the best of the organisations current ability, then if corporate strategy is proven to be flawed, people are more likely to remain loyal. It also provides a framework against which policies and procedures can be clearly defined, increasing the likelihood that implementation and administration will be fair and clear to all parties.

Trust is fragile. In every interaction it is either being built up or worn down. Business leaders that make more 'deposits' than 'withdrawals' will go a long way to forging strong, trust-based relationships with their people. From that foundation, leaders have the personal power to encourage their organisation to deliver on both strategic and organisational levels. Though hard won, the fruit of trust is sweet to taste, and has a clear impact an organisation's bottom line. That makes being a trusted business worth fighting for.


REFERENCES

[1] http://www.thetrustedleader.com/topic4.html
(Trust Topics - Steps in Rebuilding Trust)

[2] http://dictionary.reference.com/search?q=trust

[3] Covey, Dr. Stephen R: "The 7 Habits of Highly Effective People: Restoring the Character Ethic" Melbourne: The Business Library (Information Australia), 1990 pp.188-199

[4]http://www.thetrustedleader.com/index.html
(Features an online test to score your trusted leadership)

[5] http://www.quickmba.com/mgmt/leadership/trusted-leader
(summary review of The Trusted Leader)

[6] http://www.amazon.com/exec/obidos/ASIN/1576750701/qid=1106363473/sr=2-1/ref=pd_ka_b_2_1/102-9822683-4867309 (Editorial Review - Reina & Reina, "Trust and Betrayal in the Workplace": ? Barrett-Kohler, 1999)

[7] Covey, p.223


> Article commissioned by Wallage for the Wallage Executive's client newsletter.
> Written by Victoria Small and edited by Paul Quinn, Quinntessential Marketing Consulting Pty Ltd.
> Disclaimer: The views and opinions expressed in this document are those of the author and do not necessarily reflect the view of Wallage.

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