How does building trust equal high growth & profits?

There seems to be a strong correlation between the financial health of an organization and the leadership culture and behaviors within that organization. When reinforcing strong leadership, trust and collaboration throughout the organization better financial performance was realized. Likewise, when key behaviors were missing so were the financial gains.

Based on recent research developed by Interaction Associates and the Human Capital Institute (HCI) a larger percentage of high performing organizations (HPOs) are currently growing at a higher rate due to a workforce trend they have fostered. That trend is TRUST. They define “trust” as the willingness to put oneself at risk based on another individual’s actions. High Performing Organizations (HPOs) were defined as organizations whose net profit grew more than 5% over the last year. The opposing Low Performing Organizations (LPOs) were similarly defined as those whose net profit grew less than 5%, or shrank, over the last year.

5 Insights to High Performance

The summary of their findings lists 5 major insights that seem to identify the supportive behaviors of the HPOs. A dramatic rebound in trust and leadership, from previous years of the survey, shows that not only is the economy improving but the willingness of leaders to be transparent about those improvements is evident. Also, the involvement of employees in company affairs and the engagement of the workforce are skyrocketing. Leaders are “Walking the Talk”, whether they were before or not. An understanding amongst HPO leaders is that trust is not inherent, but is obvious in the decisions being made by leaders.  Lastly, they identify 5 top leadership actions that help to build the trust in their organization, which I will elaborate on.

According to 80% of respondents of the survey a high degree of trust in their leadership is required to be effective in their work. Their top responses to “leadership actions that would most strongly improve trust” were: 1.) set employees up for success (i.e. tools, resources and learning opportunities); 2.) provide adequate information around decisions; 3.) seek input prior to making decisions; 4.) consistently act in alignment with company values; and 5.) give employees an inspiring, shared purpose to work toward.

Notable differences in the business goals and priorities in the highest performing organizations from the previous year’s survey results were: 1.) A focus on customer loyalty and retention; 2.) Attraction, deployment, and development of talent; 3.) Consistent execution of strategy. So, staying focused on recruiting the workforce that fits your organizational culture, being attentive to your employees’ needs, and tying it all in with the adopted strategy of your organization makes a huge difference in the bottom line.

Some Things Are The Same – So What Makes the Difference?

While being environmentally conscious was deemed important by all those surveyed, it was typically important topics like this that were consistent whether the feedback came from HPOs or Low Performing Organizations (LPOs). The real difference seemed to lie in the focus on people, transparency, collaboration and engagement of the workforce. The companies that had the ownership of its employees and its customers were the ones that made dramatic profit increases from 2012 to 2013.

Trust, in customers, co-workers, managers, and leaders of the HPOs was earned through individual exchanges and behaviors. These behaviors were driven by improvement, since the 2012 survey, of 13 of the 16 measured leadership traits. The four most effective traits appreciated in leaders, according to the survey findings, were things such as optimism and confidence, being continually aligned with company values, acknowledging individuals and teams for their performance, and being an effective communicator.

Leadership Practices that Created the Biggest Gaps

Three leadership practices noted to have the biggest gaps between the HPOs and LPOs were: Reflecting realistic optimism and confidence in the future; Modeling and reflecting organizational values; and Encouraging, listening to, and acting on employee feedback. A 30% gap was seen in each of the three practices. This is particularly notable since both the earnings and the profits of the organizations that were most focused on these practices were improved and increasing exponentially (HPOs), while at the same time the earnings and profits of the organizations not as much focused on these practices were flat or declining (LPOs).

The leaders that “Walk-the-Talk” seemed to have a huge effect while keeping the integrity of company values and ethics intact. Being consistently transparent and in support of the strategic plan and doing everything with that strategic focus in mind made the biggest impact. While big talkers can persuade the masses temporarily, eventually followers will hold them accountable or become disengaged. The HPOs in the study all had high employee engagement due to great and improving leaders.

According to the survey results (a survey that has taken place every year since 2009), released in February, 2013, HPOs exhibit higher ratings of trust-building and trust-reinforcing behaviors than LPOs. The specific behaviors associated with the greatest differences between the HPOs and the LPOs were “sharing responsibility for success and making reasonable requests of employees” with each behavior having a 24% gap between the HPOs and the LPOs. A focus on customer satisfaction was also mentioned as a key element of the HPOs in the study.

Interestingly, in every factor of “Collaboration” HPOS were better than LPOS and 3 of 10 HPOs improved significantly while LPOs fared the same as they did in 2012. The “openness to the suggestions and opinions of others” was noted as a key differentiator for HPOs from the previous year. I think with these studies in mind we can easily conclude that organizations need to build their internal as well as external trust through all the methods mentioned above.

Get the Right Ones and Take Good Care of Them

Referred to as a thought leader for the study, Jean Hamakawa, Executive Vice-President and Director of Human Resources with Bank of Hawaii commented “We have a ‘grow, connect, thrive’ mission at Bank of Hawaii […] Employees are connecting at a level beyond the surface of work. Work with Friends. Make those people you work with your friends. We know that people stay for their team. They work for a corporation, true, but their teammates are their friends, and they don’t want to let their friends down.”

I would add that we need to be extra careful we are attracting and hiring those that fit in very nicely with our culture or the “friend” idea could backfire. If employees who are not a good fit establish friendships at work and their friendships fizzle or go sour they can easily become disengaged, which can breed a lack of trust and start turning a High Performing Organization into a Low Performing Organization.

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