W. Edwards Deming
As leaders and managers we are programmed through education and experience to constantly measure and manage the results of our activities. Want to make a new capital investment? You better perform a cost/benefit analysis. Need to assess the effectiveness of a particular business strategy? Figure out the ROI – Return on Investment. If it’s important to our business then we have to be able to measure it. That’s our motto.
But what about trust? How do you measure the impact of trust, positively or negatively, on your business? What’s your ROT – Return on Trust?
Most leaders I speak with agree that trust is important but they often think it’s just another one of those “soft” people issues like engagement, empowerment, well-being, or morale. They think trust “just happens,” as if through some sort of relationship osmosis, and they certainly don’t think you can measure it.
They’re wrong. You can measure trust, but you have to know where to look and understand how it shows up in organizations.
What Trust Looks Like in Organizations
- People keep their commitments and are consistent in their behavior
- Risk taking is encouraged and rewarded
- People feel safe in sharing their ideas and opinions
- Team members have a shared sense of responsibility and commitment to the organization
- People are treated equitably and ethically, regardless of their position or rank
- The culture promotes and rewards honesty and ethical behavior
- Senior leadership communicates transparently and authentically
- Mistakes are viewed as “learning opportunities” rather than mortal failures
- People feel valued and are engaged in their work
- Productivity and creativity flourishes
Return on Trust
Interpersonal trust is developed through the use of very specific behaviors that demonstrate your competence, integrity, value for relationships, and dependability. Organizational trust is developed through the use of sound, common-sense business practices that align with the organization’s values, prioritize the value of human worth in the workplace, foster transparency and accountability, and emphasize customer loyalty and retention.
You can measure ROT by using common sense, as an executive of one of the world’s largest home improvement retailers shared with me. He said that in his 22 year experience with the company, the teams and stores that had the highest levels of trust consistently recorded the lowest people costs around turnover, accidents, and inventory shrink. They also achieved the highest revenues, profits, and employee engagement and customer satisfaction scores.
You can also measure ROT by examining the financial performance of high-trust organizations. Research by the Great Places to Work Institute, publisher of the Fortune 100 Best Companies to Work For list, has shown that between 1997-2011, high trust companies outperformed the Russell 3000 and S&P 500, posting annualized returns of 10.32% versus 4.02% and 3.71%, respectively. Additionally, those best companies provide 4 times the returns than market average for comparative low-trust companies and typically experience a 50% lower turnover rate.
Whether you see the everyday, common sense results of high levels of trust, or you evaluate the financial metrics of high-performing/high-trust companies, Return on Trust is something every leader should measure.
What a great post. Inspiring. Love the list of what trust looks like…what ideas do you have to increase trust in an organisation?
Thanks for your comments Jocelyn! To increase organizational trust I think you have to first and foremost start with senior leadership. Are they trustworthy individuals? Do they embody the principles and behaviors of trustworthy people? Do they live in accordance with their own personal values as well as those of the organization?
Second, organizational processes need to foster a sense of trust through transparent information sharing (in appropriate contexts) and decision-making. And third, the organization needs to place a priority on treating their people in honorable and respectful ways.
I hope that helps!
Randy
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Fresh and inspiring! However, many organizations tend to dismiss the trust element or underestimate it. They need to see the core value of it and measure its success on their return investments. Think about it: why do people idealize google’s work environment? It is due to the fact that they see their people as a valuable asset and strive to create an innovative place for their minds to burst with original ideas.
Great points Maryam! I appreciate you taking the time to add your thoughts to the discussion.
Best regards,
Randy
Reblogged this on mammaham.
Nice article. Liking the article pic:) Seriously though. I like that we can impact that return at whatever level we are leading. For instance, while it certainly is a positive if the corporate culture sets the tone..it doesn’t change my personal beliefs even if it’s a low trust environment. At an operations level my contribution to any return is to serve with excellence as it pertains to that list. As a leader, the eventual by-product is replication.
Just my thoughts.
Chris
Hi Chris. I completely agree with you!
Any person, at any level in the organization, can make a positive impact by being a trustworthy individual. The more that each of us behaves in a trustworthy fashion, the more it gives others permission and encouragement to do likewise.
Thanks for adding your insights,
Randy
Hey Randy — very nice article. After having been through many conversations regarding return on trust as an author (many years ago) of Driving Fear Out of the Workplace, I now have a somewhat different perspective. I don’t think it particularly matters whether trust is or is not good for making money; the question is whether it is good for society, good for people, good for the health of the planet. If the only question about trust is whether it helps an organization achieve its financial goals, the company is out of sync with the reality outside of it. That’s not a sustainable strategic position for any enterprise.
Great point Dan!
We should focus on creating high trust relationships and organizations because it’s the right thing to do, not because it’s a means to an end. Being a trustworthy person/organization is about having honorable values and living out those values in service to others – colleagues, customers, and the community.
Thanks for calling out that important distinction. Keep up your great work!
Randy
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A great article and it’s great to read about measuring trust. This can however be especially difficult in a decentralised organisation, but with the ability to ‘measure’ it’s a great way to further support the organisation when they have remote workers and how to incorporate this throughout the organisation.
Thanks for your comments Jane. Trust is critically important for the success of remote workers, both for the worker as well as the organization. There needs to be a high level of confidence in the ability of the worker to perform well and the organization to provide the necessary resources.
Thanks for adding your thoughts to the discussion.
Randy
Hi Randy,
The high level of confidence is really interesting as I feel organisations can do better to support remote workers in their role, even in training such as time management skills and making sure the remote worker has the ‘tools’ to be successful. Really interesting. Thanks.
Reblogged this on News & Notes on LEADERSHIP for LEARNING.