In the pressure cooker business world we live in, change and uncertainty have become commonplace. No longer can organisations rest on their laurels. Plans must be put together quickly, decisions made and deadlines met.
But it’s hard to change an organisation – big or small – when the right foundations haven’t been put in place.
According to the Hoffman Institute, 90% of our reactions are emotional. What employees want to subconsciously know before any change is job security. Will the new merger make their job redundant? Does the need for a strategic overhaul mean their capabilities are out of date?
People are led emotionally and rarely consciously think about whom to trust. The part of the brain that processes emotions, such as trust and loyalty, has no capacity for language. It only understands emotions. This means when employees trust leaders about a new change, they do so based on how the leaders, and the organisation, makes them feel based on experiences, past beliefs and habits.
When a company is about to restructure, design a new business strategy or merge with a new company, the success of the change is dependent on two factors:
- The amount of trust that has been previously built with stakeholders (past experience), and
- The degree to which people can confidently rely on the organisation and leaders to do the right thing (future expectations).
Building a Foundation of Trust
Often, CEOs, executives, boards and leaders believe it is critical to build trust during the transaction process with customers, in order to boost sales. Care and attention are given to improving how the company delivers on their brand promise and customer experience.
Yet, creating trust with customers is just one part of the equation. The perception of a high trust organisation or brand also depends upon ethical business practices, how well the organisation plays the good corporate citizen role and most importantly, how it treats employees.
According to the 2017 Edelman Trust Barometer, in Australia how employees are treated is a powerful indication of whether the public perceives an organisation can be trusted. Respondents gave the statement the highest importance (64%) out of a range of trustworthy factors (interestingly, offering high-quality products and services came in second at 59%). Yet, actual performance by Australian companies for both factors was a low 33% – a massive gap of 31% and 26% respectively.
Being a high trust organisation opens doors into new markets and improves value creation. But this only occurs when the business has changed its behaviours to become more trustworthy. Focusing only on customer service or producing high-quality products are not enough on their own. It has to be supported by systems and processes that ensure that employees are exhibiting high trust behaviours (which means they believe they can trust leaders and the organisation).
Australians feel they can no longer rely on Government or even the media. Trust in Government is at an all-time low of 37%, while business trust (48%) is leading the way. Australian society now expects business to be a positive trust role model because they take action, provide jobs, and help the economy.
This presents organisations with a unique opportunity to become the most trusted brand or company during a time of low trust in the world. Organisations can create a virtuous circle whereby high internal and external trust levels opens the door to bigger markets, which then produces more trust and so on.
It’s no longer true that building trust with customers is more important than building trust with employees. Trust has to be seen a combination of trustworthy behaviours that are aligned with the company’s purpose, values and strategy across a range of domains. In other words, when the organisation has adopted an “inside-out” approach trust to building trust, rather than the traditional “outside-in.”
Introducing a New Form of Capital
Trust enables different people within an organisation to consistently rely on each other. It is trust that enables your customers and other stakeholders to believe that you will deliver on your promises and behave responsibly. It is trust that enables a company or brand to bounce back after a reputational crisis.
Generating optimal trust credits enables an organisation to operate with greater efficiency and speed through improved synergies across the company and within groups.
It works like a bank account producing trust capital, an intangible asset. What is generally misunderstood or overlooked is that trust capital drives the success of other types of capital allowing each asset to change and grow.
It reduces friction and stress within people capital – so that they take risks, innovate, and collaborate – to make more intellectual property. It’s the foundational element behind organisational capital; it fuels the ability of an organisation to mobilise and sustain change.
Trust capital provides a powerful source of sustainable, competitive advantage. Intangible assets represent more than 80% of corporate value and are hard for competitors to imitate. Once all your competitors are using the same technology and hardware, your competitive advantage is really about how fast your people can innovate and deliver.
Organisational culture is fuelled by how many trust credits a company has accrued. The bigger the trust deposits the more it facilitates business processes that drive customer value and create competitive advantage.
Optimising Value Creation Processes
Typically, companies fix trust by treating symptoms, rather than the systemic underlying causes. The most famous corporate scandals of our time involved organisations that superficially fixed trust symptoms. Both Enron and Lehman Brothers had codes of conduct and ethics training, yet failed to act in a trustworthy manner across the board.
Where high trust organisations differ is that all leaders understand the elements of organisational trust and how it works in their organisation, in order to sustainably embed trustworthiness into their organisational culture, not in just a couple of places or subsystems. Trust is fundamental to how the company operates as a whole.
The good news is that most organisations already have some amount of trust capital. Otherwise, customers wouldn’t buy from them.
What is needed is for organisations to more deeply understand how their organisation builds trust, so they know where they are excelling and where there are gaps. Often, enterprises don’t realise the value in their current trust capital levels and how to optimise it. Nor do they know how to translate their strategy into the right behaviours throughout the organisation.
The first step is to assess your current Trust Capital Levels and where it gives you the ability to move faster. To find out your current trust capital levels, use our Unlocking your Trust Capital Assessment tool.
In next week’s article, we will look at what your trust capital results mean and what you can do about it.
Image credit:贝莉儿 NG