The Real Cost of Trust In Organizations

Trust is something financially intangible to many, at least from an organizational perspective. However, it affects your business more than the framework or scaling practices you use. So why don’t we pay more attention to this factor?

Trust is something that’s inherent in our DNA. Collaboration has always been key to the survival of our species. Having trust in others is beneficial to both the individual and the collective, especially in times of risk and uncertainty.

In PwC’s 2016 global CEO survey, 55% of CEOs said a lack of trust is a threat to their company’s growth. However, they believe they’ve done little to increase it. Mainly because they’re not sure where to start. In my experience, leaders identify the challenge, but the fact that they don’t have tangible tools makes them uncomfortable leading people in that direction.

On the other hand, for too many years we’ve seen companies as machines that produce outcomes rather than complex social and human systems.

In times of exponential change, it’s critical to understand what needs to be addressed and what can be done better to create excellent organizations and sustainable human systems. The building or losing of trust happens all the time and in different ways. A husband, a friend, a business partner, a work colleague, etc. In all cases, there’s a common denominator: the brain reacts, in the same way, no matter where you are.

The first thing you need to understand is that in most cases, the loss of trust is accompanied by a loss of reputation or power. And this is where a certain part of the brain called the amygdala, is activated. It releases high levels of cortisol, reduces oxytocin (the happiness hormone) and other chemicals, and puts you on alert.

The greater the loss of prestige or power, the higher the cortisol levels. As a result, we can no longer be objective. We don’t think the way we do when oxytocin levels are high because we’re going through a happy period in our lives. The way we see the world changes, and we probably don’t even realize it.

In turn, people with high cortisol levels are less mentally flexible (mental agility) and have a harder time empathizing or seeing the other person’s perspective.

We also know from recent studies that there’s a strong link between trust, social connection, and physical and mental wellbeing.

Figure 1.
Based on Pavey (2011), Social Capital Theory, Do Social Connections create Trust? by Jennifer L. Glanville and Matthew A. Andersson – University of Iowa, and others

They’re all intertwined, and when one is affected, it can have an impact on the others. This means that when trust is low, the way we connect with others and our perception of the world changes, which in turn can affect our physical and mental wellbeing.

From an organizational perspective, this relationship may seem more complex, but ultimately all three areas function in the same way. If you lose trust in a person or team, it will affect the way you connect with them, which in turn affects the amount and quality of information that flows between you and the other person or team. The drop in information will clearly impact your organization’s chances of responding more quickly to the markets.

From a social perspective, there are also changes in your nonverbal communication. Your face sends out over 2,000 micro-expressions per second that are imperceptible to the conscious mind but can be sensed by the other person’s brain.
Imagine you’ve to deliver a message to a team you don’t trust. In this case, the body signals will be different from your verbal communication, so the other person’s brain would recognize it, and will automatically create less empathy for the situation and message. The additional impact is that the other person would distrust your information even if they don’t really know why. And all this without your knowledge!

This is called “leakage” and occurs when the nonverbal signals don’t match the verbal message.

One of the tools that you can use to assess the impact of trust in an organization is the cake of the 5 levels of agility. I developed this tool as part of my theory of enterprise agility. It can be used to assess the impact of various factors on organizational agility and resilience.

Figure 2
Five types of Agility Cake ©Erich R. Bühler, Leading Exponential Change & Enterprise Agility University

The five types of agility are a model to understand the different types of adaptability desired in an organization and the impact of different factors, and to create effective plans for change. Any organization seeking a high level of agility and resilience should pay attention to these dimensions.

Figure 3
Description of the five types of agility

As you learned, lack of trust first affects the lowest and most central level: mental agility. Places with low trust communicate less frequently, using indirect means, and have a distorted reality due to potentially high levels of cortisol and other hormones in the brain. This directly affects behavior.

The first symptom that occurs when the truth changes is usually the change in social behavior (social Agility). People start behaving differently, they don’t feel safe, and they’re more careful about what they say or do.

When you don’t trust someone, you use more indirect levels of communication. That’s, you’d rather write an email than have a face-to-face conversation.

This slows the flow of information in the company, reduces the responsiveness of the organization (Outcomes Agility), and directly impacts future products, services, and innovations (Technical Agility).

In turn, in organizations where employees’ cortisol levels are higher, they have a harder time seeing or empathizing with others’ perspectives. This usually leads to more conflict and a greater distance between the different teams in your organization.

It’s important to pay attention to how people communicate inside and outside of teams, compare those ways to other areas of the organization, and regularly check in on how safe they feel (psychological safety). Don’t forget that it’s also vital to review the company’s processes. You should have processes that can change in a collaborative way (Structural Agility), but always strive for trust as a core value.

When I work with leadership consultants around the world, I usually recommend focusing on the desired behavior change rather than measuring trust itself first. It’s easier and can be determined more quickly.

Another critical factor is to be able to quantify the impact of trust. Here, the cost of delay is an important element to consider. Whenever possible, you should measure trust in terms of its financial impact. A good indicator is how long a person’s response was delayed by the use of indirect means of communication. Again, indirect ways of measuring trust may yield better results.

There are a few tricks you can use to improve trust in the company. The fact that managers have a clear goal that’s understood by all employees helps to increase trust. Several experiments have shown that the perception of a higher purpose stimulates the production of oxytocin and trust, which lowers cortisol levels and leads to better bonding between people.

Another aspect I work on with leaders in exponential organizations (where everything can change radically from one moment to the next) is that they understand that a good leader isn’t the one whom people follow unconditionally, but the one who can make a new promise after an old promise has been broken due to a change in circumstances.

Imagine you made a promise to your employees and the situation radically changes. Many leaders are faced with a broken promise and a decline in the charisma and confidence of their employees. Here it’s possible to apply practices that allow them to see this broken promise as an opportunity to create empathy, improve communication, and make a new promise to rebuild trust.

As you can see, there’s a lot of science behind trust, and more and more companies are recognizing the value of it when leading exceptional organizations.

Be the first to comment

Leave a Reply

Your email address will not be published.