Creating a High-Trust Culture for High Performance

 

How to Increase Trust

 

Why is culture so difficult to change?

Why are so many employees disengaged?

What should a leader do when she arrives at a company that is struggling?

 

The founding director of the Center for Neuroeconomics Studies recently wrote a book, Trust Factor: The Science of Creating High-Performance Companies to answer these and other questions. Paul J. Zak, PhD, is also a professor at Claremont Graduate University. He recently answered some of my questions about his extensive research into trust. His book is fascinating and contributes to the body of work on trust and organizational culture.

 

Survey of 200,000 employees: 71% of companies have mediocre to poor cultures.

 

Spot the Signs of a Low-Trust Culture

In one part of the book, you tell a story of walking into an office full of cobwebs, old furniture, and a struggling culture. What are some of the signs of a low-trust culture?

Distrust drains employees’ energy, so people move slow, think slow, and lack a passion for their jobs.  Organizations with low trust also have lower profits, so offices often look out-of-date, even while new employees show up as turnover tends to be high.  We have also shown that people take more sick days when they work at low-trust companies, so one sees empty desks.  All these factors are signs of a low-trust syndrome and a downward cycle of productivity, innovation, and profits.

 

“High-trust companies invest in employee health and productivity.” –Paul J. Zak

 

Why Healthy Cultures are Based on Trust

trust factorWhy is a healthy culture based on trust so vitally important to its success?

Companies are, first and foremost, people. As social creatures, we naturally form teams to accomplish goals together.  Extensive research shows that teams are more effective when they have a clear objective and when team members are trustworthy. Trust reduces the frictions that can arise in teams so getting things done takes less effort and as a result more and better work is done.  By measuring brain activity while people work, we’ve shown that people are more relaxed when they trust their colleagues. They innovate more and shed the stress from work faster than those in low-trust companies.  Creating a culture of trust provides powerful leverage on performance because it harnesses what our brains are designed to do: cooperate with others in teams.  And the neuroscience I’ve done shows how to create a culture of trust in a system so it has the maximum effect on brain and behavior.

 

Workers in high trust organizations are paid an average of $6,450 more.

 

I love the biological explanation of the Golden Rule. Explain the connection between oxytocin and trust.

The Power of Admitting A Mistake

This is a guest post by friend and mentor Bruce Rhoades, who retired after having run several companies. He often helps me with strategy. I am delighted that he is a regular contributor.

The Power of Admitting A Mistake

Confucius said, “If you make a mistake and do not correct it, this is called a mistake.” Yet, many times when a mistake is made, people try to pretend that it did not happen. They attempt to justify the wrong position or try to cover it up, which leads to additional mistakes. This situation reminds me of another quote — “When you find yourself in a hole, stop digging.”

 

“If you make a mistake and do not correct it, this is called a mistake.” -Confucius

 

Quite often, more damage is done to credibility, relationships, trust and integrity by the actions taken after the original mistake. This is true in personal relationships and especially true when a leader makes a mistake. How many times have we seen high-profile people get prosecuted, not for the original crime, but for the attempt to cover it up by lying?

Of course there is another choice when a mistake is made—admit it, learn from it, correct it and apologize to those that were adversely affected. There is power in properly admitting a mistake.

 

“Anyone who has never made a mistake has never tried anything new.” -Albert Einstein

 

Why Admit a Mistake?

Rather than try to ignore or cover up a mistake, there can be many personal and organizational advantages to properly admitting a mistake.

 

“When you find yourself in a hole, stop digging.”


Personal Advantages:

  • Averts the need to continue to defend a difficult or incorrect position.
  • Increases leadership credibility.
  • Avoids additional mistakes trying to cover up or “adjust” for the original mistake.
  • Reduces personal stress and tension.
  • Provides a “reset” from others in both personal and professional relationships.
  • If you take responsibility for a mistake on-behalf of others who participated, it builds loyalty.

 

“Admitting and correcting mistakes does not make you look weak; it actually makes you look stronger.” –Bruce Rhoades

 

Organizational Advantages:

  • Provides a learning situation for you and others.
  • Builds trust—others see that you are human, honest and truthful.
  • Allows quick correction, which saves time and resources.
  • Gives others a chance to express views and provide new information.
  • Shows others that they are valued and that their input counts, which builds collaboration.
  • Increases the organization’s ability to try new things then quickly stop those that do not work, which helps establish an innovative culture.
  • Sets the tone for risk-taking, open communication and makes you more approachable.
  • Provides concrete examples to reinforce critical aspects of culture: decisiveness, truthfulness, openness, integrity and quick correction.
  • Removes the “elephant-in-the-room” situation where everyone knows about the mistake, but no one talks about it.
  • Helps offset the bad feelings for those that may have wasted their time.
  • Decreases “pocket-vetoes” when others see the mistake, do not confront it, but simply do not implement.

 

“As a leader it is a mistake to think that you need to have all the right answers all the time.” – Bruce Rhoades

 

When Admitting Mistakes Does Not Have Power