The ROI of Trust

Is it possible to actually measure the value of trust in an organization?

As human beings, we are hardwired to seek trusting relationships.  In fact, the very first stage in Erik Erikson’s theory of psychosocial development is “Trust vs Mistrust.” This stage begins at birth and lasts through one year of age. Infants learn to trust that their caregivers will meet their basic needs. If these needs are not consistently met, mistrust, suspicion, and anxiety may develop. Developing trust is one of the first challenges people need to navigate in order to become effective, emotionally grounded individuals.

But trust in one’s employer not always a given – it depends greatly upon the individual’s station within the organization, and on the behavior evidenced through managerial decisions and actions. In organizations where there is a deficit of trust, it can be very difficult to build it back up. Some may wonder if it’s really even necessary to do so, when there are always new employees lined up to take on the responsibilities of those that leave.

Is it really critical to maintain a high level of trust within an organization, in order for the people who work within it to function properly in their job roles? And what kind of ROI can organizations anticipate from their investment in building a high-trust culture?  These questions are good enough to bear some investigation.

The Neuroscientific Argument

Paul J. Zak is an American neuro-economist who applies the principles of neuroscience to build high-performance organizations. According to his research, building a culture of trust makes a meaningful difference in terms of employee engagement, which is known to fuel stronger performance.

With the help of an independent survey firm, Zak collected data from a nationally representative sample of 1,095 working adults in the US.  They asked questions that allowed the researchers to calculate the level of trust at their employers, based on eight key behaviors at their respective organizations.  They also asked participants to self-report on factors such as their own engagement and productivity levels.

Zak’s research offers some hard metrics to support the value of trust.  People at high-trust companies reported 74% less stress, 106% more energy at work, 50% higher productivity, 13% fewer sick days, 76% more engagement, 29% more satisfaction with their lives, and 40% less burnout, in comparison with people at low-trust companies.   

So, is it possible to quantify these types of benefits from an organizational standpoint? Here are some additional findings:

  • 50% more of employees working at high-trust organizations plan to stay with their employer over the next year, and 88% more said they would recommend their company to family and friends as a place to work.
  • Those working in high-trust companies enjoyed their jobs 60% more, were 70% more aligned with their organization’s purpose, and felt 66% closer to their colleagues
  • High-trust folks had 11% more empathy for their workmates, depersonalized them 41% less often, and felt a 41% greater sense of accomplishment.
  • Employees earn an additional $6,450 a year, or 17% more, at companies in the highest quartile of trust, compared with those in the lowest quartile. Zaks points out that the only way this can occur in a competitive labor market is if employees in high-trust companies are more productive and innovative.

Trust’s Impact on the Bottom Line

Highly esteemed author Stephen Covey has also looked into the connection between employee trust and financial performance along with Douglas Conant, the former CEO of Campbell’s Soup.  In their recent article in HBR, the authors assert, “In our joint experience, we’ve learned that trust is the one thing that changes everything. It’s not a nice-to-have; it’s a must-have. Without it, every part of your organization can fall, literally, into disrepair. With trust, all things are possible – most importantly: continuous improvement and sustainable, measurable, tangible results in the marketplace.”

By way of evidence, Covey and Conant cite Fortune’s “100 Best Companies to Work For” list, which is based on a criterion that focuses primarily on trust, since “trust between managers and employees is the primary defining characteristic of the very best workplaces.”  With regularity, the companies on this list beat “the average annualized returns of the S&P 500 by a factor of three.”

Echoing this example, a 2015 study by Interaction Associates found that high-trust companies are more than 2.5x like to be high performing organizations. And an advocacy group called Trust Across America has also found that the most trustworthy public companies have outperformed the S&P 500.

What does your own experience tell you?

Perhaps the most compelling argument for trust come directly from your own experience.  Have you ever worked at a high-trust organization or one that, for whatever reason, lacked trust?  Where did you feel most motivated?

If fostering trust seems too difficult, just try succeeding without trust as a basic element of the business – it’s nearly impossible.  But creating a culture of trust doesn’t happen on its own.  It requires diligent attention to honoring the key building blocks of trust: Mutual respect, inclusion, and transparency.  

Waggl helps organizations cultivate trust by providing an easy and efficient way to integrate active 2-way listening into the business. If you are interested in learning more, please sign up for a demo today.

Check out the second installment of “The ROI of Trust.”