Short version of the article from Paul J. Zak on HBR.org
Companies are twisting themselves into knots to empower and challenge their employees. They’re anxious about the sad state of engagement, and rightly so, given the value they’re losing. Consider Gallup’s meta-analysis of decades’ worth of data: It shows that high engagement—defined largely as having a strong connection with one’s work and colleagues, feeling like a real contributor, and enjoying ample chances to learn—consistently leads to positive outcomes for both individuals and organizations. The rewards include higher productivity, better-quality products, and increased profitability.
So it’s clear that creating an employee-centric culture can be good for business. But how do you do that effectively? Culture is typically designed in an ad hoc way around random perks like gourmet meals or “karaoke Fridays,” often in thrall to some psychological fad. And despite the evidence that you can’t buy higher job satisfaction, organizations still use golden handcuffs to keep good employees in place. While such efforts might boost workplace happiness in the short term, they fail to have any lasting effect on talent retention or performance.
In Paul’s research he has found that building a culture of trust is what makes a meaningful difference. Employees in high-trust organizations are more productive, have more energy at work, collaborate better with their colleagues, and stay with their employers longer than people working at low-trust companies. They also suffer less chronic stress and are happier with their lives, and these factors fuel stronger performance.
What’s Happening in the Brain
Back in 2001 Paul derived a mathematical relationship between trust and economic performance. Though his paper on this research described the social, legal, and economic environments that cause differences in trust, he couldn’t answer the most basic question: Why do two people trust each other in the first place? Experiments around the world have shown that humans are naturally inclined to trust others—but don’t always. He hypothesized that there must be a neurologic signal that indicates when we should trust someone. So he started a long-term research program to see if that was true.
Read more about the details of the research in the original article.
Compared with people at low-trust companies, people at high-trust companies report:
- 74% less stress;
- 106% more energy at work;
- 50% higher productivity;
- 13% fewer sick days;
- 76% more engagement;
- 29% more satisfaction with their lives;
- 40% less burnout.
Paul’s group then spent the next 10 years running additional experiments to identify the promoters and inhibitors of oxytocin.
How to Manage for Trust
Through the experiments and the surveys, Paul identified eight management behaviors that foster trust.
- Recognize excellence.
- Induce “challenge stress.”
- Give people discretion in how they do their work.
- Enable job crafting
- Share information broadly.
- Intentionally build relationships.
- Facilitate whole-person growth.
- Show vulnerability.
Read more about these management behaviors in the original article.
The Return on Trust
After identifying and measuring the managerial behaviors that sustain trust in organizations, Paul and his team tested the impact of trust on business performance.
The U.S. average for organizational trust was 70% (out of a possible 100%). Fully 47% of respondents worked in organizations where trust was below the average, with one firm scoring an abysmally low 15%. Overall, companies scored lowest on recognizing excellence and sharing information (67% and 68%, respectively). So the data suggests that the average U.S. company could enhance trust by improving in these two areas—even if it didn’t improve in the other six.
The effect of trust on self-reported work performance was powerful. Respondents whose companies were in the top quartile indicated they had 106% more energy and were 76% more engaged at work than respondents whose firms were in the bottom quartile. They also reported being 50% more productive—which is consistent with our objective measures of productivity from studies we have done with employees at work. Trust had a major impact on employee loyalty as well: Compared with employees at low-trust companies, 50% more of those working at high-trust organizations planned 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.
Former Herman Miller CEO Max De Pree once said, “The first responsibility of a leader is to define reality. The last is to say thank you. In between the two, the leader must become a servant.”
The experiments Paul has run strongly support this view. Ultimately, you cultivate trust by setting a clear direction, giving people what they need to see it through, and getting out of their way.
It’s not about being easy on your employees or expecting less from them. High-trust companies hold people accountable but without micromanaging them. They treat people like responsible adults.