Leading with Trust

Guest post by Paul J. Zak, PhD:

One-third of business leaders surveyed
in 2015 said that retaining colleagues is their number one concern. Everyone
knows that people are mobile. About one-quarter of employees say that they will
look for a new job in the next year. Some are chasing a higher salary, but
nearly equally important is the desire for a better opportunity inside or outside
their present company. Employers underestimate the importance of personal and
career development on employee retention, vastly overestimating the importance
of salary and benefits. As Christopher Bishop, head of Herman Miller’s
Innovation lab has said, “The war for talent is over, talent has
won.”

Leaders who fail to invest in skill
development for team members implicitly enforce a rigid hierarchy that inhibits
innovation.   A lack of leadership
development also undermines a key aspect of culture that drives
high-performance: trust.  
      

Through my research, I have found that
high trust organizations outperform low-trust ones on multiple outcome measures
by a wide margin.  My team spent a decade
running experiments that measured brain activity while people worked to find
out why some teams are productive and others engage in
“presenteeism.”  Trust, and an understanding
of how the organization improves lives, were key performance drivers.  Our work also uncovered the eight building
blocks of trust.  The science provides
specific and actionable ways that leaders can modify these building blocks to
increase trust and reap performance improvements.
        

One of the eight foundations of trust is
a set of policies I call “Invest.” 
Companies that actively invest in the professional and personal growth
of colleagues are demonstrating trust in them. The brain’s trust signal, a
neurochemical called oxytocin that my lab discovered in the early 2000s, motivates
us to reciprocate when someone provides us with a benefit.  Our studies show that when companies invest
in colleague development, it increases engagement and productivity.   It also reduces employee turnover: investing
in colleague developments demonstrates a desire to have a long-term
relationship.
        

In a surprising finding, my research revealed
that personal growth has a powerful effect on engagement and productivity.  Philosophers such as Aristotle, and
psychologists including Carl Jung, Abraham Maslow, and Martin Seligman have
argued that personal growth is necessary for human flourishing. Our analyses
confirmed this – there is positive feedback between thriving outside of the
office and productivity at work. I call investing in both professional and
personal growth “whole person” development. 
         

Many successful companies have realized
the positive return from personal and professional development programs. SAS
Institute, a statistical analysis software company, invests in its colleagues with
an almost limitless set of classes to acquire new skills, gives employees
access to career mentors, subsidizes care for elderly parents, offers financial
assistance and paid leave for adoptions, has built on-site sports and
recreation facilities, has a beautiful campus with resident artists, and serves
healthy food in their cafes. SAS also minimizes the use of contractors and simply
hires the people they need. This commits colleagues to SAS and allows SAS to
commit to them. By all accounts, it is working. 
SAS is the world’s largest privately held software company with over $2
billion in revenue and 11,000 employees.   They are also winning the war on talent: SAS
receives 200 applications for every opening and have the lowest employee
turnover in the software industry at two percent per year. 
         

Investing in colleagues does not need to
be expensive.  A trend at many companies including
Zappos, Google, Procter & Gamble, Hubspot, and Facebook is napping
rooms.  Many colleagues are
sleep-deprived due to travel or having young children and this gives them a
chance to refresh their brains and gain the energy boost from a short nap.  Other companies, such as mortgage lender
United Shore Financial Services, use a program called “Firm 40” to
focus colleagues on going all out for forty hours and then going home.  These companies expect the parking lot to be
empty at 6:05 PM and that work is not brought home. Even Goldman Sachs has
gotten rid of the go-go days of 100-hour work weeks.  To keep the best talent, they created Goldman
Sachs University to invest in professional growth and they also provide
guidance on taking time off. The co-head of investment banking at Goldman Sachs
said, “The goal is for our analysts to want to be here for a career… This is
a marathon, not a sprint.”

Just investing in colleagues increases
trust and productivity. The science I have done shows leaders how small changes
to the other seven building-blocks of trust will increase engagement.  The war for talent is real, and building a
culture of trust is an important step in empowering, engaging, and retaining,
top talent. 

So what investments are you making in a
culture of trust?  Now is the time to
start, because your competitors already have.


Paul J. Zak, PhD, is founding Director of the Center for
Neuroeconomics Studies and Professor of Economics, Psychology, and Management
at Claremont Graduate University.  He is
author of TRUST FACTOR:  The Science Of Creating High-PerformanceCompanies
 (AMACOM, January 2017). 
For more information, visit
www.PaulJZak.com.