By Steve Watkins, FOR INVESTOR’S BUSINESS DAILY
Leaders want to build trust in their firms, yet many wonder whether its impact really is measurable. Barbara Kimmel, executive director of Trust Across America, a group that helps build organizational trust, has the stats to show how important it is.
• Reap the benefits. Kimmel’s group has identified 25 companies that meet all of its criteria for being trustworthy firms. Their stock performance has doubled the S&P 500 over the past 15 months. And the companies that Forbes and GMI Ratings deemed most trustworthy in their annual study have a lower cost of capital, better stock gains and fewer negative events than their less trustworthy peers.
“Leaders who lead trustworthy organizations over time will find it pays,” Kimmel told IBD. “Trust is actually a hard currency, and the lack of it is costing companies millions of dollars.”
• Feel it. People need to trust each other if they’re going to work together successfully on a team. Otherwise they’ll fear others will steal their ideas, and they won’t innovate. “It has a huge impact on productivity,” said Erica Fox, who teaches at Harvard and runs a business leadership advisory firm.
• Lay the groundwork. Adopt a set of values and create a powerful mission statement, says Kimmel, editor of “Trust Inc.” Then act honestly and stand by your promises. You’ll win the faith of others.
• Reinforce what you seek. Hire and promote managers who are trustworthy. Be transparent and tell the truth. Track how well employees live up to their words. Offer training. And get rid of toxic employees who can’t be trusted, even if they’re the stars. Those moves will draw the best employees to your office, Kimmel says.
“Companies really have to start thinking about this if they want to recruit top talent,” she said.
• Spread the word. Get people to live up to top standards of trust and to show others that’s how things are done. Over time, it becomes ingrained in the culture. Then new people learn that employees share ideas without worrying about who takes credit. “Trust is something you can feel when it’s part of the culture,” said Fox, author of “Winning From Within.”
• Be consistent. Make sure everyone on your team lives up to his end of the bargain. If you make an exception for the guy who has $2 million in clients but shows up late to meetings and is disrespectful to co-workers, it won’t work. “Everyone has to be held accountable or it’s very demoralizing,” Fox said.
• Set the example. It’s vital to measure trust and provide training. But none of it works if the boss doesn’t follow his own advice.
“Leaders have to roll up their sleeves and make sure they’re not just talking the talk, but walking the walk,” Kimmel said.
• Make the effort. In “Trust Inc.,” strategic planner Deb Mills-Scofield wrote about Wisconsin-based box and design firm Menasha Packaging Corp. A decade ago, its performance faltered amid tough competition; employees lost faith in management and the company was for sale. But a new president, Mike Waite, came in to change things. He told employees the firm wouldn’t be sold, got their input for a strategic plan and visited the firm’s plants to explain workers’ roles in the company’s success. It worked. He gained trust. Employee retention rose while sales, profit and market share soared.
“The benefits of trust are evident,” Mills-Scofield wrote.
• Look within. Fox finds that when people know their own strengths and weaknesses, they’ll become key contributors on projects because they won’t make excuses.