Why Trust Matters for Organisations
In 2016, the Thunder River Rapids ride at the amusement park Dreamworld, in Queensland, experienced a mechanical failure that resulted in the deaths of four people. Forty-eight hours later, the board for Ardent Leisure (the owners of Dreamworld) held its Annual General Meeting as if nothing had happened. The CFO was forced to defend the bonus payment of $843,000 to CEO Deborah Thomas, promising to hold a memorial for the victims and “donate funds to the Red Cross.”
Thomas said Ardent had made contact with the family of Kim Dorsett, whose two children, Kate Goodchild and Luke Dorsett, were among the four victims. But it turned out Thomas hadn't spoken to them, much to the fury and dismay of the family. A journalist had to provide Thomas Dorsett’s mobile phone number. There was a public outcry demanding Thomas not accept her bonus payment or at least give it to the victims of the incident.
This was not just a communications shamble. It was a moral and ethical disgrace. All trust in the leadership of the amusement park, which had been a favourite of families for decades, had been lost. Ardent Leisure is now on the journey to rebuild the brand of Dreamworld and the reputation of the board. This is a prime example of a brand that shifted rapidly from influence to disengagement as a result of lost trust and human connection.
According to a 2002 study by Watson Wyatt, organisations considered to be high-trust outperformed low-trust organisations by 286 percent in total return to shareholders. Furthermore, a study by Russell Investment Group in 2005 showed that Fortune magazine’s “100 Best Companies to Work for”, in which trust comprised 60 percent of the criteria, earned more than four times the returns of the broader market over the seven years prior.
In addition, a PricewaterhouseCoopers (PwC) study of corporate innovation among the Financial Times 100 index showed that “the number-one differentiating factor between the top innovators and the bottom innovators was trust.” So, as you can see, having trust creates a formidable platform to drive change.
It’s also interesting to note that a 10 percent increase in trust between a manager and an employee has the equivalent effect on life satisfaction as a 36 percent increase in income.
This highlights two points that I regularly teach my clients:
Don’t be deluded into thinking your employees are motivated by money; they are not. They may go looking for more money but what causes their initial dissatisfaction with their job rarely has anything to do with money.
Smart companies put their training and employee engagement dollars towards increasing the capability of their managers and teaching them the skills to build trust between themselves and their teams.
In his book, First Things First, Stephen Covey says three significant factors slow the business growth of low-trust organisations:
Span of control
Hovering and double checking take time and energy.
High-trust culture doesn’t need to hover and double check.
Low trust culture is 1 supervisor to every 10 people, high trust is 1 supervisor to 50 people.
Motivation
Low-trust culture puts a carrot out front to motivate people.
In a high-trust culture, people are internally motivated and have passion, a shared vision and synergy.
Structure and systems
Low-trust culture is full of bureaucracy, duplication, rules and regulations, and restrictive closed systems.
Low initiative, a “do as you’re told” mentality and a quarterly bottom line drive the culture.
High-trust structures and systems empower, liberate, create energy and foster creativity. There’s less bureaucracy, fewer rules and more involvement.
What do you do to actively build trust and connection as a leader for your organisation?
Jane Anderson is a communication expert, speaker and the author of 6 books including the upcoming “TRUSTED: The Level Above Influence.” With over 20 years of experience helping people step into their personal power, she is obsessed about creating human connection to drive business growth in a world of disruption and automation. To inquire about her working with you or your organisation please contact us here.