High-trust organizations generally perform better over time than their low-trust counterparts. They’re innovative. These organizations tend to have more pleasant workplaces than low-trust organizations. In fact, low-trust organizations tend to damage the lives and health of those condemned to labor in what often becomes politically dense zones of recrimination, second-guessing and vague, sometimes passive-aggressive, communications.
The good news is that there are ways leaders can nurture a high-trust culture. One of the most important is simply by sharing information clearly, persuasively, and thoroughly. This means telling the truth during good times and bad. Transparency informs team members that they’re respected and trusted to work through challenges and toward commonly-held and meaningful goals.
By contrast, low-trust organizations tend to communicate by rumor. Left to guess at priorities, team members wonder if leaders have a plan. Their sense of mission—and its daily priorities—remains vague. In such an environment, predicting how a leader will respond leaves team members unwilling to make decisions, to try out new ideas, to take risks. Instead, they double-check the politics before acting, resulting in the best ideas often losing out to the arguments of the most powerful people. From there, trust goes downhill.
High-trust organizations, on the other hand, have a commitment to truth-telling through words and actions and words again. They report unpleasant news as openly as they celebrate success. They know people are smart and will pick up on spin as well as on partial truths and legalisms.
While transparency may take on different forms, the common characteristic is trusting the team with information. In extreme cases, this attitude even goes beyond the team. For example, online shoe retailer Zappos shares sales data with everybody in the supply chain, including margins and inventories, which sneakers are selling and which hiking boots are not. Employees and customers get information, but so, too, do competitors. The theory: Transparency will generate trust and loyalty in multiple constituencies.
More recently, Tesla, the electric car manufacturer, took a similar approach when releasing its patents. In doing so, its founder, Elon Musk, announced that the firm would not “initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”
Within the team, transparency can be secured by four communication principles aimed at building trust:
1. Own the bad news.
Few of us are eager to confront error or unfortunate circumstances beyond our control. But, while our instincts tell us to withhold talking about challenges, admitting mistakes, or acknowledging disappointments, people learn to mistrust if they are told only what is good. Sugarcoating the bad, or ignoring it altogether, won’t change reality. It will merely make it more difficult for people to deal with when the real story comes out. And when it does, the team will want to know why their leader wasn’t up front with them.
To be sure, having competent crisis-management and PR teams can help with the weak spots in a narrative. But, too many of them do little else. The bigger picture is not to be afraid to tell the truth. The more transparent you can be about challenges, the more likely your team will come up with creative approaches to conquer them. If yours is a company where employees feel they’re respected and own the mission, they’ll be inclined to stick around and help instead of fleeing at the first sign of trouble.
2. Discipline yourself to stay positive.
This does not mean glossing over the truth. It does, however, mean steering clear of negativity, high-velocity language, and tantrums. Though stress, disappointment, and embarrassment, can combine to produce a cocktail of negative feelings, it’s best to let them pass before talking to colleagues, writing emails, or calling a meeting. A single tirade or carelessly written email may live forever. And the trust developed slowly—a conversation and an action at a time—may be lost in a single rant.
From childhood, Dwight Eisenhower had an awful temper. It’s not that he outgrew it to become the moderate, smiling Ike we see in the newsreels. Instead, he learned to master his temper. He wrote down the names of those he despised, then tore up the pieces of paper and tossed them “into the lowest drawer of my desk.” That, he explained, “finishes the incident and, so far as I’m concerned, that fellow.” Like most of us, Eisenhower occasionally raged—but in solitude.
3. Pay attention to body language and atmospherics.
Organizations communicate symbolically, if inadvertently. How people dress, where executives eat and entertain, what art is displayed—they all matter. These forms of communication can either separate people or bring them together. Be on the lookout for how subtle signals communicate. Be alert for dated practices and scrap them if they’re inconsistent with what you wish to communicate. At Peterson Partners, an investment firm I founded 20 years ago, we scrapped the artwork and replaced it with logotypes, scale models, and other memorabilia of the products and advertisements celebrating the 150 portfolio companies we’ve backed. This reminds everyone that we work for our entrepreneurs.
You’re always communicating, whether or not you want to. So be intentional in the details: Think about building trust with each word and action.
4. Consider what budgets say about priorities.
Your budget is among your firm’s most compelling expressions of its values. If your budgets don’t sync up with what matters most, trust will dissolve. For example, if you say you’re committed to work-life balance but budget to be chronically understaffed, employees will pick up on this as a lack of integrity. You’d be better off saying nothing than saying one thing and budgeting another.
Keeping budgets secret is another common mistake. While it often lets people hide an inconsistency—for a season—the gap between action and utterance, between values and budgets, will linger, intensify, then erupt. Transparency in budgeting makes low-trust organizations nervous. But their high-trust counterparts have learned that the late U.S. Supreme Court Justice Louis Brandeis had it right: Sunshine is a superb disinfectant. Because budgets are compelling value statements at the very heart of developing trust, most should be open to review.
Radical openness is a concept coined a few years ago by author-consultants Don Tapscott and Anthony Williams. In a 2013 book they explained the phenomenon—both its foundation and its utility. “Times have changed,” they wrote. “While secrecy and opacity have been hallmarks of business behavior in the past, maintaining and defending secrets is costly and difficult in an era where billions of smartphone-wielding citizens can transmit information around the globe in a heartbeat.”
High-trust leaders think of a budget as values in action and budgeting as, literally, an investment in trust. Sharing budgets broadly is a way to debate priorities and build trust over time.
The integrity of leaders is the sine qua non for a high-trust culture, and communication—through words, symbols, budgets, and stories—is the fuel they use to power trust in their organizations. Silence, secrecy, and doublespeak destroy trust, causing damage to organizations that may take years to overcome. By learning to communicate lavishly, to open up budgets for discussion, and to deal with good and bad news, one can secure a reputation for trustworthiness—internally and externally.
Adapted From The 10 Laws of Trust: Building the Bonds That Make a Business Great (Expanded Edition; HarperCollins Leadership; September 17, 2019) by Joel Peterson.