It’s official; cryptocurrencies are taking over the world. Banks have given up the fight and are preparing to join them.
The underlying catalyst for this creative destruction is painfully evident.
Banks and bankers were once synonymous with trust. But a series of scams and financial crises eroded this trust, compounded by the industry’s absolute faith in its own invincibility. The birth of bitcoin, a “trustless” electronic cash system, based on a technology called blockchain shattered this faith. To put this into perspective, bitcoin is now just one of more than a thousand cryptocurrencies. And cryptocurrency is just one of many possible applications of blockchain technology. It might be the end of banking as we know it.
The banking industry is not being felled by technology; it has been brought to its knees because it failed to recognize the importance of trust.
It is telling that outside the ambit of financial institutions, trust is typically spoken about in the context of family and close relationships. But what about organizational trust, the kind that employers and employees have in each other? Leaders, individual contributors or managers, trust is the fabric that binds all these relationships to a common vision or goal, and yet it is often underestimated.
Take the case of Naren, a data scientist who started working for a small IT company a few years ago. Things were great at the beginning. The office was a vibrant, positive space where everyone knew each other. Naren got the opportunity to work on challenging projects, where he honed his skills alongside the best. As the company grew, they won larger, more lucrative assignments. But somewhere along the way, things began to change. Intake spiked, but the new employees who came in did not understand the inclusive, non-hierarchical culture of the company. Managers had to step in frequently because teams had trouble working together. Projects began to fall behind schedule, and a couple of key clients began to complain about the quality of work, an unheard of occurrence. The office had a more tensed, strained atmosphere. Eventually, people began to leave. Naren’s teammates, who had joined around the same time as he had, left to join a rival company.
So, what had gone wrong? By focusing purely on growth, Naren’s company had failed to appreciate that sustainable business growth could not be achieved by compromising on relationships. And relationships could not thrive in an environment where there was no trust.
So, what is trust, really? It appears to be a word that all of us know, yet few fully understand. According to Michelle and Dennis Reina, who spent 29 years researching it, trust is complex and emotionally provocative. It means different things to different people. Yet, difficult as it is to define, the effects of its presence or absence manifest clearly – both in people’s lives as well as in the performance of an organization. The Reinas developed a framework called the 3Cs of Trust which describes 16 behaviors that contribute to trust in the workplace.
But why the emphasis on trust? What exactly is its relevance in the workplace? Paul J Zak, author of Trust Factor: The Science of Creating High-Performance Companies, analyzed the return on trust. In his article The Neuroscience of Trust, he says “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.”
He and his team designed a survey to calculate the effect of trust on self-reported work performance in an organization. Respondents in high-trust companies indicated they had more energy and were 76% more engaged at work than respondents in low-trust companies. They also reported being 50% more productive. 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.
The team also found that those working in high-trust companies enjoyed their jobs more, were more aligned with their companies’ purpose, and felt closer to their colleagues. They had more empathy for their workmates, depersonalized them less often, and experienced less burnout from their work. In a marketplace where the ability to collaborate effectively across boundaries of team, function or culture has become crucial, it is no surprise then, that people in trust-rich environments felt a greater sense of accomplishment too.
Clearly, trust is a powerful asset. But the impact is not limited to just within the organization. Trust determines how stakeholders interact with an organization because the way stakeholders’ view an organization’s motivations and behavior influence their current and future decisions and actions towards it. This has significant implications for organizations of all types, prompting some searching questions for the people leading them. According to the PwC report Understanding the value and drivers of organizational trust, being trustworthy-
- drives performance
- puts an organization on the front foot in a crisis
- overcomes stakeholders’ skepticism
- allows organizations to be true to themselves
As entire industries become irrelevant overnight, survival depends on how quickly an organization responds to macro and micro changes in the market. Companies need to build an organization that can successfully navigate the turbulence, and it is impossible to achieve this agility without a climate of trust.
To know more about what companies like Naren’s can do to build a sustainable high-growth trajectory, read our on ‘How can you rebuild trust?’ here.
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