Trust Into The Limelight

Trust into the limelight Trust – or lack of it – is going to be a big issue this year, writes KATIE JACOBS. The solution for organisations is to pick the right leaders, ensure they walk the talk, and make them open to feedback from employees and other stakeholders

Luciano Lozano

Goncalo Viana

W

hile it’s only February and you’re probably sick of hearing predictions for 2014, HR magazine is going to make one. Trust is going to be one of the words of the year – trust, and more pertinently, lack of it, inside and outside organisations.

At the start of the year, John Cridland, directorgeneral of the Confederation of British Industry (CBI), explicitly addressed trust in his new year message, saying: “If 2013 was the year that business trust took a hammering on a range of issues, from corporate taxation to energy prices, then 2014 must be the year that business leaders take action to rebuild that trust.”

Recent CIPD reports have found there is not just a crisis of trust outside of organisations, but within them too. In a study – Are organisations losing the trust of their workers? – the professional body revealed 37% of employees do not trust their senior managers, and 33% think trust between employees and senior management in their workplace is weak.

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The CEO view

Vineet Nayar, former CEO of HCL Technologies

“Assumptions are a big distraction to organisational momentum, and employees only make them because they don’t trust what you say, because it’s inconsistent with what you do. If you want a high-momentum company, you need trust between every stakeholder: employee, customer, management and shareholder. Once you trust each other, everyone works in a common direction.

“Transparency is critical: give people the good and bad news, what they need to know

and what they don’t. Put so much information out there that no one assumes you are hiding anything away. That’s an essential building block for trust. You also need to be consistent in your actions.

“Trust can only be created if you have structures of accountability. You need to create reverse accountability, so management is accountable to employees and people have a voice. We have a system where employees can open a ‘ticket’ on the company: the company has to solve the issue as only the employee can close the enquiry.

“My 360-degree feedback was done by 88,000 employees across 32 countries and

was published online for everyone to see. I made sure other managers did the same. It says to employees: ‘I trust you so much, I’m open to feedback from you.’ Managers who weren’t trusted were exposed through that; 90% worked hard to change, but 10% either left or moved to a non-leadership role.

“Trust has taken us from a $700 million business to a $4.6 billion one. I think other CEOs will copy it, but the problem is it’s traditionally been HR talking about this. We need to link it with growth and shareholder accounts. It’s down to HR to educate the CEOs. But the CEO has to run with it. It can’t be an HR initiative: it’s a key growth strategy.”

Regardless of how well

This, said the CIPD, impacts negatively on engagement, performance and productivity. “Employees spend more time covering their backs and secondguessing what management are up to,” said CIPD chief economist Mark Beatson.

It would be easy to blame this lack of trust entirely on the economic crisis, with its significant downsizing programmes and scandalous revelations. But according to Veronica Hope-Hailey, dean of the Bath School of Management, who has been studying trust for several years: “There was a problem with trust in large organisations before the crisis. People were already feeling levels of distrust towards senior managers.”

going through, it’s no surprise interest in trust is so big that Hope-Hailey is having to turn away businesses for research projects. “That tells me it’s absolutely huge for people,” she says. “It’s such a building block.”

So, trust is “absolutely huge”, but why does it matter so much to organisational effectiveness? Hope-Hailey describes it as: “The willingness for somebody to take a risk, to allow themselves to feel vulnerable, believing the other person has an attitude of goodwill towards them.”

She is adamant it is not engagement. “Engagement is about energy, discretionary effort and the feel-good factor,” she says. “Trust is much more fundamental. It’s so fundamental to organisations and organisational change.

If your senior managers are fundamentally mistrusted, you can do masses of engagement activities, but you are not going to get that rise in performance as people will be viewing those activities through a lens of distrust.”

Her definition of trustworthiness is based on four main drivers: benevolence, ability, predictability and integrity (see box on p27). She adds that, while engagement can be seen as “fluffy”, trust is anything but: “It’s a rigorous academic area and it’s extremely precise.”

you are leading and managing,

there’s a certain level of contagion coming in.

It’s a big issue

Mistrust is contagious What’s increased now, Hope-Hailey says, is “the level of contagion from outside, making it particularly difficult for organisations”. She explains: “There’s been some fundamental disruption of basic societal pillars of trust: MPs, newspapers, banks, Jimmy Savile. Regardless of how well you are leading and managing, there’s a certain level of contagion coming in. That’s why, organisationally, it’s become a big issue.”

Doug McIldowie, group HR director at engineering group GKN, agrees this “contagion” is an issue. “Our trust in leadership is still not great,” he admits. “Our employees really trust their boss, but they don’t trust leadership. I think it is something to do with leadership in general – with MPs and banks, there’s a feeling leadership is untrustworthy.” The 2014 Edelman Trust Barometer backs this up: only 43% of the public trust CEOs. Only government officials score lower.

Against this backdrop, and taking into account the almost constant cycles of change many organisations are 26 HR February 2014

Trusting leaders Graham Abbey, director of executive development at the University of Bath, who is also working on the trust research, says trust has “many different contexts”. He explains: “As an employee, in whom do you place your trust? Your manager? Your leaders? Your organisation? One of the distinctions is between interpersonal trust and organisational trust. Do we trust the individual as a leader?”

Not surprisingly, good leadership is absolutely critical. hrmagazine.co.uk

“People don’t do what the CEO says, they do what he does,” says Sally Bibb, director of consultancy Engaging Minds and author of The Right Thing, a look at ethics and trust in business. She describes how she told one sceptical CEO to start carrying a copy of The Economist into work every morning: “Within weeks, everyone was doing it.”

But as GKN’s McIldowie points out, engendering that trust at all levels of the organisation is a challenge. “Like most companies, trust in leadership is one of things we struggle with,” he says. While employees often tend to trust their immediate boss, that trust weakens the higher up you go. “The relationship with the boss is very good, but we can do more [around senior leaders],” he says. “It comes down to senior leaders being ‘trusted’ but not ‘trusting’. We need to do more at a senior level and push it down the organisation: be more visible, engaging and out there.”

Abbey points out that “senior leaders are line managers as well”, adding: “Maybe there isn’t such a thing as senior leaders: it’s a chain of line managers and a cascade of trust.

Or is there something uniquely different about being a senior leader? That’s what we are trying to unpick. There’s something for HR in this: how do we more fully develop people leading organisations?”

At GKN, McIldowie and his team have developed a suite of leadership development tools for all levels, from first line management right the way up to CEO, deploying them worldwide. “They don’t focus on the skills of a leader as a supply chain or accounting person, but on their skills as a leader and the impact they have on people,” he says. “That’s been significant.”

The perfect fit The right – or wrong – leader makes all the difference.

When it comes to selection, Andrew Lambert, a partner at HR research company Creelman Lambert and author of a Corporate Research Forum report on trust, says choosing someone who has “done it all and understands the organisation from top to bottom” helps. “You need to take a balanced view of what it actually feels like to be on the front line,” he says. “The best-rated leaders are those who have fought their way up from the bottom and really know what it’s like.” He cites William Hill CEO Ralph Topping, who worked his way up from the shop floor.

However, with Topping due to retire soon, HR director David Russell is in a tricky succession situation. “With 44 years in the company and having come up from the front line, there’s a huge amount of trust in him,” he says.

“If you’re in a shop in Glasgow, you can call the CEO and he’ll call you back. You can lose that with more ‘careerist’ types. It’s an interesting challenge.” While not a total replacement

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The four main drivers of trustworthiness When Veronica Hope-Hailey and Graham Abbey refer to trustworthiness, they consider four main drivers. These are especially useful for recruiting or selecting leaders:

1

Ability Ability is “table-stakes”, says Abbey. “It’s what we recruit for. Can you do the job?” However, at senior level this may be a given and values may become more critical (see integrity).

2

Integrity “It’s hard to rise up the organisation and sustain it without integrity,” says Abbey. “Gross acts of corruption discount you from being effective as a leader.”

Doug McIldowie, group HRD at GKN, says this comes into play in recruiting at senior levels: “The accountants can all count and the sales people can all sell, but do their values match ours?”

3

Predictability Mixed messages lead to lost trust, says Hope-Hailey. She advises leaders to “decide what your value system and leadership style is and give consistent messages about that.”

McIldowie backs this up. “Part of the challenge is being consistent and not going off on some new initiative,” he says. “People will trust you more.”

4

Benevolence Abbey agrees this is an odd word, which can smack of paternalism.

However, he says it becomes powerful when twinned with engagement, empowerment and freedom. “It’s being concerned about others,” he adds. “It’s the emotional side of leadership.”

for working your way up, visibility and spending time at the coal face in an effort to really understand the employee experience can help.

All this has further ramifications for talent management and succession planning, says Abbey. “You build trust over time and it’s about consistency,” he explains. “That requires a balance between internal and external candidates. If you are always bringing in new people, you are starting from ground zero. I can see trust washing through things like talent management. It becomes a dimension of how people flow through the organisation.”

Fostering self-awareness According to Lambert, leaders need to think very seriously about relationships. “How good are you at understanding and managing relationships from your perspective as a leader?” he asks. “When you get into a work context, do you honestly think about relationships? When you’re in an organisation, remember trust is something other people put on you.

In terms of leadership development, getting people to be self-aware and step out of themselves is critical.”

Kirstin Furber, people director at BBC Worldwide, the commercial arm of the BBC, has been working on fostering that self-awareness among senior leaders, in the light of a challenging restructure. “If we want to be a global company, we’ve got to trust our executives and our employees,” she says. “Working globally, you need to make decisions in the moment. It’s having that trust around how people operate, communicate and work with each other.”

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“We had no idea how bad it would get”

teams,” Graham says. “That manifested in a lack of information sharing or collaborative working.” It also revealed some “problematic managers”, rumours of favouritism – “the idea that it was how your face fitted, not what you did” – and that policies were too bureaucratic and preventing autonomy.

As a result, RHP invested heavily in training around delegation and coaching, introduced a concept called “personal promises”, based on reciprocating and building trust between teams, held employee focus groups to recalibrate how performance should be measured, redesigned communications and “got rid of a hell of a lot of policies”. “We’ve seen some really tangible differences since we did the trust workshops,” Graham says. “It’s intrinsic to getting to those deeper levels of engagement. We want to have the majority of decisions made at the lowest possible level, rather than the highest level.”

Maintaining trust through adversity

Inji Duducu, former HRD at insurance company CPP and now interim head of HR at The Co-operative Group joined and the senior team all made a public commitment to our own learning, making us vulnerable. I think people expected air-punching, but we acknowledged it had been hard and gave time and space to that.

It was important for our credibility.

“That horrendous February 2012 letter from the FSA arrived on a Friday evening, so the leadership team discussed it over the weekend. We sent people to each of the UK sites for Monday morning and held rolling briefings. It was part of the journey we’d started at the conference: being vulnerable. Leaders

have mortgages and children too, so it’s scary for them too. We commuted to briefing people every 48 hours.

“Stobart was firefighting and less able to get out and visit sites, so we rethought communications. We did video messages, he wrote a weekly blog, held monthly ‘coffee and cake’ sessions and Paul’s Calls, where he’d personally phone members of staff. People had a really strong sense of him.

“We never talked about trust explicitly, but we talked a lot about belief.

People needed to believe there was a future and we needed to act

To make sure the ‘top 100’ leadership team really understand what’s going on ‘on the ground’, a group of junior high-potentials are tasked with finding out what employees think of BBC Worldwide, and providing honest feedback to leaders. When this was presented at a leadership conference last year, Furber says it was “tough stuff to listen to, but that made it real”.

In addition, reverse mentoring ensures the company’s leaders learn from junior members of staff. And, in the ultimate exercise in self-awareness, a group of senior leaders recently took part in a development programme that culminated in live feedback sessions. “It was difficult to co-ordinate and took up lots of time and energy, but it led to some real value,” says Furber.

You need to take a

balanced view of

It’s good to talk Senior executives making themselves vulnerable enough to receive live feedback is a big step, but one initial thing organisations can do to build trust is simple: talk about it. “In organisations where trust is high, that trust is becoming more explicit,” says Abbey. “People are talking about it.

Individuals who are trusted typically have a concept of trust.”

That’s true of housing association Richmond 28 HR February 2014

what it actually feels like to be on

the front line.

The best-rated leaders have fought up from

the bottom

as if we believed there was a future, even if it was tough. But we got there and sorted the refinancing: our accountants KPMG called it a miracle.

“I’ve always believed HR should be out and about, knowing the business, knowing the leadership team. When I joined CPP, I used to visit all the sites and I was seen as a bit of a problem child.

But that week in February, I went down and couldn’t leave because people kept stopping me. People knew who I was, they knew I was approachable and would give them a view. That’s why I’d been down there every month for the past four years. I didn’t know it at the time, but it crystallised on that first morning. I was known and I was trusted.”

Housing Partnership (RHP), which decided to focus on trust as part of its ambition to make the leap “from good to great”, says Amina Graham, executive director of corporate services.

“We want to be an excellent employer, and trustworthiness is an intrinsic part of that,” she explains.

Introducing training on trust for all employees, she believes, “marked a step-change. It cemented the good work we had been doing already and took us up to the next gear.”

The workshops aimed to “create a common language and an understanding around trust across the whole of the organisation”, she continues. “We had to overtly create the business link on why trust is so important. People were wondering why we were suddenly talking about it.”

The initiative revealed a couple of issues. “At corporate level there was a real lack of trust between some hrmagazine.co.uk

According to Andrew Lambert’s Corporate Research Forum report on trust, there are some key questions HR needs to address in order to be seen as trusted: Is it resolute and persuasive in identifying and resolving trust issues?

Is it trusted to provide great service, and do so in an integrated way?

Is HR known for enabling people to do their best, as opposed to being mainly a policing function?

Does HR help the employee voice to be heard, and if necessary act as an organisational conscience?

Does HR enhance the way information flows in the organisation, rather than being seen as secretive?

Do HR directors have sufficient influence to ensure that trust factors are to the fore when recruiting and developing CEOs, C-suite and board members?

The role of HR The changes RHP has implemented reflect Hope-Hailey’s view that “HR and HR systems are so important”. She says: “They are about the employment relationship and what the organisation values. If you don’t change the basic HR

High and low trust organisations Below are some of the cultural characteristics of high and low trust organisations High trust

Low trust

Leadership serves stakeholders, high answerability to and support for stakeholders, ‘all one team’, build ownership through participation, leaders as role models, relate to frontline needs.

High control from the top, rigid hierarchy, silos, status orientation, ‘don’t challenge authority’, ‘them and us’, spying not listening, remote from the front line.

Success celebrated in an inclusive way – recognition of all contributors, rewards shared widely.

Honest mistakes regarded as opportunities to learn, and regarded as part of experimentation and innovation.

Constant improvement and healthy risk-taking encouraged.

Source: CRF Report on trust by Andrew Lambert

“CPP had enjoyed double-digit growth for five years. Then, in February 2011, the FSA announced it was investigating our sales practices, causing a share-price crash. We thought things were bad then, but we had no idea how bad it would get.

“In October 2011, Paul Stobart joined us as CEO, with new ideas for making our culture more customer-focused. In February 2012, the FSA revealed the proposed redress programme for customers, which would have caused us to go into administration. It was very public.

Our shares were suspended.

“Stobart had a very different style of corporate comms: open and authentic. We held a leadership conference after he

HR and trust

Information and ideas shared freely, collaborative orientation.

Honest feedback invited, criticism accepted. Allows accurate assessments to be made, learning to take place. Take action after feedback, surveys etc.

Recognise and promote talent.

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Leaders take credit and rewards, selfishness in seeking power/ recognition/promotion.

Mistakes punished, blame culture and scapegoating, shifting responsibility, defensive reaction as a default, risk aversion. Leads to hiding of problems, reduces learning, inhibits improvement.

Hold on to information, don’t share ideas or suggest improvements (rocking the boat), stick to your silo.

Feedback unwelcome, unless flattery.

Fear of being direct because it may offend or raise difficult questions. Weak follow-through after feedback, surveys.

Talent regarded as threatening, or to be held on to for self-interested reasons.

processes around promotion, appraisal, reward, leader selection and so on to reflect the importance of trust to the organisation, you are not going to get trust.” And it’s just as important for organisations that already have high levels of trust to maintain them.

HR can play a big role in linking trust to processes such as talent management programmes, succession planning and performance management. However, the function has its own problem to overcome: in many organisations, HR simply isn’t trusted. “In our earlier research, it was depressing how few people trusted HR,” says Hope-Hailey.

“People said HR has become too aligned with senior leadership and desperate to show itself to be strategic.

Plus, it’s often associated with difficult restructure programmes and downsizing. Why should people trust HR? Who now is the conscience of the organisation and acts as the loyal opposition?”

Lambert agrees, adding that HR has a role to play in challenging dysfunctional leadership behaviour: “Are you putting your hand up to say you’re going to help resolve trust issues? There will always be issues in top teams, but the more dysfunctional they are, the less people trust them.

Making sure the head office works as a team and supports the organisation is something HR rarely thinks about.”

He says in the wider business context, any move towards more integrated reporting (see p11 for the latest, and the September 2013 issue of HR magazine) will only make trust more important. “Business is being pushed towards a multiple stakeholder audience,” he says. “When we decide big things, do we take other stakeholders seriously, besides the financial ones? Or do staff just have to lump it? That immediately puts you in a negative space as regards trust.

HR needs to be clear about its contributions and capabilities as a force for good.”

Get that right and HR can be a major player in harnessing the power of trust to boost organisational effectiveness.

After all, as Engaging Minds’ Bibb puts it: “If you could bottle and sell trust, organisations would buy it.” But until it’s available by the litre, HR will have to settle for brewing its own. HR February 2014 HR 29