Why trust is crucial to organisational success

Leadership teams need to prioritise the attraction and retention of the right people, support under pressure middle managers, and adopt more distributed forms of leadership if their organisations are to thrive and succeed, according to Dr Colin Hughes, head of the Graduate School of Business at TU Dublin.

And trust is the golden thread connecting all three. “Trust is an area of interest for us at TU Dublin and we sponsor the Most Trusted Leader Award every year,” says Hughes. “Trust increases the speed at which we work with others. It allows us to rely on others to deliver what we need while we focus our attention elsewhere, thus making us all more productive and effective. This is increasingly important given the pace of change and complexity in modern organisations.”

Employers face significant challenges when it comes to recruitment and retention. “In an economy with full employment it is incredibly important to attract and retain good talent,” he points out. “However, uncertainty around working arrangements is impacting upon organisational culture in some organisations. On one hand, some leaders are demanding that employees return to the office, while on the other many employees now expect a lot of flexibility and have increasing legislative support.”

He points to a mixed picture regarding workplace arrangements noting that some organisations and leaders have called for a return to the office publicly and in quite blunt terms.

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One such leader is L’Oréal chief Nicolas Hieronimus who told the World Economic Forum at Davos that remote workers lack attachment, passion, or creativity in their roles. He also said working in the office is fairer to workers “because we have lots of young people who have small houses or have young kids and working from home is actually very bad for their mental health.”

“There is a bit of a disconnect happening,” says Hughes. “But some organisations have figured it out well. They know what works for different teams and are allowing team leaders to sort it out in some cases. We are seeing different practices, and some people are still working remotely as much as they were during Covid. But the needs of the organisation have to be paramount. The business needs to perform and make a profit. At the same time, the reality is that they will lose staff if they are unhappy.”

Bridging the expectation gap requires evidence-based decision-making, he believes. “A lot of organisations are not doing enough to explain why they want staff back three or four days a week. It can’t just be intuitive. Staff are looking for sound evidence. The absence of evidence undermines trust. It’s a credibility issue. Employees look for organisations and leaders who will look out for them. Lots of employees really value flexibility for family life. They find they can fit a lot more into the day and can be a lot more productive.”

Return to the office mandates can be counterproductive. “In the research on trust there is a concept known as felt trust,” Hughes explains. “If leaders say they want people back in the office all the time because think they will be more productive that could be perceived as a signal that employees are not trusted to work from home.”

Support for middle managers is increasingly important in light of the increased pressure being placed on this cohort. “They need to be supported to lead effectively,” he says. “They need to be able to build strong team cultures characterised by psychological safety and trust. Aside from leadership training, strong hiring practices help managers in this regard as they need to get the right people on their team so that they can trust them and build trust between team members. Managers also need support in prioritisation, effectiveness and self-care. I believe many managers are struggling to cope with an ever-increasing array of demands and will not be able to generate high levels of team performance if they are burnt out themselves.”

The pace of change in areas such as technology and sustainability places a premium on learning and development, he continues. “We need to ensure that managers are constantly upskilling in the areas that will be crucial to the organisation’s success, as well as their own success. Strong organisations are very mindful of their future senior leadership pipeline. People can be appointed to management roles without possessing the necessary skills to be a good leader. A lot of leadership programmes tend to be short one or two-day programmes. This is not good enough.”

He employs a sporting analogy to explain the need for intuition in certain areas. “It is a constant challenge for senior leaders to skate to where the puck will be, as ice hockey great Wayne Gretsky once said. Risk taking is crucial but this needs to be based on a mix of good data and intuition. There is a danger that many modern leaders are simply too busy working in the business to be able to take the valuable time needed to work on the business. More adaptive and distributed forms of leadership are also required to thrive in a complex environment where solutions are unclear, but this only works in high trust environments.”

Adaptive leadership means having leaders at all levels who will stand up and voice their opinions and have confidence that they will be listened to. “Senior leaders have to trust them and listen to and value the insights they bring,” says Hughes. “If leaders are open to hearing what they don’t necessarily want to hear people are more willing to share their thoughts. The organisation benefits from the diverse experience and insights in the room. That’s much better than having a bunch of sycophants agreeing with the CEO.”

Those other voices are critical at a time of rapid change. “A lot of organisations are at critical points as to the decisions they make now on technology adoption and how competitive they will be in future,” he explains. “Nokia is a classic example of an organisation that failed to see the way the wind was blowing. They held a dominant position in the mobile phone market but failed to invest in smartphone technology and lost their leadership position. There is no ready answer to a lot of the challenges facing organisations today. But the old view that senior people have all the answers doesn’t stack up in the face of new technologies like AI where it’s likely that junior people will have deeper knowledge and better understanding and insights. Senior leaders need to trust those people and listen to what they have to say.”