The Trust Equation: Why It Hits Your Bottom Line

This is part 2 of The Math of Trust: A Leader’s Guide. Read the headlines for the main ideas. If you want details or justification, dig into the paragraphs that follow the headline.

Trust is one of the simplest levers you can use as a leader to elevate your teams and their results. The research is clear on what happens when teams have it and what happens when they don't. Trust affects the bottom line in direct ways.

While 55% of CEOs recognize that lack of trust threatens their organization's growth (PwC Global CEO Survey), most haven't taken concrete steps to build it, mainly because they aren't sure where to start. This guide provides a simple, actionable formula: Trust = Time + Consistency." Before we dive into how to turn the "math of trust" in your favor, let's look at the good that comes with trust. Let's also look at the friction created when trust is missing.

The data is clear: trust makes things "get done" faster because productivity and performance go up.

Trust affects employee morale, stress, and engagement. Higher trust can cut stress by 74% and burnout by 40%[3]. Engagement rises 5X when employees trust leadership, and employees report 29% more satisfaction with their lives (Harvard Business Review, 2017).

Separate research by Theresa Amibile and Stephen Kramer showed that we are more resilient, creative, and adaptable when engaged. This is true even when things "blow up." (The Progress Principle: Using Small Wins to Ignite Joy, Engagement, and Creativity at Work, Harvard Business Review Press 2011).

Consider the tales of engaged employees who brave snow and floods to reach work. Then, think of the burned-out, disengaged employee seeking excuses to miss work. The research on this theme continues to grow. You have probably seen it in the workplace through your own experience.

Things are done better and faster because of solid teamwork.

Trust boosts cooperation and teamwork. Research shows that high-trust workplaces have better collaboration among employees. Trust sets the stage for innovation. Research shows its role as a gateway to sharing and developing ideas [6]. Trust also fosters more open and honest communication [1].

The impact on teamwork is measurable: employees in high-trust organizations report feeling 66% closer to their colleagues, show 11% more empathy for their workmates, and depersonalize them 41% less often (Harvard Business Review, 2017). This improved collaboration and connection enables innovation and higher quality work."

By now, you are getting the theme: "Things get done faster." In this sense, speed hits your bottom line as it lowers the cost to deliver your goods or services. This fact alone could be enough for you to buy in. If not, there are still more ways trust translates to dollars.

People stick around longer, and that means $$ along with the good vibes.

When people stay on your team, costs are lower. You avoid training their replacements and losing knowledge. Turnover (people not sticking around) is costly. Replacing an employee costs 50% to 200% of their salary. Replacement costs show up in the $1 trillion per year US Businesses are estimated to pay because of turnover [14][17].

The financial impact: compared with employees at low-trust companies, 50% more employees at high-trust organizations plan to stay with their employer over the next year. Even more striking, 88% more say they would recommend their company as a place to work (Harvard Business Review, 2017). In terms of direct compensation, employees at high-trust companies earn an additional $6,450 per year on average.

Trust boosts loyalty and a desire to stay with a company, so it has a big financial impact on retention.

The dollars of trust keep adding up as researchers publish more.

Organizations with high levels of trust have higher financial performance[1]. Companies with higher levels of employee satisfaction - something trust affects - outperform their peers in the race for dollars[6]. Based on the previous sections, you can follow the ways trust compounds in costs or benefits.

Trust is a lever within reach.

As the research above shows, trust is a cash factor. It is also a lever within any leader's reach. You do not need a degree or special training to build trust. All you need is to become aware of - and intentional about building - trust.

Trust-building is a way to take ownership of results.

Building trust gives you a way to take ownership of results—even when the work is in the hands of your teams. Trust is your lever whether you need to improve productivity, drive growth, or drive innovation.

In the next sections, we'll outline simple ways to build trust. First, let's look at what gets in the way of trust so that efforts aren't sabotaged.

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