Last month, Ziba Goddard, our Deputy CEO, spoke at The Financial Services Forum's Next Generation Summit.
Her talk centred around the significance of trust in leadership and business. She emphasised the psychology behind being a good leader and shared some key insights on the topic.
Here are the summarised highlights from her talk.
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The Art of Building Trust
Trust is a multifaceted concept encompassing reliability, integrity and competence, and plays a crucial role in leadership and business success.
Research conducted by PWC's consumer intelligence series revealed a significant "trust gap" between leaders' perception of trust and the actual trust reported by employees and customers; whilst 84% of leaders believed their employees had complete trust in them, only 69% actually did. These findings highlight the importance of understanding and bridging this gap.
Trusting businesses have several advantages, including higher ratings for exceptional leadership, better employee retention rates, and outperformance in the market by 6%. Furthermore, trust is particularly important for neurodiverse employees, as it contributes to creating inclusive and supportive work environments for all.
Psychological Characteristics that Underpin Trust
Trust can be built in three key ways:
Firstly, trust is not formed quickly or based on first impressions alone. It takes time to develop and must be earned.
Secondly, trust involves both emotional and rational components. Our brains operate via two thinking systems: System 1 (emotional) and System 2 (rational), which work together to assess trustworthiness. System 1 picks up on immediate cues, while System 2 makes more deliberate judgments over time.
Thirdly, trust is a reciprocal relationship. It cannot exist in isolation; it requires both parties to actively participate. The principle of reciprocity explains how trust is formed through mutual gestures and exchanges. Leaders can leverage this by initiating vulnerability, sharing, and creating a comfortable environment, encouraging employees to reciprocate and in turn, build trust.
As trust deepens, effective relationships are formed, and employees become more willing to follow the leader's vision and share in their successes.
Now that we understand the characteristics of trust, how do we build it?
David Maister, in his book "The Trusted Advisor," outlines the trust equation rooted in psychology and behavioural science. He identifies four components of trust, and here are four behaviours that align with such components:
- Credibility: This is about demonstrating relevant expertise and authority. To build credibility, use tangible examples, share lessons learned, and showcase your experience. Avoid lying or exaggerating, as honesty is crucial. Show passion for your work to create an authentic sense of credibility.
- Reliability: Focus on keeping promises and following through with actions. Reduce ambiguity by managing expectations and keeping people informed. Be punctual and set clear, measurable goals to demonstrate reliability.
- Intimacy: Foster emotional connections and create a psychologically safe environment. Practise effective phrasing in sensitive conversations, considering the primacy and recency effects. Be the first to open up and create space for others to reciprocate. Recognise and appreciate others both publicly and privately.
- Self-orientation: Overcome ego bias by putting others' interests above your own. Create an empowered culture where people have a sense of ownership. Listen more and talk less, allowing others to express themselves. Show genuine care by replaying what others have said and crediting their ideas and observations.
The Trust Equation: Measuring Trust
Having understood each of these four principles and how to behaviourally align with them, we’re now able to combine these principles into a measurable trust equation:
10 10 10 10
Credibility, reliability, intimacy & self-orientation are all marked out of ten. The goal is to have the first three the highest, with self-orientation being the lowest. Your teams may then anonymously rate each component.
By marking each component out of ten, leaders are able to understand which components are the strongest and where they might require improvement. The previous section also provides leaders with instantly actionable behaviours per component, to better understand how to aid the boosting or lowering of certain scores.
Conclusion
Overall, the talk emphasised the importance of trust as a foundational element of effective leadership. Building and maintaining trust is crucial for fostering strong relationships, engaging employees, and achieving business success.
By understanding the psychological factors and adopting trust-building behaviours, leaders can develop a positive and impactful leadership style.
To understand more behavioural biases, take a look at our C-factor toolkit.