Abstract
Trust is an essential aspect of leader-stakeholder relationships and is at the core of every trait that defines a strong team. However, not all managers are equipped with skills and knowledge on how to inspire trust in their subordinates. By focusing on reward systems rather than establishing a mutually trusting rapport with workers, leaders risk alienating their workforce, leaving them unmotivated and unsatisfied, and, as a result, less productive and more likely to look for a different job.
To build trust, managers need to cultivate a special atmosphere in the workplace and develop their character traits to inspire trust better.
Introduction
To achieve success in a modern competitive market of products and services, a lot of facts need to be taken into account. To an outside observer with a passing acquaintance of the workings of the industry, it may seem that a novel idea or approach and a strong, charismatic leader would be the principal ingredients to setting up a successful company. And in the past, this was a widespread approach.
It was believed that effective leaders were the principle of the human resource of the business. Leaders were seen as exceptional and rare, in contrast to numerous and replaceable followers. And while this approach had its uses when vertical-based businesses were the powerhouses of the economy, in modernity, the emphasis has shifted from the cult of personality to team effort and collaboration. Also, businesses can no longer survive, on innovation alone, since it is a given that a radical, interesting idea will quickly be copied or imitated in some way by the competition.
Thus, most entrepreneurs who have experience managing a modern, horizontally-organized business know that nowadays, a strong leader and an innovative idea are at best a solid foundation for an enterprise and cannot hold a business afloat by themselves. In such an environment, staff members become the most valuable resource of the business.
But the transition has not been complete, as many managers now recognize the importance of motivating and engaging their staff, but have a rather vague idea of how to achieve this correctly. The most common approach is to attempt to involve the workers through compensation and benefits, which is extrinsic motivation. This system of motivation is not very useful in the long-term since it requires to be renewed regularly, which is not very financially viable.
Intrinsic motivation, as to strive for personal satisfaction or accomplishment, gives people long-term motivation. The issue here is that managers often find it hard to provide their subordinates with recognition and appreciation that they need to feel personal achievement. This is difficult because it requires managers and leaders to build trust with the stakeholders of the business.
In the modern environment, trust may very well be the most important element of a successful workplace. It creates a better rapport between team members, and between leaders and subordinates, which is essential in maintaining a high quality of products or service provided, increasing loyalty among employees, and providing a more team-oriented, efficient work environment.
This paper will investigate why trust is so important for a successful business and how to achieve it in a work environment.
The Importance of Trust Between Leaders and Stakeholders
Reasons Why Trust Is Important
As mentioned above, in modern society, teamwork is the driving force behind a business’s success. And teamwork, just as any other form of successful partnership, requires trust to be the foundation of the workplace.
If the managers overlook trust and its importance, it will begin to deteriorate, which can lead to dire problems. If employees perceive their leaders as untrustworthy, and their companies as unreliable, they will not work at their top levels of efficiency, and will not make a significant personal input. This attitude, in turn, leads to dropping motivation, disillusionment, followed by apathy, laziness, and, as a result, stagnation or even collapse of the business.
Disillusioned workers with no trust in their management won’t be motivated by any of the core methods of motivation: compensation, benefits, recognition, and appreciation. This means that the employees have no personal stake in the success of the business or the realization of their leader’s vision. They also have no reason to stay in the company should they find a supposedly better job offer. This is not a novel situation, as it has been observed before, during the Great Depression in America, and nowadays, it is once again taking root. An article by Michele O’Donnell (2014) provides statistics that show just how damaging to the business the lack of trust is.
According to the research gathered by O’Donnell, “only 49% of employees trust senior management, and only 28% believe CEOs are a credible source of information”, “30% of American employees plan to look for a job when the economy turns around”, “48% of the group mentioned above cite a loss of trust in their employer as the reason”, and “90% of employees report they feel the effects of eroded trust daily.” Finally, “65% of Fortune 1000 executives believe trust will be a factor in voluntary employee turnover in the near future” (O’Donnell, 2014, par. 2-3).
This means that managers have to ignore the past ideas of the cult of leader personality and instead focus on winning over the stakeholders’ trust, making it one of the core responsibilities of a successful leader.
The most common cited reasons why trust begins to erode in companies are communication problems. In this context, “communication problems” is an umbrella term which covers managers and company leadership not being open with employees, not sharing critical information, perpetuating earning management, which is a practice of overestimating the financial success of the business, or even not involving the employees in the process of decision making. As well as communication, accountability also has a very striking impact on how workers perceive their leaders and businesses. Lack of responsibility and abuse of leadership authority destroys trust and leads to lower productivity rates and inability to overcome crisis situations.
Methods of Building Trust
While trust can be destroyed through simple negligence, restoring it is much more complicated and requires a conscious, focused effort on behalf of the managers. Researchers have defined five characteristics which inspire trust. These are integrity, competence, consistency, loyalty, and openness. (Barret, 2014, p. 4)
By developing these character traits, and through ethical behavior and use of transparent communication, managers and stakeholders should be able to build trust successfully. Another way of improving trust is by replacing the top-down management approach, which is the traditional approach with directions coming from the “top” of the business, by the bottom-up approach, at least in some situations.
The bottom-up approach invites team members to involve themselves in every step of the management process. This method relies on the manager in charge to trust his team enough to delegate his responsibilities to them and is the fundamental part of the participative style of leadership. Ultimately, in the flexible and varied organizations no single method of management is a complete ideal, and to achieve the best production and quality results, as well as in trust building managers need to be able to use both of them intermediately (Filev, 2008).
Personal values of workers can also influence the difficulty of winning their trust. Liberal and conservative stakeholders (both employees and customers) prioritize different traits when interacting with leaders and shaping their opinions. In particular, liberal stakeholders will look for integrity and benevolence in their leaders, while conservatives focus on competence, with clients being more interested in the capabilities of the leader, and workers being interested in his or her profitability (Pirson, Martin, and Parmar, 2013).
Benefits
Ultimately, many benefits of successfully building trust between leaders and stakeholders are self-evident. Team members who rely on each other and their leaders work more efficiently. By trusting each other to be equally committed to the task at hand and uniformly competent, to communicate information and exchange ideas freely, leaders and subordinates will be able to achieve more in their projects, and will be more motivated by their successes (Measom, n.d.).
Conclusion
As we can see, trust is at the core of any successful teamwork effort. While many aspects of successful collaboration have been studied in detail, such as responsibility delegation, conflict resolution, collaboration, ideas exchange, each one of these would be impossible without trust. It has become a pivotal part of the modern business, and will certainly remain an integral component of all future leader-stakeholder relations.
References
Barret, D. J. (2014). Leadership Communication (4th ed.). New York: McGraw-Hill Education.
Filev, A. (2008). Top-down and Bottom-up Project Management: Leveraging the Advantages of the Two Approaches. Web.
Measom, C. (n.d.). The Importance of Trust Within a Team. Web.
O’Donnell, M. (2014). Building Trust In The Workplace – TalentCulture. Web.
Pirson, M., Martin, K. E., & Parmar, B. L. (2013). Building Trust: The Role of Stakeholders’ Personal Values. Web.