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My colleagues and I have been studying workplace trust and its impact on business performance since the economic downturn of 2009. For the purposes of our work, we define trust as 'a willingness to accept personal risk based on another person's actions.' Having compared the practices of organizations across industries, we have found that they fall somewhere on a continuum between 'Trust Leaders' and 'Trust Laggards'.

Trust Leaders are the elite 10 per cent of companies whose workers uniformly agree with the statement, 'Employees have high trust in their leaders and the organization'. Trust Laggards are the 10 per cent whose employees say this statement 'does not describe their company very well' or 'does not describe it at all'.

The benefits of being a Trust Leader are many: these companies are more than 2.5 times more likely to also be leaders in revenue growth, and they significantly outperform others in achieving key business goals – including customer loyalty and retention and ethical behaviour and actions.

Based on our findings, many companies are facing a 'trust gap' – and leaders should be concerned about how the erosion of employee trust is affecting their bottom line.

One of the key problems is that, in organizations with a long track record of success, leaders are often reluctant to tamper with the status quo. Even if they recognize the need for evolution, they may be too wrapped up in doing what is familiar to begin making the shifts needed to build the organization's future. We uncovered two needs that we believe are prevalent across industries – and both relate to empowerment.

The Operational Need for Empowerment

In our fast-changing environment, a lack of empowerment will impair employee responsiveness – sometimes, with disastrous results. Dynamic businesses environments require rapid, decentralized decision making in order to meet evolving customer needs. If they fail to empower the people who work for them, managers can quickly become decision-making and process bottlenecks.

The Personal Need for Empowerment

Employees do not like to be micro-managed. It is widely recognized that leaders at all levels – right down to the front lines – want to be empowered, but ironically, these same leaders often fail to empower the people that they lead. Empowerment and autonomy are two sides of the same coin: when a leader empowers an employee, she is given the autonomy to act.

In our work with clients, we often find ourselves addressing a lack of empowerment – and its more pernicious form, micromanagement. One way we respond is by teaching leaders how to delegate. In many cases, these people have never been taught delegation skills – and even once these skills are acquired, many continue to delegate far less than they should.

Managers tell us that they often resist delegating because they don't want to risk an outcome that might not meet their (or their organization's) standards. However, in attempting to heroically uphold a quality standard, they unintentionally create a cascade of other problems – including demoralized employees, stifled skill development, and increased organizational risk due to bottlenecks.

Being willing to trust your employees to perform the work delegated to them – especially when it involves a stretch goal – requires that you accept the risk inherent in their subsequent performance. The fact is, when managers resist delegating, employees experience this risk-averse behaviour as demonstrating a lack of trust in them.

Another key finding was that employees would have increased trust in their leaders if they practised more transparency in the decision-making process – which means asking for input before making decisions that affect employees, and providing context and background, so employees can better understand the rationale for decisions. The top five actions employees urge leaders to embrace to build trust are:

  • Ask for my input on decisions that affect me.
  • Give me background information, so I can understand the context for decisions.
  • Set me up for success, in terms of learning and resources.
  • Admit to your mistakes.
  • Don’t punish people for raising issues.

In summary, transparency builds trust, in both direct reports and leaders. The most effective way for direct reports to build trust with their bosses is to practice stronger communication and behave in ways that mitigate risk for the supervisor; and for leaders, the goal is to practice more transparency in the decision-making process.

By embracing these principles, leaders will reap the benefits of empowered employees; and chances are, innovation and value creation will be right around the corner.

Andrew Atkins is the chief innovation officer at Boston-based Interaction Associates. His clients have included TJX, Merck and Comcast/NBC-Universal. Trust Across America has twice named him one of the Top-100 Trust Thought Leaders in the U.S.

Reprinted, with permission, from Rotman Management, the magazine of the University of Toronto's Rotman School of Management.

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