The ROI of Employee Trust: Why Top Companies Focus on Cultivating Trust in Leadership

In corporate offices and Zoom meetings across the globe, leadership teams are strategizing how to build employee trust.

Are these leaders all having a breakthrough in empathy for their team simultaneously? Unlikely. The truth is, they’ve learned the secret I will let you in on: employee trust is vital for corporate success.

The best companies cultivate employee trust. The Great Place to Work Institute partners with Fortune annually to determine the “100 Best Companies to Work For.” Can you guess what makes up two-thirds of the criteria? Trust.

High-trust companies deliver higher profits. The top 100 companies that rank highest in this trust-based ranking system beat the average annualized returns of the S&P 500 by a factor of three.

So, let’s talk about it. Why does workplace trust impact profits? What is the current state of employee trust? And how can businesses increase employee trust in leadership? Stick with me, and I’ll cover all that and more.

Top companies know employee trust is vital

Employee trust isn’t a “worry-about-it-later” perk of a highly evolved organization. It’s a requirement.

Most leaders know this and worry about how a lack of trust in leadership can impact their team. In 2016, a global CEO survey found that 55% of CEOs believe a lack of trust threatens their organization’s growth.

Research shows that trust between leadership and employees is the most critical element of the best workplaces. And, as we’ve already learned, these high-trust organizations make more money than their competitors.

Employee trust impacts your bottom line

This Harvard Business Review leadership study found that high-trust businesses are over twice as likely to be high-performing revenue organizations than low-trust companies.

Trusted companies outperform their peers by 400%.

But it’s not just revenue and annualized returns that show employee trust matters. Scientists have conducted studies that prove employee trust leads to more collaboration and a more profitable business.

Paul J. Zak, the author of Trust Factor: The Science of High-Performance Companies, examined the neuroscience of workplace trust over two decades to arrive at this crucial finding. Confidence in co-workers increases the production of oxytocin, making work more enjoyable. Moreover, these teams were more productive overall than those in lower-trust organizations.

Why employee trust boosts revenue 

• Increased employee engagement: A Deloitte study found that when employees trust their employers, their engagement level increases by up to 20%.
• Higher job satisfaction and retention: Studies show that job satisfaction is directly impacted by an employee’s trust in their manager. Unsurprisingly, employees in high-trust companies stay with their employers longer than those in low-trust organizations.
• Boost creativity through psychological safety: When you trust your co-workers and manager, you’re more likely to feel psychologically safe. This safety directly translates to better creativity and collaboration with your team.
• Improved mental health and performance: Employees in high-trust organizations have less chronic stress and are overall happier. These factors empower better performance across the board.

The current state of employee trust

So, how are businesses performing on this widely agreed-upon pillar of success? Upon closer inspection, they’re not nailing it.

According to Forbes, 83% of employees surveyed expressed confidence in their HR department. But, concerningly, two-thirds of those employees said they wouldn’t document issues with HR because they felt HR wouldn’t address the problem.

This data is troubling, knowing how vital a high-trust culture is in a post-pandemic workplace. The past few years have been weird, to put it mildly, and employees are on edge from the unpredictable work environment and the uncertain economic future.

Employee trust in remote and hybrid teams

While trust is necessary for any business to perform well, remote and hybrid teams will barely function without it.

Hybrid team members report the highest levels of burnout, so managers need to work harder than ever to create a strong sense of trust and transparency in the modern workforce.

We love remote work here at Hubstaff, but we know there are pain points teams need to navigate while working from home.

For one, managers are still working to create a healthy leadership style for their remote and hybrid teams. In a remote work environment, teams need a shared understanding of how trust works with their managers and co-workers.

However, there is a lot of hope. Increased research into employee trust has led us to clear findings and instructions on building trust in the workplace.

How to build employee trust

Hubstaff has been championing employee trust for years. But with rapidly increasing studies showing that employee trust is skyrocketing profitability, leaders are racing to join the fight for employee trust.

We’ve already covered this topic and won’t bore you with a long answer. Instead, here are three quick and actionable steps leaders can take to cultivate a culture of trust based on recent research by Ohio State University. 

1. Admit when you are wrong.
2. Appreciate and value team members.
3. Be open to learning.

These three simple steps all narrow down to one key element: humility. 

Take it from study co-author Roger Goddard, professor of educational studies at The Ohio State University, “A little humility on the part of leaders goes a long way in helping groups be more productive and collaborative.” 

The takeaway: Employee happiness is the key to boosting profits

The key thing I took away from my research, and I hope you take from this information, is that employee happiness is vital to corporate success. 

Why? Because studies show that employee happiness equals increased profits again and again. Happy employees stay with a company longer, work harder, and are more creative, resulting in higher profits. 

All scientific studies and corporate metrics supporting the importance of building employee trust point to one thing. The best thing you can do as a leader is invest in your employees: their happiness, trust in leadership, and ability to work creatively and collaboratively.