Trust: The Glue that Bonds Leaders and Employees

During her 15 years at Hewlett-Packard, Amy Stroud, an executive with the high-tech giant’s business strategy and development unit, watched as employee engagement sank at the company known as the “godfather of Silicon Valley.”

A series of controversies, cutbacks and rapid CEO turnover left staff wary of company leadership. HP had lost its way, going from the top 10 of Fortune’s “100 Best Companies to Work For” to dropping off the list entirely within four years.

Stroud, a former student of mine and UC Davis MBA alumnus, wanted to develop ways to improve employee engagement. She approached me to help. We teamed up to study HP’s communications to employees and ultimately sifted through more than 300 publicly available documents—media reports, agency filings, books and speeches—to show how employee trust and distrust evolved at HP between 1995 and 2010.

Our study showed how the words and actions of HP’s leaders signaled dissatisfaction with employees, disrespect for employees and unfairness in treatment, engendering distrust, which deepened as events unfolded. Our research revealed how distrust was built in a series of phases and how attempts to restore employee trust fell short.

The trials of Hewlett-Packard in building trust—and distrust—among its employees provides a cautionary tale for managers. There is much to learn from HP’s mistakes and many other high-profile leadership failures in which the loss of trust impacted the performance of their companies.

Signals of satisfaction and pride are central to employee trust

It’s no secret that trust is a key ingredient to leadership success. Yet to inspire the trust of employees and peer leaders, managers have to earn it.

Managers and executives can gain trust over time by promoting a supportive work environment that show concern for employees, displaying competent managerial practices, and fairness in decision making. Showing satisfaction with employees—having “pride” in employees—is important to building organizational trust. Respect, integrity and fairness make up the backbone of trustworthiness.

There are skills and approaches that managers can put into practice that can lead to greater trust. Managers can also become aware of how they might be undermining their trustworthiness through behavior and communication.

Creating an environment of trust has tangible and immediate benefits: improved creative collaboration and innovation, better group decision making, and stress reduction for both leaders and employees.

In addition, being a trusted leader has a number of less tangible and longer-term benefits, such as enhancing the general reputation of the companies, and the ability for these firms to rebound from setbacks.

Mending the trust divide

Overall, public trust in business is returning, a trend that can only continue with more trusted business leaders.

The reputation of business has bounced back from a trust implosion following the global financial crisis. The 2016 Edelman Global Trust Barometer, which for 16 years has measured trust in institutions, including business, media, NGOs and government, found that business is “in a new situation of strength, a unique position that translates into an opportunity to help mend the trust divide.” In fact, in 2016, no institution recorded a larger gain in trust among the general population than business.

On Friday, July 12, I’m leading a half-day open-enrollment Executive Education program, “Becoming a Trusted Leader.” The program draws on Roger Mayer’s well-known model of trustworthiness that is based on the constructs of integrity, competence and goodwill as well as my research on trustworthiness among business leaders.

About the Author

Kimberly Elsbach, Associate Dean and Professor at the UC Davis Graduate School of Management, holds the Stephen G. Newberry Endowed Chair in Leadership. Her research focuses on the acquisition and maintenance of organizational images, identities, and reputations, especially images of legitimacy, trustworthiness, and creativity.