Entrepreneurship

Effective Leadership Starts With Trust

Dan Nicholson

If you’re looking to become a more effective leader, the first step is building trust. Trust is the foundation for building workplace culture, guiding teams, and helping organizations succeed. And it needs to go both ways—your team needs to trust you, but it’s just as important that you trust in your team.

Understanding Trust in Leadership

Trust underpins almost every aspect of human interaction, from economic exchanges to personal relationships and democratic processes. In leadership, trust is critical because it influences how team members perceive and respond to leadership actions and decisions. “Trust is one of the most vital forms of capital a leader has today,” writes Abbey Lewis for Harvard Business School—and it’s time leaders start treating it as the valuable asset it is.

The modern model of leadership is one that prioritizes empowerment by focusing on others rather than oneself. The objective is to empower and inspire others rather than control and command those under your leadership. This demands a departure from the old-fashioned idea that leadership is about gaining power. Instead, it is about gaining trust.

Leadership shouldn’t just be based around a leader’s charisma or strategic vision, either. According to Frances X. Frei and Anne Morriss, “It’s about empowering other people as a result of your presence, and about making sure that the impact of your leadership continues into your absence.” This management style, which they coin “empowerment leadership,” allows team members to realize their full potential, but it is only possible in a high-trust environment.

The Core Drivers of Trust

Trust is not built on a whim but through consistent behavior across three key areas: authenticity, logic, and empathy. These elements form the “Trust Triangle.” When any of these elements fail, trust can be eroded, and effective leadership is undermined. “People tend to trust you when they believe they are interacting with the real you (authenticity), when they have faith in your judgment and competence (logic), and when they feel that you care about them (empathy),” explains Frei and Morriss.

Authenticity in leadership involves being genuine and truthful, not only about successes but also about failures. Leaders who show their true selves create an environment where openness is valued. Logic, another driver, refers to the leader's ability to make decisions that are sound and well-reasoned, giving confidence to others in their leadership abilities. Lastly, empathy, the ability to understand and share the feelings of another, is crucial. It ensures that team members feel valued and understood, not just as workers but as human beings. 

Identifying and addressing any behaviors that undermine the three elements above and cause others not to trust you is a continuous process. Leaders should regularly solicit feedback from their teams about their leadership style and decisions. Reflecting on this feedback helps identify recurring issues that may be eroding trust, whether they relate to authenticity, logic, or empathy.

Strategies for Building Trust

Blaire Palmer, a speaker on leadership and work, tells leaders looking to build trust to first take an honest look at themselves: “You’ve been thinking about what everyone else needs to do differently, not what you need to do differently.” To build trust within their organization, leaders need to take an introspective approach. 

Using the three elements of the trust triangle can be a good starting point for examining your own strengths and weaknesses. If a weakness is identified, the next step is to address it head-on. This may involve changing specific behaviors, improving communication, or altering decision-making processes. 

To build authenticity, leaders should work on communicating openly and ensuring their actions align with their words. This transparency fosters a culture of trust and encourages similar openness among team members. For the logic component, leaders need to demonstrate competence and good judgment. This involves making decisions based on data and informed analysis, which reassures team members of the leader’s capabilities. 

Empathy can be shown through actions that prioritize the well-being and professional growth of team members. Empathetic leadership involves listening to team concerns, acknowledging team efforts, and providing support where needed, which in turn, enhances team loyalty and trust. By openly acknowledging and addressing these issues, leaders not only rebuild trust but also demonstrate their commitment to personal and organizational growth.

The Business Case for Trust

The benefits of fostering a trust-rich environment are substantial. Trust leads to improved collaboration, higher engagement, and increased discretionary effort from team members. According to a study titled “The Neuroscience of Trust,” people at high-trust companies report 74% less stress, 106% more energy at work, 50% higher productivity, 13% fewer sick days, 76% more engagement, 29% more satisfaction with their lives, and 40% less burnout than people at low-trust companies. This translates to better financial performance, higher levels of innovation, and greater employee satisfaction.

Moreover, trust impacts the bottom line through enhanced agility and reduced operational friction. When trust is high, teams are more likely to embrace change and innovation. Conversely, in low-trust environments, fear and uncertainty can stifle initiative and creativity, ultimately hindering organizational performance.

Conclusion

Effective leadership is deeply intertwined with the ability to build and sustain trust. By understanding the core drivers of trust and actively working to enhance these elements, leaders can create a robust, dynamic, and responsive organizational culture. The journey to becoming a trusted leader is ongoing and requires dedication, self-awareness, and a genuine commitment to personal and professional development.

Sources

Gallup

Harvard Business School

Harvard Business Review

Fast Company

The Neuroscience of Trust

The CEO Magazine

Dan Nicholson is the author of “Rigging the Game: How to Achieve Financial Certainty, Navigate Risk and Make Money on Your Own Terms,” deemed a best-seller by USA Today and The Wall Street Journal. In addition to founding the award-winning accounting and financial consulting firm Nth Degree CPAs, Dan has created and run multiple small businesses, including Certainty U and the Certified Certainty Advisor program.

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