Trust in leaders 4 February 2013 Roderick M. Kramer, Professor, Stanford Graduate School of Business, and Visiting Professor, Harvard Kennedy School and Todd L. Pittinsky, Professor, Stony Brook University, and Senior Lecturer Harvard Graduate School of Education

Apparently, the United States enjoys a surplus of deficits. President Obama’s first State of the Union address warned that we are weakened and endangered not only by our financial deficit, but also by a deficit in trust.

He wasn’t making that up. Polls find that Americans’ trust in business and political leaders is in the dumps–and not springing back to life anytime soon. After all, if we can’t trust our leaders not to manipulate interest rates, tap dead people’s phones, let top athletes cheat for years, or wreck the world economy–well, what can we trust them for?

We’ve heard it all before–the president, the polls, the pundits, the public–but can anyone do anything about it? As a matter of fact, yes. There are concrete steps leaders can take to begin restoring trust, which then-Secretary of State George Schulz once astutely referred to as “the coin of the realm.” (And this was during his testimony before the Congressional committee investigating the Iran-Contra scandal, so who are we to argue?)

But in this image-obsessed age when politicians admit cheerfully that they want to create a “perception” of being honest or decisive, we need to remember that trust is the perception and trustworthiness is the reality. So unless you are a leader who can actually fool all of the people all of the time, you need to earn people’s trust by being trustworthy. Trust should be thought of as a byproduct–and benefit–of having first provided trustworthy leadership and organizational performance.

But what can leaders do to create and sustain such trustworthiness? Research has identified several steps leaders can take:

Communicate. A leader’s words and actions should show that he or she is working diligently to protect and advance the well-being and security of constituents or employees. Good intentions matter. People are more likely to trust leaders whom they see as altruistic and committed.

Demonstrate competence. When we place our trust in someone, we put ourselves at risk. We need to believe our leaders are competent. We need to be reassured that not

From www.oecd.org/governance/trust-in-leaders.htm 22 November 2013 only are their intentions in line with our interests, but also that they can deliver.

Practise transparency. We regard leaders as more trustworthy when we feel we know who they are and what values they hold dear. We’re more comfortable, moreover, when we feel we can understand and predict their actions. Thus, we expect leaders to be transparent about the procedures they use when reaching major decisions and about the consequences of those decisions.

Be vigilant. We expect our leaders to do the necessary due diligence on our behalf. Former Intel CEO Andrew Grove liked to remind his managers and employees, “Only the paranoid survive.” He wanted everyone in his organisation to maintain a healthy sustained scrutiny of their fast-moving, hyper-competitive environment.

Political and business leaders often bemoan the “fragility” of trust–so hard to earn and so easy to lose, they whine. But that’s exactly the way it should be. We should be stingy when it comes to trust. We should dole it out sparingly and only to those who have passed the tests. If trust is the coin of the realm, it’s worth spending frugally and wisely.

References and recommended sources

Roderick M. Kramer, Restoring Trust in Organizations and Leaders, Oxford University Press, 2012

From www.oecd.org/governance/trust-in-leaders.htm 22 November 2013