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Why Leaders Need Trust and How To Earn It

It’s something we all intuitively know: Good leaders are trusted by their employees. A happy, engaged, productive workforce is built on trust, and trust in the person leading the charge is a vital part of this.

Yet trust isn’t working for many organizations. A whopping 60 percent of employees don’t trust their workplace. And this distrust is holding back productivity and wounding employee engagement.

Leaders need to start building trust. In this post you’ll learn more about why trust should be a priority, what Carlos Ghosn can teach us, and get five tips on how to earn trust.

Why trust is important for leaders

Employees’ perspective of their boss is filtered through the prism of trust. Why is trust such a key factor? As one study puts it:

“Because leaders have authority to make decisions that have a significant impact on the follower (e.g., promotions, pay, work assignments, layoffs), perceptions about the trustworthiness of the leader become important.”

But trust extends beyond simply having faith in leaders’ decisions.

Research shows that trust in company leaders has a direct impact on employee engagement. Or, in the words of the academic paper: “Trust had the largest relationships with job satisfaction and organizational commitment.”

All this is to say that building (or strengthening) trust is now a top priority for business leaders. It also tells us something important:

Trust is earned, not given.

What does this look like in the real world? Let’s go through a quick story about trust and leadership — and how the latter must have the former.

The Tale of Carlos Ghosn

When Carlos Ghosn took over as COO (later CEO) of Nissan in 1999, he had some major problems on his plate. The Japanese carmaker’s numbers were bleak, its models unpopular, employees unhappy. Nissan’s culture was polluted.

So what did Ghosn do? Did he come in and focus exclusively on the financial side of things?

No. He attacked the company’s culture head-on. And demonstrated some big moves that build trust.

Ghosn immediately made a dramatic pledge to quit if he couldn’t turn a profit within two years.

He established a dictionary of 100 common terms so that all employees of the Japan-French company could understand them, regardless of native language. Included on the list? “Transparency.”

He launched a tour of the company’s facilities, travelling around the world to introduce himself to workers and managers.

And then he did something even bolder — he asked employees for ideas on how to fix the struggling auto giant.

The Brazilian-born Ghosn also appreciated that small gestures meant a lot for company culture (and therefore trust). So he learned how to use chopsticks, making a positive impression on Japanese employees.

But these weren’t one-off or token acts. With Ghosn these gestures were part of a larger shift in the company’s management culture, emphasizing transparency, execution and communication.

As Ghosn said:

“Credibility has two legs: the first leg of credibility is performance; the second leg of credibility is transparency — what I think, what I say, what I do is the same thing. So we have to be extremely transparent.”

And transparency amounts to more than just sharing good news with employees (there certainly wasn’t a lot of this during this challenging period for Nissan). It also meant Ghosn revealed to employees the reasons and reasoning behind a run of layoffs and plant closures.

And it worked. Nissan is now a classic turnaround story, as Ghosn saved the business without losing the company. And, as he puts it, this accomplishment really did come down to trust.

“For a turnaround process of this kind to work, people have to believe both that they can speak the truth and that they can trust what they hear from others. Building trust, however, is a long-term project; those in charge have to demonstrate that they do what they say they’ll do, and that takes time. But you have to start somewhere.”

Increasing Trust: How to Get There

Ghosn and the story of Nissan encapsulates some key trust factors leaders need.


This one should guide pretty much all your actions — transparency is a trust multiplier. Open up. Better communicate with employees. Bring them into the loop. If a difficult decision has to be made, let employees know. Be honest on major problems or difficulties your organization faces. And if the leadership team makes a mistake, such as misreading a growth opportunity, own up to it. Showing some humility and vulnerability when errors are made goes a long way.

Gather and consider feedback

Lower the drawbridge between management and staff. Give employees a way to contribute feedback on specific initiatives or general incremental improvements. Basically, let them in on major challenges that leaders are facing — especially if they affect employees.

An example here? Let’s say the leadership team is looking for ways to improve productivity and efficiency. Letting employees chip in ideas around process improvements is a great way to widen management’s knowledge base and better engage employees at the same time.

Be truthful

This is part of transparency, but it deserves being broken out on its own. Don’t dodge, obfuscate or sugarcoat things. Fact is, trust is one of those things that is hard to gain but easy to lose. To quote one of Warren Buffet’s many aphorisms: “It takes 20 years to build a reputation and five minutes to ruin it.” Same with trust.

And one lightning-quick way of ruining trust with employees is through mistruths — the misalignment of words and action. To build trust you must be truthful with others. The rule of thumb here: walk the talk and make your actions consistent with what your statements. It sure worked for Ghosn.

Recognize good work

If someone (or an entire team) has really knocked it out of the park, let them know. And if it’s a specific employee who has done something above and beyond the call of duty, don’t just let them know — tell their manager as well. Another way of thinking about this is that if someone is excelling and making excellent contributions in their work, then they deserve a “thanks” for a job well done — a simple gesture we do without thinking when getting help from a friend or when someone does us a good turn, but can forget to mention at the workplace.

Be your values

If you talk the talk you have to walk the walk. Be the leading example of the positive work culture that you want to see your employees believe in an adopt. This means, for example, making company priorities — such as continuous innovation, customer service or personnel growth and learning — your own. If there is a disconnect between a leader’s words and their actions, everyone will know — and this will impact trust and morale.

Want to learn more about employee trust?

For starters, read our informative blog post on why Trust is the Core of Employee Engagement.

And for even more, check out our awesome infographic on the link between Trust and Performance.

Harness the power of employee ideas.