3 Tactics to Create a High-Trust Organization
Applications
Contributor / Douglas Conant
Clinical Professor of Executive Education
Chairman of the Kellogg Executive Leadership Institute
Kellogg School of Management / Leadership
Valuing a company is more than just focusing on facts and figures, it’s about valuing people. That’s the message Conant imparted to leadership at Campbell Soup, at a time when toxicity in the company was at an all-time high and trust at an all-time low. That guiding principle became essential among not only leadership, but trickled down to reshape the company culture in regards to character and competence.
Transcript
In the spirit of a conversation around building trust, it’s mission critical to understand that it’s not a nice-to-have; it’s a must-have.
If you have low trust, in the fullness of time, you will have low performance. If you have high trust, you have the potential to have high performance.
To deliver on that trust benefit, you have to do three things: you have to do your homework; you have to declare yourself; and you have to do what you say you’re going to do, ultimately, and you have to do it well.
Over my forty-year career and in all my study of leadership, I’ve never seen a low-trust culture perform at a high level in an enduring way.
In my experience, a high-trust culture is absolutely essential to deliver high performance.
Trust is an amorphous thing, but it’s really quite simple. There are two characteristics you need to bring to an engagement to engender trust: one, you have to have competence; two, you have to have character.
Let me dimensionalize that just a little bit: Competence says, “I know what I’m doing.” Character says, “I will do what I say I will do.”
And so, it’s not enough just to be a person of good character; you also have to know what you’re doing.
And so, in high-trust cultures, you have to have a collection of people that know what they’re doing and do what they say they’re going to do. That requires the third C between competence, character—the third C is chemistry.
That requires that they all play together well and work towards a common end. But the notion of trust is all about competence and character dealt with, with beautiful chemistry of a high-performance team.
BUMPER: A CEO’s challenge: rebuilding a low-trust organization
When I went to Campbell Soup Company, I had worked in the food industry for most of my career, I understood the structure of the industry and how it worked.
I didn’t know a lot about Campbell soup. What I did learn was it was an even more toxic and troubled place than I had imagined.
At Campbell Soup Company, the year before I came, they had ousted one CEO, they brought an old CEO back to hold things together, they were under investigation by the SEC and the Justice Department for something called “fraudulent conveyance,” and they had severely downsized the organization.
We actually measured the level of engagement using a Gallup Q12 survey and discovered that it was the lowest level of engagement that the Gallup survey had ever measured in Fortune 500 companies.
So, we had a huge trust deficit. That’s what needed to be addressed.
BUMPER: How trust rebuilt Campbell’s Soup
When we had fully assessed the situation in the first six months of my arrival at Campbell Soup Company, we relaunched the company under something called the “transformation plan.”
And we essentially did three things: We made sure we had done our homework and we had a plan going forward. We declared that plan; we declared ourselves boldly. And then we set about the process of implementing that plan and doing everything we said we were going to do.
I think when you’re running a large organization, it’s important to have a rallying cry or an umbrella idea that holds it all together, because there’s so many arms and legs to running an organization.
We came upon this idea that was brought to life the first hour of the first day I got to Campbell when I talked to the people, and I told them, “My core belief is that we can’t ask you to value our agenda as a company until we’ve tangibly demonstrated to you that we value your agenda as a person.
“In my experience, it just doesn’t work any other way. So, job one is for us to demonstrate to you that we value your agenda as a person.”
The employees helped shape that line, and within a week, we had something called the Campbell promise, which was an umbrella over everything we did.
And it was Campbell valuing people, people valuing Campbell, with acknowledgement that job one was for us to value all of our stakeholders in a tangible way.
And we worked that territory for ten years, and we went from having the lowest level of engagement in the Fortune 500 to the highest. And we went to record heights with our top 350 leaders.
See, I believe when you’re trying to build trust and engagement, you have to lead from in front. So, the leadership team—not just at the top but the next couple levels down—has to be fully engaged in the work and modeling the kind of behavior you’re asking from everyone else.
If you have low trust, in the fullness of time, you will have low performance. If you have high trust, you have the potential to have high performance.
To deliver on that trust benefit, you have to do three things: you have to do your homework; you have to declare yourself; and you have to do what you say you’re going to do, ultimately, and you have to do it well.
Over my forty-year career and in all my study of leadership, I’ve never seen a low-trust culture perform at a high level in an enduring way.
In my experience, a high-trust culture is absolutely essential to deliver high performance.
Trust is an amorphous thing, but it’s really quite simple. There are two characteristics you need to bring to an engagement to engender trust: one, you have to have competence; two, you have to have character.
Let me dimensionalize that just a little bit: Competence says, “I know what I’m doing.” Character says, “I will do what I say I will do.”
And so, it’s not enough just to be a person of good character; you also have to know what you’re doing.
And so, in high-trust cultures, you have to have a collection of people that know what they’re doing and do what they say they’re going to do. That requires the third C between competence, character—the third C is chemistry.
That requires that they all play together well and work towards a common end. But the notion of trust is all about competence and character dealt with, with beautiful chemistry of a high-performance team.
BUMPER: A CEO’s challenge: rebuilding a low-trust organization
When I went to Campbell Soup Company, I had worked in the food industry for most of my career, I understood the structure of the industry and how it worked.
I didn’t know a lot about Campbell soup. What I did learn was it was an even more toxic and troubled place than I had imagined.
At Campbell Soup Company, the year before I came, they had ousted one CEO, they brought an old CEO back to hold things together, they were under investigation by the SEC and the Justice Department for something called “fraudulent conveyance,” and they had severely downsized the organization.
We actually measured the level of engagement using a Gallup Q12 survey and discovered that it was the lowest level of engagement that the Gallup survey had ever measured in Fortune 500 companies.
So, we had a huge trust deficit. That’s what needed to be addressed.
BUMPER: How trust rebuilt Campbell’s Soup
When we had fully assessed the situation in the first six months of my arrival at Campbell Soup Company, we relaunched the company under something called the “transformation plan.”
And we essentially did three things: We made sure we had done our homework and we had a plan going forward. We declared that plan; we declared ourselves boldly. And then we set about the process of implementing that plan and doing everything we said we were going to do.
I think when you’re running a large organization, it’s important to have a rallying cry or an umbrella idea that holds it all together, because there’s so many arms and legs to running an organization.
We came upon this idea that was brought to life the first hour of the first day I got to Campbell when I talked to the people, and I told them, “My core belief is that we can’t ask you to value our agenda as a company until we’ve tangibly demonstrated to you that we value your agenda as a person.
“In my experience, it just doesn’t work any other way. So, job one is for us to demonstrate to you that we value your agenda as a person.”
The employees helped shape that line, and within a week, we had something called the Campbell promise, which was an umbrella over everything we did.
And it was Campbell valuing people, people valuing Campbell, with acknowledgement that job one was for us to value all of our stakeholders in a tangible way.
And we worked that territory for ten years, and we went from having the lowest level of engagement in the Fortune 500 to the highest. And we went to record heights with our top 350 leaders.
See, I believe when you’re trying to build trust and engagement, you have to lead from in front. So, the leadership team—not just at the top but the next couple levels down—has to be fully engaged in the work and modeling the kind of behavior you’re asking from everyone else.
Related Videos
Trust as the Essential Ingredient in Influence: A Leadership Perspective
Applications
Contributor / Harry Kraemer
Harry Kraemer
Leadership
Leadership
When one talks about leadership, sometimes people will say, "Well, I’d really love to be a leader, but I don’t have anybody reporting to me."
One of the key things about leadership is that leadership really has nothing to do with organizational charts and titles; leadership has everything to do with the ability to influence people.
And the only way you can influence people is you have to be able to relate to people.
And if you’re going to relate to people, the only way that’s going to happen is through trust.
The more trust that you can develop, the more you’ll be able to relate to people, influence people, and lead people.
And as I always remind folks, the people that are the leaders literally exhibit leadership long before, long before they have anybody reporting to them.
And I often tell the story that sometimes in companies, there’s this view of, "Boy, I’d really like to get started, but I can’t yet. We have to wait for some group of people.” You say, “Well, who do we have to wait for?"
Well, there’s this infamous group of people that seems to exist in most companies that get referred to as "those guys." There’s this magical group of men and women called "those guys we have to wait for."
And as I try to remind people who want to be leaders, when do you become a leader? You become a leader as soon as you realize, "I am one of those guys. I’m one of the men or women who’s going to make a difference.
"Why? Because I’m going to establish relationships based on trust and have an enormous impact on the organization regardless of my level, regardless of my title."
Bumper: 4 Ways to Establish Trust as a Values-Based Leader
From my perspective, if you’re the CEO of an organization—whether it’s 10 people or 50,000 people—you are one of the people (and I stress one of the people) responsible for building trust with customers, partners, suppliers.
As the former CEO of Baxter Healthcare, I would always get asked the question, "Boy, how do you deal with all these stakeholders? You have your team members, you have customers, you have suppliers, you have society, you have shareholders. Boy, there’s got to be a whole lot of conflicts between these."
My perspective is, if you’re a value-based leader and you’re focused on building trust, you actually realize these are not in conflict. In the bigger picture, it’s all in exactly the same direction.
To the extent somebody wants to be a value-based leader and really establish trust, my view is there’s four things that you need to focus on as a leader.
Number one, you need to become self-reflective. You need to start to think about, "What are my values? What do I stand for? What’s my purpose? What really matters?"
Number two, I have to focus on developing a balanced perspective. And when I say "a balanced perspective," many people have very, very strong opinions; the problem is they have virtually no understanding of other perspectives.
But the value-based leaders takes the time to understand all sides of the story. They establish trust because they demonstrate they really care about what each person has to say.
Number three, a value-based leader focuses on what I refer to as "true self-confidence." They know what they know; they admit what they don’t know; they’re a learning person.
And the fourth and final key part of being a value-based leader is genuine humility. In genuine humility, you realize every single person matters.
And if you want to establish trust in an organization, you don’t take the view, "Well, I’m a director level now. Well, these people are below me." No, nobody’s below you.
You as a leader are the person who’s below because you realize every single person matters. That isn’t just a nice thing to say; you actually believe it.
And to the extent you can make progress on becoming a little more self-reflective, establish more balance, have true self-confidence and genuine humility, your ability to build relationships and trust in the organization will truly put you on the path to becoming a value-based leader.
One of the key things about leadership is that leadership really has nothing to do with organizational charts and titles; leadership has everything to do with the ability to influence people.
And the only way you can influence people is you have to be able to relate to people.
And if you’re going to relate to people, the only way that’s going to happen is through trust.
The more trust that you can develop, the more you’ll be able to relate to people, influence people, and lead people.
And as I always remind folks, the people that are the leaders literally exhibit leadership long before, long before they have anybody reporting to them.
And I often tell the story that sometimes in companies, there’s this view of, "Boy, I’d really like to get started, but I can’t yet. We have to wait for some group of people.” You say, “Well, who do we have to wait for?"
Well, there’s this infamous group of people that seems to exist in most companies that get referred to as "those guys." There’s this magical group of men and women called "those guys we have to wait for."
And as I try to remind people who want to be leaders, when do you become a leader? You become a leader as soon as you realize, "I am one of those guys. I’m one of the men or women who’s going to make a difference.
"Why? Because I’m going to establish relationships based on trust and have an enormous impact on the organization regardless of my level, regardless of my title."
Bumper: 4 Ways to Establish Trust as a Values-Based Leader
From my perspective, if you’re the CEO of an organization—whether it’s 10 people or 50,000 people—you are one of the people (and I stress one of the people) responsible for building trust with customers, partners, suppliers.
As the former CEO of Baxter Healthcare, I would always get asked the question, "Boy, how do you deal with all these stakeholders? You have your team members, you have customers, you have suppliers, you have society, you have shareholders. Boy, there’s got to be a whole lot of conflicts between these."
My perspective is, if you’re a value-based leader and you’re focused on building trust, you actually realize these are not in conflict. In the bigger picture, it’s all in exactly the same direction.
To the extent somebody wants to be a value-based leader and really establish trust, my view is there’s four things that you need to focus on as a leader.
Number one, you need to become self-reflective. You need to start to think about, "What are my values? What do I stand for? What’s my purpose? What really matters?"
Number two, I have to focus on developing a balanced perspective. And when I say "a balanced perspective," many people have very, very strong opinions; the problem is they have virtually no understanding of other perspectives.
But the value-based leaders takes the time to understand all sides of the story. They establish trust because they demonstrate they really care about what each person has to say.
Number three, a value-based leader focuses on what I refer to as "true self-confidence." They know what they know; they admit what they don’t know; they’re a learning person.
And the fourth and final key part of being a value-based leader is genuine humility. In genuine humility, you realize every single person matters.
And if you want to establish trust in an organization, you don’t take the view, "Well, I’m a director level now. Well, these people are below me." No, nobody’s below you.
You as a leader are the person who’s below because you realize every single person matters. That isn’t just a nice thing to say; you actually believe it.
And to the extent you can make progress on becoming a little more self-reflective, establish more balance, have true self-confidence and genuine humility, your ability to build relationships and trust in the organization will truly put you on the path to becoming a value-based leader.
Rationality and Reciprocity in Trust: Key Findings
Research
Contributor / J. Keith Murnighan
J. Keith Murnighan
Management
Reciprocity,Breaches,Social Psychology,Reputation Management
BUMPER: Key Research in the Discipline
There have been a bunch of articles on trust that are really important. In 1995, Mayer, Davis, and Schoorman wrote a theory paper on trust that introduced integrity, competence and benevolence as the three critical elements of trust.
Prior to 1995, there had been very little research on trust, for no good reason. Early ’60s and ’70s, there was a lot of work on personality and trust, and trust propensities, and how likely it is someone will trust.
And people would answer questions like, “I believe most people are honest” and other questions like that, and they would try and relate people’s responses to those to their behavior.
And there were moderate predictability but not very impressive. I think that’s kind of why the research on trust dissipated after the early ’70s.
Mayer, Davis and Schoorman were great at coming up with a very noteworthy article that said, “Let’s start studying trust again.”
And so, since the ’90s, there’s been an enormous amount of work on trust.
BUMPER: Trust and Rationality
Gary Alan Fine in our sociology department has written a book on the Minnesota Mycological Society.
And one of the things that he focuses on in this book that relates to trust is that new members of the society — after they’ve gone out mushroom hunting, they come back, they cook their mushrooms and eat them — new members will eat other people’s mushrooms when they haven’t even met the other person. Old members will not.
So, new members want to join, want to become part of the group, want to become members, want to be well thought of, so they say, “yes,” when they’re offered mushrooms that they don’t recognize by someone they’ve never met.
It’s pretty darn dangerous! People don’t choose theirs and are easier to pass it up when they’re already established members — pretty cool.
BUMPER: Trust and Reciprocity
“Attributions of Trust and the Calculus of Reciprocity” — one of my favorite article titles — Madan Pillutla and Deepak Malhotra and I varied how much trustors trusted and then observed how much trustees responded and found very clear indications that the more you trust, the more people respond and reciprocate, especially when they think you’re doing it in a smart way.
That was one of our first studies, and I just thought, very neat and clean and tells us a lot about the trust-reciprocation process.
There have been a bunch of articles on trust that are really important. In 1995, Mayer, Davis, and Schoorman wrote a theory paper on trust that introduced integrity, competence and benevolence as the three critical elements of trust.
Prior to 1995, there had been very little research on trust, for no good reason. Early ’60s and ’70s, there was a lot of work on personality and trust, and trust propensities, and how likely it is someone will trust.
And people would answer questions like, “I believe most people are honest” and other questions like that, and they would try and relate people’s responses to those to their behavior.
And there were moderate predictability but not very impressive. I think that’s kind of why the research on trust dissipated after the early ’70s.
Mayer, Davis and Schoorman were great at coming up with a very noteworthy article that said, “Let’s start studying trust again.”
And so, since the ’90s, there’s been an enormous amount of work on trust.
BUMPER: Trust and Rationality
Gary Alan Fine in our sociology department has written a book on the Minnesota Mycological Society.
And one of the things that he focuses on in this book that relates to trust is that new members of the society — after they’ve gone out mushroom hunting, they come back, they cook their mushrooms and eat them — new members will eat other people’s mushrooms when they haven’t even met the other person. Old members will not.
So, new members want to join, want to become part of the group, want to become members, want to be well thought of, so they say, “yes,” when they’re offered mushrooms that they don’t recognize by someone they’ve never met.
It’s pretty darn dangerous! People don’t choose theirs and are easier to pass it up when they’re already established members — pretty cool.
BUMPER: Trust and Reciprocity
“Attributions of Trust and the Calculus of Reciprocity” — one of my favorite article titles — Madan Pillutla and Deepak Malhotra and I varied how much trustors trusted and then observed how much trustees responded and found very clear indications that the more you trust, the more people respond and reciprocate, especially when they think you’re doing it in a smart way.
That was one of our first studies, and I just thought, very neat and clean and tells us a lot about the trust-reciprocation process.
Trust in Leadership: 3 Lessons in Empowering Your Team
Applications
Contributor / Sanjay Khosla
Sanjay Khosla
Consumer Products
Leadership
Blank checks is all about trust: trusting leaders to do the right thing, to take ownership, and yet be accountable for results.
How do these blank checks really work? There are three guidelines. The first is, you select the leaders whom you really trust (and the teams) and give them a really big target, let them dream big. And these targets have to be achieved in a very short period of time.
The second is, the leader and the team puts together a short business proposal, asking for the resources that would be needed along with clear deliverables and milestones.
And the third guideline is to nurture these teams, make sure that they have an environment where they can succeed, and then monitor progress against milestones.
BUMPER: Case Study: Oreo
Let’s take an example; let’s take the case of Oreo. Now, Oreo is the number one biscuit in the world by far. Oreo is over 100 years old. But for 95 years, Oreo was spectacularly unsuccessful outside the U.S. — and certainly not for a lack of trying.
So, we called the Oreo team, and we said, “We know currently it’s not doing well in countries like China and Indonesia and various other parts of the world — it’s not doing well. Just figure out what do you want to do, what resources do you want to use, take a blank check, and go.”
And then they realized, why is it that it’s not selling so well in various countries around the world, like China? And they found that, very often, the American Oreo was too sweet, too big, the price points were too different.
And they started experimenting, then, with a number of different products, like Green Tea Oreo, wafers. Half these products failed.
And that was okay. That was really okay because the whole idea here was to give them freedom within the framework of keeping the Oreo essence core around the world but then getting local products, which delight local consumers.
As a result of that blank check, Oreo went from a revenue of about 200 million dollars outside the U.S. to over a billion dollars in revenue in six years. More importantly, gross margins outside the U.S. were very healthy.
BUMPER: Three Lessons from Blank Checks
So, what are the lessons that one can learn from giving blank checks? And again, this is equally applicable to small companies and large companies.
The first is, you get people, you trust people, to do the right thing, and you make them act as owners. The second is that this signal of trust goes all over the organization, of empowerment, but yet they are accountable for results.
And the third is not all blank checks succeed; very often, they fail because if everything is going well, something’s horribly wrong. The important part there is, if a blank check experiment fails, not to penalize the leader or the teams, provided they’ve learned the lessons from the project.
That, again, is a signal of trust — trusting people always to do the right thing and making sure, then, you celebrate not only successes but also celebrate and learning from failures.
Over years of experimenting with blank checks, we found that, in companies, you have a choice: you can either be cozy, or you can trust people and get them to fly.
How do these blank checks really work? There are three guidelines. The first is, you select the leaders whom you really trust (and the teams) and give them a really big target, let them dream big. And these targets have to be achieved in a very short period of time.
The second is, the leader and the team puts together a short business proposal, asking for the resources that would be needed along with clear deliverables and milestones.
And the third guideline is to nurture these teams, make sure that they have an environment where they can succeed, and then monitor progress against milestones.
BUMPER: Case Study: Oreo
Let’s take an example; let’s take the case of Oreo. Now, Oreo is the number one biscuit in the world by far. Oreo is over 100 years old. But for 95 years, Oreo was spectacularly unsuccessful outside the U.S. — and certainly not for a lack of trying.
So, we called the Oreo team, and we said, “We know currently it’s not doing well in countries like China and Indonesia and various other parts of the world — it’s not doing well. Just figure out what do you want to do, what resources do you want to use, take a blank check, and go.”
And then they realized, why is it that it’s not selling so well in various countries around the world, like China? And they found that, very often, the American Oreo was too sweet, too big, the price points were too different.
And they started experimenting, then, with a number of different products, like Green Tea Oreo, wafers. Half these products failed.
And that was okay. That was really okay because the whole idea here was to give them freedom within the framework of keeping the Oreo essence core around the world but then getting local products, which delight local consumers.
As a result of that blank check, Oreo went from a revenue of about 200 million dollars outside the U.S. to over a billion dollars in revenue in six years. More importantly, gross margins outside the U.S. were very healthy.
BUMPER: Three Lessons from Blank Checks
So, what are the lessons that one can learn from giving blank checks? And again, this is equally applicable to small companies and large companies.
The first is, you get people, you trust people, to do the right thing, and you make them act as owners. The second is that this signal of trust goes all over the organization, of empowerment, but yet they are accountable for results.
And the third is not all blank checks succeed; very often, they fail because if everything is going well, something’s horribly wrong. The important part there is, if a blank check experiment fails, not to penalize the leader or the teams, provided they’ve learned the lessons from the project.
That, again, is a signal of trust — trusting people always to do the right thing and making sure, then, you celebrate not only successes but also celebrate and learning from failures.
Over years of experimenting with blank checks, we found that, in companies, you have a choice: you can either be cozy, or you can trust people and get them to fly.