Not glum, but great: Trust differentiates good workplaces from bad

Trust differentiates good workplaces from bad

As any exec running even a modest-size division can attest, there’s no trickier problem than keeping employees happy and productive. It’s too important to leave to chance. After all, without a talented and motivated team, there’s little chance of long-term success.

But how do you do it? Competitive compensation and benefits packages count for something, but they only go so far. How do you ensure employees come in every morning willing to work hard–not just to pay the bills, but because they actually believe in what your company does? Inspirational speeches and company-wide e-mails? Summer picnics?

Research shows it’s not so simple. Instead, it boils down to a single word: trust. When employees trust who they work for, they are happier and more productive. But trust must be built on a foundation of credibility, respect and fairness.

How to achieve those goals is the mission of San Francisco’s Great Place to Work Institute. Founded in 1991 by Robert Levering, who has been studying the world’s best workplaces for more than two decades, its surveys have formed the basis of Fortune’s 100 Best Companies to Work For since 1998. Its model is also used by the Financial Times and publications in Europe, Latin America and Asia.

Organizations identified as “high-trust” generally get more qualified applicants, experience lower turnover and health-care costs, higher levels of customer satisfaction, and greater innovation and risk-taking. There are also financial payoffs: independent analysis by academics, as well as investment-services firm Frank Russell Co., shows that Great Place to Work winners have higher productivity and profitability, higher return-on-assets, and better stock performance. Between 1998 and 2004, an equally weighted portfolio of Fortune’s publicly traded best workplaces (reset annually to adjust for changes to the list) had an annualized return of 15.61%, compared with the S&P 500’s 4.79%. A 2003 study found that cumulative stock returns of the 100 Best firms between 1995 and 2000 outperformed the index 376% to 193%.

None of this surprises Graham Lowe. A consultant based in Kelowna, B.C., and a former University of Alberta sociology professor who spent 25 years researching workplace issues, he’s an international expert on the complex relationships that drive motivation and productivity. Lowe conducted a two-year study with the Canadian Policy Research Network examining how employment relationships were changing, which helped make clear how important trust is–not only for creating job satisfaction, but also for improving performance. “This was the win-win,” says Lowe.

In April, Lowe established Great Place to Work Institute Canada, and he now plans to apply the same model for the first time to Canadian organizations. “The methodology is unique,” says Lowe, “because the trust index was developed not from the perspective of what it is that managers really want out of employees, but rather through hundreds of interviews with employees, who were asked, ‘What defines a really great place to work?'”

Lowe says the survey’s 57 questions, which usually take employees 10 minutes to complete, along with a management questionnaire, are “actionable”: execs get a clear picture of what to address. They’re also able to compare their organizations to others around the world.

For Lowe, it’s all about defining best practices. “If you really want to identify the fundamental underpinnings of both performance and quality of work life,” he says, “you need to look at trust.”

Great Place to Work Institute Canada and Canadian Business are conducting a Best Workplaces in Canada survey. See for details.