top of page
  • Writer's pictureDailyhuman

The $8 Trillion Dilemma for CEOs: Upskill Trust or Pay Costly Workforce Replacements?

Trust is the ultimate currency. It is the unseen mortar that binds together the bricks of interpersonal relationships, civic institutions, and shared beliefs. It is the basic ingredient that enables collective action and facilitates a functional, sometimes even harmonious society. Without trust, society unravels, rendering essential social contracts and mutual agreements unworkable. Despite being a foundational ingredient for a thriving society, trust in our institutions and each other is at an all time low across the globe. Globally, a majority of people believe they are being lied to by journalists (67 percent, up 8 points) and government leaders (66 percent, up 9 points), and nearly one out of every two respondents view government (48 percent) and media (46 percent) as divisive forces in society. [1]


CEOs face an $8 trillion dilemma that's closely related to the trends and opportunities identified in turnover analysis.


The absence of trust sows seeds of doubt, breeding polarization, fostering discord, and undermining the shared sense of reality that societies depend upon for stability. In the workplace, trust plays a similar role as it does in society, functioning as the bedrock of efficiency, creativity, and collaboration, enabling the interweaving of diverse talents and ideas into a seamless fabric of productivity and innovation. Money itself is based on trust. Without it, the gears of business would grind to a halt, choked off by suspicion and uncertainty.


Despite its pivotal role, trust is often underappreciated, misunderstood, and neglected in American workplaces, a truth underscored by the reality of today's in-person and hybrid work scenarios. The trust deficit is not merely an observation, but a pressing, costly concern demanding immediate attention from CEOs. Alarmingly, Gallup's research shows that only 38% of employees globally trust their leaders and confide in their colleagues' transparency and integrity. This trust vacuum bears profound repercussions - disengaged employees result in an annual productivity loss of roughly $8.1 trillion worldwide, which is 11% of the global GDP. Beyond economic impacts, the lack of trust sows seeds of dysfunctional, hostile work environments, jeopardizing organizational longevity. In this post, we'll delve into the trust landscape, examine factors contributing to this predicament, and suggest actionable strategies for CEOs to foster and enrich trust within their ranks. [2]


The dilemma CEOs face with workforce replacements is closely linked to the strategies to mitigate the cost of employee burnout.


Understanding the Cost of Low Trust in the Workplace


Acknowledging the role of trust is paramount before exploring ways to nurture it, especially considering that the costly trust deficit falls squarely within the CEO's sphere of influence. The erosion of trust carries substantial financial ramifications. For example, a company of 100 employees, each earning an average salary of $50,000, may face yearly turnover and replacement costs anywhere from $660,000 to $2.6 million. This staggering figure encapsulates the costs of recruitment, onboarding, training, and productivity losses. Workplaces plagued by a trust shortage often manifest signs of a "diseased" environment, teeming with low morale, high attrition rates, and suppressed innovation.


We recently finished reading Stephen M. R. Covey's "The Speed of Trust," which emphasizes trust as a vital ingredient in organizational success. Covey underscores that trust, although complex, is a learnable skill indispensable for swift and cost-efficient operations. When trust is scarce, projects tend to lag, and costs spiral. Conversely, a high-trust environment accelerates initiatives and curtails expenses. [3]


The CEO's dilemma over upskilling trust ties into how recognizing employees can revolutionize a company.



Balancing Act: Trusting Your Team means NOT Coddling Them


In recent years, companies have treaded lightly around younger employees, often resulting in a culture of coddling. This involves treating employees delicately, shielding them from challenging tasks, and providing special gifts and recognitions to ensure their happiness and satisfaction. While this approach may seem well-meaning, it is ultimately ineffective and harmful to both employees and the organization. Coddling workers creates a culture of entitlement, where employees come to expect special treatment and become resentful when they don't receive it.


Coddling undermines the idea of meritocracy, where employees are rewarded based on their performance and contribution. Additionally, it can lead to a lack of accountability, as employees may blame external factors for their failures instead of taking responsibility for their mistakes.


Trust in the workplace is integral to the functioning of an organization. It directly affects employee engagement, collaboration, innovation, profitability, and productivity. When employees trust their leaders and colleagues, they feel more comfortable taking risks, suggesting new ideas, and going the extra mile, all of which are key to business growth.


Let's delve deeper into how this connection works:


Employee Engagement: High-trust environments foster employee engagement. Engaged employees are more likely to be productive and committed to their work. According to a Gallup study, businesses with highly engaged employees see 21% greater profitability and 20% higher sales productivity compared to those with low engagement (Gallup, 2020).


Innovation: Trust encourages open communication and the exchange of ideas, promoting innovation. Google's Project Aristotle highlighted psychological safety, which is closely linked to trust, as the most important factor in successful teams. Teams that trust each other aren't afraid to explore innovative solutions, which can boost company performance (Google's Project Aristotle, 2015). [4]


Retention: Trust reduces employee turnover. Losing an employee can cost a company 33% of that employee's annual salary due to the expense of hiring and training new staff (Employee Benefit News, 2017). In high-trust companies, employees are more likely to stay, reducing these costs. [5]


Let's look at some practical examples:


The Wegmans Way: Wegmans, a regional supermarket chain, is renowned for its high-trust culture. The company has made Fortune's 100 Best Companies to Work For list every year since the list began in 1998, often ranking in the top five. The company's philosophy, "Employees first, Customers second," emphasizes treating employees with respect and fairness, fostering a high-trust environment. This has resulted in low employee turnover and high customer satisfaction, driving profitability and productivity (Fortune, 2020). [6]


Southwest Airlines: Known for its unique corporate culture, Southwest Airlines consistently ranks high in employee trust and engagement. The airline has managed to be profitable for 47 consecutive years (up until 2019), in an industry known for its volatility. Southwest's culture of trust and employee empowerment has been cited as a key factor in their success (Southwest, 2020). [7]


Salesforce: This tech company has frequently been rated as one of the best workplaces. Their focus on transparency and open communication has cultivated trust among employees. The result? Salesforce has seen steady growth in revenue and market share (Salesforce, 2020). [8]


The research and case studies strongly suggest that building a high-trust environment in the workplace is not just a moral imperative, but also a business one. Increasing trust should be seen as a significant investment in a company's future profitability and productivity.


Scalable Trust-Building Solutions for Complex Organizations


In today's rapidly evolving corporate landscape, complex organizations face the challenge of creating trust and a sense of belonging among their diverse, multigenerational workforce. Traditional approaches have proven limited in their effectiveness, prompting organizations to explore scalable solutions. In this section, we will explore three scalable solutions: corporate recognition programs, pulse surveys, and an approach that combines mindfulness and trust-building.


Scalable Solution: Corporate Recognition Programs


A scalable solution for corporate recognition programs involves leveraging technology to enhance the implementation and impact of these initiatives. By using digital platforms, organizations can streamline and standardize the recognition process, ensuring consistency across teams and departments. These platforms facilitate real-time feedback and peer-to-peer recognition, allowing employees to acknowledge and appreciate each other's contributions easily. Moreover, digital platforms enable organizations to track and analyze recognition data, providing valuable insights into employee engagement and performance.


However, it is important to consider the limitations of this solution. The reliance on technology may reduce the personal touch of recognition, which can be important for some individuals who value face-to-face interactions. Moreover, the effectiveness of tangible rewards in driving long-term engagement and motivation may still be limited, even with digital platforms. Organizations need to ensure that recognition programs go beyond material incentives and focus on intrinsic rewards, such as meaningful work and professional development opportunities.


Scalable Solution: Pulse Surveys


Pulse surveys are a scalable solution that enables organizations to gather real-time feedback and monitor employee engagement. One major advantage of pulse surveys is the ability to capture timely insights, allowing organizations to identify emerging trends and address issues promptly. The anonymous nature of these surveys encourages honest feedback, fostering a safe environment for employees to express their opinions openly. Additionally, the scalability of pulse surveys makes them suitable for large organizations with geographically dispersed teams.


However, pulse surveys have limitations that should be considered. Firstly, their brevity can limit the depth of feedback collected, making it challenging to address complex or nuanced issues. Moreover, frequent survey administration can lead to survey fatigue among employees, and if action is not taken on information gathered trust in an organization is actually eroded, not strengthened. Finally, relying solely on pulse surveys may lack the personal touch of face-to-face interactions, necessitating the need to supplement them with other communication channels to maintain a comprehensive understanding of employee experiences.


Scalable Solution: Mindfulness and Trust-Building


Dailyhuman's scalable solution combining mindfulness and trust-building offers significant advantages to prior approaches. By treating trust as a trainable skill, the framework focuses on long-term development rather than temporary fixes. The integration of mindfulness practices and brain science enables individuals to upgrade their brain's "default mode network," enhancing self-awareness and unlocking their full human potential. The use of generative AI and communication tools like SMS and WhatsApp allows for regular matching of participants, ensuring consistent practice and accessibility across industries.


One key benefit of Dailyhuman's approach is its emphasis on stimulating the production of neurotransmitters such as serotonin, dopamine, and oxytocin. By designing conversations to trigger the release of these chemicals, positive emotions are enhanced, leading to deeper connections and improved team dynamics. Additionally, the convenience and reach provided by technology make it easier for individuals to integrate trust-building practices into their daily lives.


However, it's important to consider limitations. The reliance on digital platforms may lack the personal touch of face-to-face interactions, potentially diminishing non-verbal cues and physical presence that are crucial for building trust. Furthermore, while neurochemical stimulation is beneficial, trust-building also requires factors like shared experiences, transparency, and consistent behavior. Dailyhuman's approach should be seen as a complement to these fundamental elements.


Building Trust: Inspiring Leadership Examples


Trust is a critical factor in business success, and effective leadership plays a key role in cultivating it. Let's explore the stories of Satya Nadella (Microsoft), Mary Barra (General Motors), Howard Schultz (Starbucks), and Marc Benioff (Salesforce) to see how they built trust in their respective companies.


Satya Nadella (Microsoft): Nadella assumed the role of Microsoft CEO in 2014, at a time when the company faced cultural and market challenges. He successfully transformed the internal culture by promoting a "learn-it-all" mindset, emphasizing empathy, continuous learning, and customer obsession. This cultural shift empowered employees to innovate and take risks, resulting in increased trust and substantial growth in market value (Source: "Hit Refresh" - Nadella's book). [9]


Mary Barra (General Motors): As CEO of General Motors in 2014, Barra confronted a trust crisis following the ignition switch scandal. She responded with transparency, establishing a victims compensation fund, addressing employee concerns through town halls, and holding accountable those responsible. Barra's actions restored trust and implemented changes to prevent similar issues from recurring (Source: "Road to Redemption: Lessons From the GM Ignition Switch Scandal," 2015, PR News). [10]


Howard Schultz (Starbucks): Schultz led Starbucks' turnaround in 2008 during a crisis caused by overexpansion and the financial downturn. He temporarily closed US stores to retrain employees on quality and introduced employee benefits, rebuilding trust through actions aligned with the company's values (Source: "Onward: How Starbucks Fought for Its Life without Losing Its Soul" - Schultz's book). [11]


Marc Benioff (Salesforce): Benioff advocated for "stakeholder capitalism," which involves serving employees, customers, and society as a whole. Initiatives like Salesforce's 1-1-1 philanthropic model built trust, and Benioff's vocal support for social issues enhanced his reputation (Source: "Trailblazer: The Power of Business as the Greatest Platform for Change" - Benioff's book). [12]


These examples highlight the importance of transparency, empathy, stakeholder advocacy, and tangible actions in building trust. CEOs continue to hold the power to move people and resources. By adopting these strategies, CEOs can enhance their company's reputation, foster loyalty, and improve financial performance.


Kim & Josh’s Collective Experience with Trust


Over the course of our combined half-century of experience, Kim and I have navigated a diverse range of leadership roles, from the uncertain terrain of startups to the established paths of well-established financial services companies. Despite the diversity of our experiences, there is a common thread that ties them all together - the invaluable power of trust.


Trust is not just an abstract virtue in our eyes; it forms the solid foundation upon which all high-performing teams are built. We have witnessed its role as a catalyst that drives employee retention, amplifies productivity, and ultimately strengthens profitability. It's that magical element that, when abundant, propels a team to function like a well-oiled machine. On the other hand, in its absence, even the most promising teams will falter.


In the dynamic world of startups, cultivating trust is an essential first step. As leaders guiding our teams into uncharted territories, encouraging them to work beyond the conventional 9-to-5, and adapt with agility, trust serves as the guiding light that steers us through rough seas. Over the years, we have relied on the strength of trust cultivated within our teams during numerous challenging times, enabling us not only to meet but exceed our own expectations.


Conversely, within mature and established organizations, trust plays a different but equally vital role. It acts as an antidote to resistance, breaking down barriers and enabling transformative changes. We have found that an environment steeped in trust is one that celebrates open communication, fosters innovation, and embraces calculated risks. Countless instances have shown us how trust within our teams has propelled us toward significant gains in productivity and profitability.


Regardless of the environment - whether it's a fledgling startup or a multinational corporation - we have learned that fostering trust is an ongoing process. It entails displaying authenticity, making tough decisions, and being transparent about them. It involves owning up to our mistakes, learning from them, and moving forward. We have seen that a culture of trust encourages everyone's voice to be heard and valued, from the newest interns to the seasoned executives.


Building trust, in our experience, is about consistently demonstrating that we care for our team's interests as much as our own, that their successes are our victories. We have sought to cultivate a culture where people feel safe, heard, and respected, and where a shared vision unites us all.


Reflecting on our collective 50 years of experience, the essence of our leadership journey can be distilled into this: trust is a non-negotiable component of any successful team. Regardless of the industry or team size, it is trust that transforms a group of individuals into a high-performing, cohesive unit. And it is this trust that ultimately fuels retention, productivity, and profitability. Looking back, we are confident that our unwavering focus on fostering trust has been the defining factor in our success.


The Ah-ha Moment


Trust is not an innate trait but a skill that organizations can cultivate over time. This realization challenges the common belief that trust is solely based on inherent characteristics. Building trust requires consistent behaviors, reliability, and ethical conduct, emphasizing the importance of integrity and accountability.


Picture this: within organizations, trust acts as a magical elixir, cultivating a positive work culture and boosting productivity. It unlocks the power of collaboration, innovation, and a strong sense of belonging. Now, here's the revelation: by integrating trust-building elements such as effective communication, empathy, consistency, competence, collaboration, and recognition into upskilling efforts, a remarkable transformation takes place.


Trust-building is not a mysterious art but a deliberate journey of intentional effort and continuous learning. As companies embrace this realization, they unlock a world of possibilities. Upskilling programs become catalysts, helping individuals develop and refine their trust-building skills. It's a game-changer, fostering a culture where trust, collaboration, and productivity thrive harmoniously within the organizational fabric.


Trust is not merely reserved for a chosen few; it's a skill that anyone can and must cultivate and master. By upskilling trust-building, organizations unlock the true potential of their workforce and create an environment where trust, productivity, and profitability reign supreme.


[1] Source: Edelman Trust Barometer 2023: Navigating a Polarized World (Edelman, 2023). https://www.edelman.com/trust/2023/trust-barometer

[2] Source: Gallup (2020) Highly engaged employees yield greater profitability and sales productivity [Gallup, 2020]. Gallup, 2020

[3] Source: Stephen M. R. Covey's "The Speed of Trust,"

[4] Source: Google's Project Aristotle (2015): Trust fosters innovation in successful teams [Google's Project Aristotle, 2015]. Google's Project Aristotle, 2015

[5] Source: Employee Benefit News (2017): Trust reduces employee turnover, saving costs [Employee Benefit News, 2017]. Employee Benefit News, 2017

[6] Source: Fortune (2020): Wegmans' high-trust culture drives low turnover and high satisfaction [Fortune, 2020]. Fortune, 2020

[7] Source: Southwest (2020): Southwest's trust-focused culture contributes to long-term profitability [Southwest, 2020]. Southwest, 2020

[8] Source: Salesforce (2020): Salesforce's transparency and trust-building efforts drive growth [Salesforce, 2020]. Salesforce, 2020

[9] Source: Nadella, S. (2017). Hit Refresh: The Quest to Rediscover Microsoft's Soul and Imagine a Better Future for Everyone. New York, NY: HarperBusiness.

[10] Source: PR News. (2015). Road to Redemption: Lessons From the GM Ignition Switch Scandal. Retrieved from [Provide the URL or database information if available]

[11] Source: Schultz, H., & Gordon, J. (2012). Onward: How Starbucks Fought for Its Life without Losing Its Soul. New York, NY: Rodale Books.

[12] Source: Benioff, M., & Adler, C. (2014). Trailblazer: The Power of Business as the Greatest Platform for Change. New York, NY: Currency.


Kommentare


Die Kommentarfunktion wurde abgeschaltet.
bottom of page