The Trust Factor: The Science of Creating High-Performance Companies (My 3 Takeaways)
What is the most essential function of leadership?
According to Komives, Lucas, & McMahon in “Exploring Leadership” (2013), leadership is “a relational process of people together attempting to accomplish change or make a difference to benefit the common good.”
In the words of Simon Sinek in “The Infinite Game” (2019), “Leaders are not responsible for the results. Leaders are responsible for the people who are responsible for the results.”
The most important function of leadership, therefore, is cultivating a positive and transformational culture.
Although this may seem like a soft and squishy idea on the surface, it is grounded in hard facts and science.
In his 2017 book, “The Trust Factor: The Science of Creating High-Performance Companies,” author Paul J. Zak, the founding director of the Center for Neuroeconomics Studies and professor of economics, psychology, and management at Claremont Graduate University, presents the biological evidence for the power of trust in organizations, with extensive examples and research from for-profit, nonprofit, and government organizations.
The evidence Zak offers is anything but “warm and fuzzy.” Zak and his research team drew blood samples from participants across a broad range of organizations, and then measured levels of oxytocin, a chemical produced by the brain not only as a result of receiving trust, but which also has been shown to predict the reciprocation of trust.
The results showed that building a high-trust culture demonstrated positive, powerful, and predictable results for individuals, organizations, and communities, which Zak referred to as the “triple bottom line.”
“The Trust Factor” is not just a collection of fanciful ideas from inside a lab; it is an evidence-based guide for building a culture of trust in any organization. The behaviors Zak describes throughout the book have been proven to produce oxytocin in people in a wide variety of organizations.
Zak identifies them with the acronym, “OXYTOCIN,” and they are:
Ovation recognizes colleagues who contribute to the organization’s success; it should be personal, tangible, timely, and unexpected. Ovation explains 67 percent of organizational trust.
eXpectation occurs when colleagues face a difficult, but achievable, challenge as a group, which engages the brain’s reward system. Consistent and regular feedback allows people to build neural pathways to accelerate future performance. eXpectation explains 83 percent of organizational trust.
Yield occurs when colleagues choose how to do a project, applying their own expertise and knowledge, and allowing them to make-and thereby learn from-their mistakes. Yield explains 51 percent of organizational trust.
Transfer enables self-management by permitting colleagues to craft their own jobs. Transfer also depends on Ovation, eXpectation, and Yield. Transfer explains 82 percent of organizational trust.
Openness shares information broadly and transparently with colleagues, solicits input, and values others’ perspectives. Openness explains 65 percent of organizational trust.
Caring is intentionally building relationships, facilitating connections, and prioritizing empathy among colleagues. Caring explains 84 percent of organizational trust.
Organizations Invest in colleagues when they enable whole person growth and work-life integration. Whole Person Reviews revolve around three questions: 1) Are you growing professionally? 2) Are you growing personally? and 3) Are you growing spiritually (or as a human being)? Invest explains 72 percent of organizational trust.
An organization is Natural when leaders are honest, human, and vulnerable. Leaders who are Natural accept responsibility for their mistakes. Natural explains 82 percent of organizational trust.
These eight factors explain 100 percent of the variations in organizational trust in Zak’s research, and each of the factors by itself accounts for between 51 percent and 84 percent of the variation in organizational trust, which means each of the factors themselves exists in relationship with other factors.
Here are my three biggest takeaways.
Takeaway #1 - Caring
Out of the eight OXYTOCIN behaviors Zak identified, Caring has the largest impact on organizational trust. As it turns out, Caring also is more effective than money at motivating employees, too.
In Chapter 7, Zak describes an experiment in which participants were informed they would complete their work for a stated wage. Then, one group was given 17 percent more money than the stated wage, and a second group was given personalized letters of appreciation for the work they would do.
The group who was given the unexpected raise were 21 percent more effective than the baseline. The group that received the personalized letters, however, were 30 percent more productive, and the personalized notes of appreciation, of course, cost absolutely nothing.
Likewise, a Stanford University study of software engineers found that the engineers who helped others with their projects were more productive than those who did not provide such help.
One of the reasons Caring is so desperately necessary is that testosterone, which inhibits the brain’s production of oxytocin, rises in both men and women as they ascend to leadership positions. As it limits oxytocin production, testosterone also encourages displays of dominance in the workplace, a phenomenon that Rolling Stones guitarist Keith Richards refers to as “lead singer syndrome.”
“If you’re the lead singer or the CEO, your elevated testosterone can turn you into a jerk because testosterone tells your brain the world revolves around you,” Zak said. “But extraordinary performance never happens alone… It’s just that testosterone-fueled alphas cannot help but take credit for everyone else’s work” (p. 128).
Thus, it becomes even more important for leaders to be self-aware, to embrace ideas of servant leadership, and to avoid even subtle displays of dominance.
Takeaway #2 - Natural
The eighth and final contributor to organizational trust is Natural, which is essential for those leaders who are striving to be self-aware servant leaders.
Zak observed that leaders of both sexes who have high social status have “chronically high testosterone,” (p. 157), which “increases selfishness and diminishes empathy.”
As such, one of the best ways to push back against your own biological tendencies is by being aware of those tendencies. Our brains desire energy-saving defaults and reflexes, which entrenches habits and make those habits resistant to change.
By inviting feedback and receiving it with grace and humility, you are not only improving your leadership efficacy, you are actively building rapport, trust, and goodwill with those around you.
Fallibility increases likability, according to Zak, who pointed out that experiments going back several decades have shown that people are put off by those who try to appear perfect in the eyes of others, but warm to those who appear flawed and vulnerable.
“Leaders who need to fortify their veneer of perfection often come off as insecure,” Zak said.
This level of relatability also shows why it is important for leaders to “walk the talk” when it comes to holding themselves accountable and implementing organizational values.
Zak cites McKinsey & Company, who found that half of organizational change efforts fail because leaders do not model new behaviors or foster insurmountable obstacles to change.
The dangers of corrosive cultures and toxic leaders were summed well by Reed Hastings, chief executive for Netflix, who said his company didn’t need “brilliant jerks” because the “cost to effective teamwork is too high.”
One of my personal favorite parts of this chapter was the comparison of the behaviors that differentiated good pilots from bad ones.
The effective pilots are those who (p. 167-168):
Recognize that crewmembers have personal limitations
Recognize that crewmembers have diminished personal decision-making capabilities in emergencies
Encourage other crewmembers to question decisions and actions
Are sensitive to the fact that personal problems might affect crewmembers’ performance
Openly discuss personal limitations
Recognize the need for the pilot flying the aircraft to verbalize planned actions and procedures
Recognize the role of the captain in training other crewmembers
Recognize that the flight deck atmosphere must be relaxed and harmonious
Recognize that management styles must vary with the situation and the make-up of crewmembers
Emphasize that the captain is responsible for coordinating crewmember responsibilities
Takeaway #3 - Joy = Trust x Purpose
Although Joy is not one of the eight contributors to organizational trust, it is the ultimate result of an organization that possesses high trust and high purpose. Zak said, “Joy is created from trust and transcendent purpose. The correlation between Trust x Purpose and Joy is 0.77” (p. 171).
The chapter begins with a description of “arbejdsglaede,” which is a Danish word for “joy at work.”
But is joy at work the result of hiring joyful people, or the result of a joy-producing culture at work?
It turns out that both are necessary parts of the equation.
“Experiments from my lab and others how that working in a high-trust culture modestly Increases Joy,” Zak said (p. 174), which are evidenced by releases of both oxytocin and dopamine. Purpose, on the other hand, provides a powerful oxytocin stimulus as a result of helping others.
“Organizations should not try to make people happy at work,” Zak said, “Joy is the result of working with trusted colleagues who have a transcendent purpose.”
Statements of purpose are insufficient; employees also must experience that purpose.
KPMG, for example, embarked on a project to find its own Purpose narrative and ended up giving their people countless opportunities to experience the organization’s purpose.
By building an app called, “10,000 stories,” KPMG gave its people opportunities to share their own viewpoints, with more than 42,000 stories at the time Zak wrote The Trust Factor. The employees who worked for leaders who communicated Purpose were 50 percent more motivated than those who worked for leaders who failed to do so, while also being about half as likely to leave the company. KPMG’s CEO, John Veihmeyer, remarked, “I’ve always believed that culture is the most important dimension of any CEO’s responsibility to an organization.”
In a lab-based experiment, researchers also found that participants who had a friend with them were able to endure the pain of keeping their hands in ice water longer than those who were by themselves.
Zak, who has done extensive work with Zappos (among others), found that 55 percent of productivity was the result of hiring friendly, sociable people, whereas the other 45 percent was the result of a strong sense of Purpose.
Zak closes the chapter with a few words from former Apple CEO, “The only way to do great work is to love what you do,” while stressing that such Joy is the result of high Trust and high Purpose.
