How Building Trust Cuts Employee Turnover In Half

Are high-performing employees constantly walking out the door? It’s not just about the money. Zenger Folkman’s research reveals a surprising culprit behind employee turnover: trust. This article explores the powerful link between trust, engagement, and retention, providing actionable insights to build a culture of trust and slash turnover by 20%.

Zenger Folkman’s research has shown that employee turnover is an excellent litmus test of employee satisfaction and engagement. In the last two years, we have collected data from 18,459 employees on their intention to continue working for their current employer and their satisfaction with the organization as a place to work. The graph below demonstrates the correlation between those two factors. Those who are most satisfied are the least likely to leave the organization.

In recent years, turnover rates have been increasing in many industries, particularly sectors with high competition for talent or a strong demand for specialized skills. Higher pay may be tempting for most people, but working in an organization with an inclusive, high-trust culture and high engagement makes it difficult to trade one company for another just for more money.

Zenger Folkman’s research on trust leads us to conclude that trust, while a seemingly small factor, exerts an oversized influence. Trust is a key variable that enables organizations to be successful. High trust increases employee engagement and commitment. When employees trust their leaders and colleagues, they are more likely to be engaged, satisfied, and committed to their work. A high trust culture opens communication channels between colleagues and between employees and management. Lack of trust shrinks commitment and loyalty. In low-trust organizations, employees often describe their work as “day prison.” Trust breeds psychological safety, which in turn encourages risk-taking, sharing ideas, and expressing authenticity. Trust is the bedrock of an organization’s values and culture, and it significantly promotes loyalty.

The Team Trust Assessment

One research goal is to use assessment data to predict organizational outcomes. We created a team trust assessment that measures the level of trust in a team, including the three elements our research found that leverage trust. The three elements are:

· Relationships (are there positive relationships between people)

· Consistency (do we walk our talk)

· Expertise/execution (are we knowledgeable in our jobs, and can we execute)

The assessment also measures the level of employee engagement in a team.

A large retailer interested in improving the level of trust in their organization agreed to administer the assessment to teams in different locations across the organization. The senior leader in each unit and their direct reports completed the assessment. On average, eight direct reports completed the assessment in each location.

The organization is in the “big box” retail industry that experiences annual turnover that far exceeds most others. They hire untrained employees, often just out of school and often for their first work position.

As the graph below shows, locations in the bottom quartile of trust have employee engagement levels at the 20^thpercentile and 87% annual employee turnover. This is in contrast with those locations in the top quartile that have engagement levels at the 76^th percentile and 67% employee turnover. The Pearson Correlation Coefficient between trust and turnover is -.505, Sig. 0.001, and between trust and engagement is .717, Sig. 0.000.

Building Trust in Organizations

While many factors impact trust, our research discovered that three factors have the most significant influence and account for the majority of the variability in the data. As noted earlier, these three factors are consistency, relationships, and expertise/execution.

Consistency

Consistency is an essential element in any organization. When unethical behavior is NOT tolerated in any way, and team members insist on honest dealings with each other, that sets the precedent that consistent behavior is the rule. Consistency is rated high when everyone in the organization insists on honest dealings with each other and team members are confident that if they bring an ethical issue forward, it will be addressed. Another critical element of consistency is that people are valued regardless of background, age, race, or gender. High scores on consistency show up in situations where problems occur in the team, and responsibility is accepted rather than looking for someone to blame.

Relationships

Relationships in a team are enhanced when people are quick to praise and slow to criticize, and team members are appreciated when they put forth extra effort and do an excellent job. Handling conflicts also indicates much about an organizational culture. When team members get conflicts out on the table and resolve them constructively, a positive culture is created. Collaboration is also important. When efforts to work collaboratively are responded to positively and with enthusiasm by team members, the organization functions efficiently. Another critical element in relationships is assessed by how well team members support each other in improving their skills to perform their jobs. We have found that helping a colleague develop a new skill is an excellent way to build positive, lasting relationships with others.

Expertise and Execution

Trust is built when teams do everything possible to achieve their objectives on time and within budget. Execution is an essential element in trust. When each team member is held accountable for successfully accomplishing their part of the work, trust is generated. When team members do only enough work to keep their jobs, trust is eroded. Problems also need to be resolved quickly before they become a crisis. For trust to thrive, individual performance problems must quickly be addressed in each team. Teams also need to be effective at making the tough calls and decisions that are required for the team to operate effectively.

Impact on Trust

Our research on data from 350 teams found that teams with scores above the 75^th percentile on all three elements had an average trust score at the 89^th percentile. Teams rated at or below the 25^th percentile had a trust score at the 11^thpercentile.

What is interesting about trust is that all three of the elements are important, but a team does not need to be exceptional (e.g., above the 76^th percentile) to create high trust. We believe it is the interaction between skillful consistency, relationships, and expertise/execution that generates trust. In our research, we found that all three elements were highly correlated with both engagement and turnover. Lower effectiveness on any of the three elements can significantly erode trust.

As you think about trust in your team, are all three of the critical elements doing well? Which of the three needs improvement? The good news in Zenger Folkman’s research is that trust can be improved.