Building trust from the top down

There are plenty of examples in recent years, of corporate crises where the outcome could have been avoided with a greater fundamental focus on trust, says Ryan, citing Boeing as an example. “I think there is absolutely an imperative for business to step up on the trust agenda,” he says.

Ryan refers to the work of Frances X Frei, a Harvard Business School professor. Frei is co-author of Move Fast and Fix Things: The Trusted Leader’s Guide to Solving Hard Problems, and was brought into Uber as Senior Vice President of Leadership and Strategy, as the US company struggled with culture problems during its hyper-growth.

Frei describes three component parts of trust: authenticity; empathy; and having rigour in your logic. In any environment, when all three components are working, there is great trust. If one or more of the three components is faulty, however, trust is seriously threatened.

Ryan applies Frei’s framework to boards and board effectiveness, substituting corporate strategy for individual logic. As he points out, once a board understands the components underpinning trust, it can be ready to act if one of the legs of the three-legged trust stool begins to wobble.

In the boardroom, empathy is tied up with authenticity. Ryan poses a compelling question to all board members: “Do you care? Fundamentally, do you care about this company?”

Boards and board members that are disinterested or disengaged are doing a disservice to their companies. In practical terms, board members who are on their phones in meetings or not fully contributing, are red flags. “If the board is arriving in, box-ticking, not supporting management, not challenging management, how does that work?” Ryan asks.

All viewpoints should be heard, even – or especially – ones that may be in a minority. As Frances Frei notes, it is much easier to reward people who say something you were going to say, as opposed to people whose opinion is entirely different from yours.

That matters because “empathy comes top-down”, says Ryan. “If you’ve got a board that lacks empathy in terms of how they engage with each other and with the management team, then that flows down through the organisation.”

Ultimately, it can flow on to how customers are treated and how other stakeholders perceive the company. There are many examples of those factors having a direct impact on the bottom line and a company’s share price. That’s a spiral that can be difficult to reverse.  

Given the importance of the three components of trust, organisations should not expect them to look after themselves, says Ryan. From a board effectiveness point of view, authenticity, empathy, and strategy should be regularly held up to the light.

“In particular, I think empathy is a proxy for being respectful and interested in the human interactions i.e., the actual meeting,” says Ryan. “One thing I hear board members complain about is the length of board meetings. But the higher the empathy level at meetings, the shorter the meeting will be because everyone is tuned in, focused on the human interaction, with no distractions.”

He cautions, however, that trust cannot be skin-deep. “You hear CEOs talking publicly about wanting to be the most trusted company, but you shouldn’t start by outwardly selling it as a marketing tool. If you deal with the inward components of it – which are absolutely board-led – it becomes part of culture. That’s far more powerful.”

Like many of the most important elements of board performance, trust can be hard to measure. “It is intangible, but you know when you’ve got it right,” Ryan concludes. “And your stakeholders certainly know when you’ve got it wrong.”