Building a System of Trust: Ten Hidden Secrets of Success in Employee-Owned Companies

By Martin Staubus and Robert Porter Lynch

Part 1 of 3

working together

The great potential of employee ownership to improve business performance lies in its capacity to bring people together to work as a team toward shared success. At role model employee-owned companies, we see people cooperating and collaborating, contributing their best efforts and ideas toward the goal of organizational success. This highly productive style of operating is actually held together by a key hidden element: trust.

It is trust that is the foundation of all cooperative relationships, whether in business or in our personal lives. And in “creating an ownership culture,” trust is the indispensable element.

One of these role-model companies is SRC Holdings, Inc. (formerly Springfield Remanufacturing Corporation), where CEO Jack Stack described some of the components of a trust system:

“It comes from being honest with people, from telling them about the realities of business, from having principles and sticking by them, from trying to be fair � by keeping our promises to one another, by living up to our mutual commitments. We’ve treated people like the capable, intelligent adults we know they are � we’ve created a society built around rules we all know and understand. There needs to be a fundamental change in the way people think about the business and its future � starting with the people at the top.” 1

Where does the high level of trust at these companies come from? What accounts for it? It may look very elusive, but in fact there is a clear framework that describes and accounts for the level of trust that exists in any organization. Here are some of the key elements that comprise a “trust system:”

1. Shared Vision and Purpose

In any organization where there is strong trust, there is invariably a strong commitment to a vision that creates value, meaning, purpose and commitment.

A shared strategic vision aligns teams onto one central target. This enables trust by ensuring that everyone has the same ultimate agenda, going in the same direction for the same reason. If there are diverse and conflicting agendas at work, the collaborative process required for personal commitment and innovation will be stifled.

Every person in a successful, high-performing business must know the answer to the foundational questions: Why does this organization exist? What are we trying to accomplish? The commitment to a powerful vision that defines the organization’s purpose constitutes what might be considered “institutional trust,” the faith one has in the organization, its goals, its operational integrity, its honesty and its value in the eyes of its stakeholders.

Every person holding down a job has a heart and soul that yearns for knowing that their daily labor contributes to something much more valuable than just a dollar in their pocket. They want to know that their job has some value, some meaning and purpose. This can range from the villainous (such as a crime ring) to the honorable (such as fixing truck engines, shuttling passengers, moving trains, etc.) and extending to the noble (such as finding a cure for cancer or reducing the impact of global warming). High-trust organizations are very clear about their honorable purpose.

2. Balancing Self-Interest versus Greater Good

When a team starts with honorable purpose, they agree to do the right things for the right reasons. Honorable purpose means we think consciously about balancing our own personal self-interest with the needs of others in our realm of influence.

No business or economic system can thrive over the long run if it places overwhelming emphasis on self-interest, as epitomized by the “greed is good” mantra on Wall Street that brought down the entire world’s economic order in 2008. On the other hand, neither have economic systems flourished that over-emphasized the total sacrifice of personal gain in favor of the greater good of the whole. There must always be a balance between the two, and most individuals are fully cognizant and capable of accepting and supporting this balance.

If the organization gets out of balance — a union strikes for its self-interest knowing the organization cannot afford its wage demand, or a leader strips the value out of a company by taking an inordinate amount of compensation, or a department refuses to cooperate with another — the imbalance will end in mutual disadvantage.

There is nothing inherently wrong about self-interest. But if everyone works exclusively in the name of self-interest, severe problems can erupt. In such a dog-eat-dog world, trust diminishes as everyone withdraws into their turtle shells to protect their individual interests. We trust people whom we can count on to respect our interests as well as their own — to look out for our “mutual” interests, or put another way, the “good of the organization.” Balancing self-interest with mutual interests is the essential commencement of trust building.

It is here that employee ownership makes a unique contribution — it holds the possibility of actually aligning self-interests with what’s for the greater good of all the stakeholders.

3. Honoring Differences, Respect and Integrity

Most organizations tend to minimize, obscure or disparage differences or impose control over differences by demanding “oneness,” or punishing those who do not conform. In high trust environments, honorable differences are cherished and respected. Southwest Airlines’ Colleen Barrett, president emeritus explained, “We want our employees to be themselves — this is a great freedom — we don’t want them to fall into cookie-cutter molds, we hire them as individuals, we want them to be themselves, and share that personality with their teammates and customers, not play a role — to be like they are at home.”

By encouraging and respecting an individual’s value as a contributor, team trust is built. And, by respecting others, the leader in turn earns respect. When you hear or read the word “trust” you will very often see it linked to the word “respect.” According to Jack Stack:

For “management to have credibility � there must be a minimum level of mutual respect and trust. People have to feel that, whatever your faults, you have some sensitivity to them and their problems, you value their contributions, you’ll offer them a fair shake. 2 You can’t have trust without honesty and openness.” 3

This is the essence of a high-trust organization — one that cherishes differences in thinking, while being intolerant of dishonorable actions. In turn, trust builds in an organization when people begin to see that their leaders are worthy of being trusted. That’s when pride grows — pride in the leadership’s character and competence, pride in the organization’s vision and purpose, pride in their teammates’ commitment to mutual interests and the greater good, and thus the ultimate trust — trust in oneself.

To be continued�

Note: Robert Porter Lynch, chairman emeritus of the Association of Strategic Professionals is one of the leading experts in the field of strategic alliances and collaborative innovation and author of the seminal books on these topics. He has led workshops for more than 25,000 senior executives and organizational managers.

A series of hands-on, interactive workshops featuring Robert Porter Lynch will be conducted in San Diego, June 22-24. For further information please visit

Friends of the Beyster Institute will receive a $150 discount.

1 Jack Stack, A Stake in the Outcome
2 Jack Stack, The Great Game of Business, p 39
3 Jack Stack, A Stake in the Game, p 48

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