Proof that TRUST results in financial performance

Most of us know intuitively that trust, collaboration, and leadership make for more successful organizations. But what if we could prove it? The great news is, the data is IN! When we get rid of fear based behaviors, when we can trust and collaborate and work from a positive perspective, that UNFEAR results in increased shareholder value.

Interaction Associates launched a powerful survey in 2009 on Trust in Business. To take this year’s survey click HERE.

There are several significant differences between high-trust organizations and other organizations. High-trust organizations scored “extremely or very effective” in the following important performance areas, as compared with other organizations.

High-trust organizations are:

Better able to attract deploy and develop talent
Better at achieving innovation, creativity, and entrepreneurship
More likely to exhibit organizational behavior that is consistent with company values/ethics
Better able to retain key employees
Better at developing customer loyalty/ retention
More likely to be effective at people and process aspects of collaboration than other organizations.

In addition, high levels of trust correlate with high levels of effective leadership and collaboration inside organizations.

High trust organizations are much more likely to describe their organizations as “highly collaborative” (87 percent vs. 24 percent others) and as organizations with “effective leadership” (91 percent vs. 35 percent).
In addition, 93 percent of respondents from high trust organizations trust others based on “their contribution to our shared commitment and responsibility” vs. 52 percent of other organizations.

The most exciting thing to come out of this research in my perspective is that there is now proof that high trust, high collaboration organizations create more positive financial outcomes.

Interaction Associates looked at the seven publicly traded companies in both the top 10 percent and bottom 10 percent of the surveyed companies. In an analysis using Yahoo! Finance, data drawn from portfolios of these publicly traded companies showed sharp differences in the earnings and P/E ratios over the past year. On average, high performing companies had earnings and P/E ratios superior to those in the bottom 10 percent, and the numbers were significant.

Earnings
Low Performers – $.21 High Performers + $2.72

Price/ Earnings Ratio
Low Performers 14.67 High Performers 18.85

That amounts to a 28.5 percent premium for the seven highest performing companies.

For more information or to download last year’s research results, visit this page: Building Trust In Business

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About karlinsloan

Karlin Sloan has committed herself to finding out what makes great leaders tick, and to supporting leaders to be the change they wish to see in the world. As a corporate citizen she is an advocate for triple-bottom-line reporting, for creating sustainable ways of working and living, and for creating positive organizational communities that work together for the greater good. She is the author of the acclaimed business book Smarter, Faster, Better; Strategies for Effective, Enduring, and Fulfilled Leadership which has been translated into Thai and Russian, UNFEAR: Facing Change in an Era of Uncertainty, and co-author of the 2012 book Lemonade: The Leaders Guide to Resilience at Work. For more information see www.karlinsloan.com or www.theresilienceproject.net
This entry was posted in Executive Coaching, fear at work, leading people, leading teams, positivity, trust, unfear. Bookmark the permalink.

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