[author: Matt Kelly]

Organizational trust may seem like one of the fuzzy concepts in corporate ethics and compliance, something nice to have when times are flush, but nowhere near as important as the command-and-control that companies must have when times are difficult.

That’s wrong. In fact, when we look at the hard choices businesses have had to make to survive the COVID-19 crisis, organizational trust has a material impact.

Organizational trust is the confidence employees have that their company will act in ways that are fair and aligned with their own ethical priorities. (And while we use employees for this definition, this holds true for shareholders, customers, business partners, and other stakeholders of any corporate enterprise, too.)

More simply, organizational trust is the employee’s belief that the corporate enterprise won’t act in some way that betrays their sense of what’s right. Even when they might not understand the full picture of what the company is doing, the employee follows the practices and standards of the company anyway, because they believe that their actions will serve a greater common good.

Frame organizational trust that way, its importance should become more clear. COVID-19 has heaped an enormous amount of uncertainty upon businesses large and small. Organizational trust will be the glue that senior executives use to keep the enterprise together as they restructure operations, implement new procedures — or, fundamentally, ask employees to make sacrifices during these difficult times.

Make no mistake, organizations will be asking for a lot.

Weighing the Demand for Trust

As businesses either push forward with essential operations or try to resume operations as states and countries ease their lockdowns, consider what companies might ask employees to do:

• Take pay cuts or furloughs
• Use common facilities such as lunchrooms or bathrooms
• Wash their hands or sanitize their office space frequently
• Work from home more often
• Use new software for tasks they’re now doing remotely
• Submit more reports about their work activities
• Consent to health checks
• Promise to maintain social distancing even outside the office

All of those things require organizational trust, as employees must trust that their personal sacrifice - spending extra time and effort doing tasks, or even giving up compensation - is not in vain. Employees must trust that furloughs and pay cuts (or in the worse case, layoffs) truly are necessary. Managers have to trust that employees are practicing social distancing off-hours, or handling data properly while people are working at home. Everyone will need to trust everyone else to tell the truth if they feel sick.

In other words, COVID-19 is making trust throughout the whole organization more important. Consider the alternative.

Organizational trust isn’t a nice-to-have when the budget allows. It is an imperative, must-have especially when times are chaotic and difficult. It is, really, one giant compensating control for the whole enterprise — the backstop the organization relies upon as management scrambles to assess risk, develop new policies and procedures, and then test those things to see how they do or don’t work.

Organizational Trust Requires Specific Steps

So how does a company achieve it? What specific elements are necessary to create that outcome of strong organizational trust?

Clear executive messaging. The executive team needs to be clear and honest with employees when talking about challenges during COVID-19. That demonstrates a respect for them, even if the news is bad. Even “we don’t know” is a good message to convey if that’s the case, because it shows openness and transparency.

If you want an excellent example of executive messaging that reflects those traits, read the letter AirBnB CEO Brian Chesky sent to employees as he was laying off 25% of the staff. It was an object lesson in honesty, clarity, and respect, even when every sentence was bad news.

Establish consistent policy, procedure and training. COVID-19 is forcing innumerable changes in how businesses operate on a daily, practical level — everything from extra log-in protocols for software accessed at home, to staggered start times at the factory floor, to new methods of interacting with customers in the store.

Employees will take that leap; research shows that the vast majority want their companies to succeed. But policy, procedure, and training will need to answer three questions clearly:

• What are we supposed to do?
• How are we supposed to do it?
• Why are we doing this?

The “why” is important here, because many responses to COVID-19 may be temporary or not as effective as management expected. The more we involve employees on why these changes are happening — the more they see the intended result — the more management can trust them to embrace change, or warn us when change isn’t working.

Reliable practices. By this, I mean that when employees engage with the company, they get the result they expect.

For example, when an employee reports a concern to managers, they expect corrective action rather than retaliation. Retaliation is a betrayal against the employee — hence retaliation is so corrosive to organizational trust.

Retaliation isn’t the only threat to reliable practices. Access controls to IT systems are supposed to work. Data is supposed to be correct.

Organizational trust is a two-way relationship, and delivering expected results is the company’s half of that equation. So in many mundane, routine ways, the company’s internal controls and business systems are crucial to fostering trust. (Which means internal audit is more important to organizational trust than one might assume, too.)

All of these elements must support each other. Tone from the top executives; support from management in the form of policy, procedure, and training; behind the scenes audits to assure that things perform as expected — they all need to weave together toward that desired outcome of more organizational trust.

That’s always been urgent, but COVID-19 makes organizational trust more urgent. No business will fare well without it.

View original article at Risk & Compliance Matters