The Business Case for a High-Trust Culture

GREAT PLACE TO WORK®

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High-Trust Workplaces are Better for Business

There is a strong connection between a high-trust culture and business success. Our 30 years of research and data from over 100 million employees proves high-trust workplaces see larger returns to the bottom line, higher levels of innovation, customer and patient satisfaction, employee engagement, and organizational agility. Leaders who care deeply about the financial well-being of their business, should make building a high-trust company culture a top priority.

For 30 years, Great Place to Work® has studied and recognized organizations with high-trust cultures, in part through our Best Workplaces™ lists published in Fortune.

For these companies, a defining feature of being recognized as a great workplace is a high level of organization-wide trust, as reported by employees. This research, along with findings from various independent research groups, illustrate that high levels of trust can be a critical strategic advantage for organizations across industries, sizes, and locations.

Strategies to measure and boost engagement alone have little impact on long-term retention and performance, whereas cultivating a high-trust culture is a proven driver of several business outcomes:

  • Stronger Financial Performance
  • Greater Stability during Economic Downturns
  • Lower Levels of Voluntary Turnover

Demystifying High Trust

So what is a high-trust culture? It is a workplace where trust-based relationships are highly valued.

Initially, trusting workplace relationships are built and nurtured between leaders and employees. However, a trust-based approach also has a notable impact on customers, investors, and the community at large, which further drives experiences of pride and camaraderie. While engagement metrics primarily look at employee sentiment at a point in time, trust measures are based on the drivers of employee attitudes, proving to be more predictive.

In our research, we have found that employees experience high levels of trust in the workplace when they:

  • Believe leaders are credible (i.e., competent, communicative, honest)
  • Believe they are treated with respect as people and professionals
  • Believe the workplace is fundamentally fair

 

Stronger Financial Performance

 

According to independent investment firm FTSE Russell, comparative cumulative stock market returns among the publically-held Fortune 100 Best Companies to Work For® are nearly 3x greater than the market average.

Additional independent research shows the bottom-line benefits associated with a high-trust culture:

  • An independent study of Fortune 100 Best Companies to Work For® found that great workplaces achieved superior results over a several-year period across metrics including: operating income per employee, operating margin, growth rate, return on assets, and Tobin’s Q (the ratio between an asset’s market and replacement value).1
  • Great Place to Work® global research shows that bothin the U.S. and internationally, companies with high-trust cultures lead to impressive performance records. For example, a portfolio of India’s Best Workplaces outperformed India stock market indices by a factor of nearly four during a recent five-year period.
  • A four year-research project led by Alex Edmans of the London Business School examined the link between employee well-being and financial performance across the high-trust companies recognized by Great Place to Work® and Fortune.2 Edmans found employee well-being at these companies preceded positive financial performance, rather than the other way around.
“The 100 Best Companies to Work For in America delivered stock returns that beat their peers by two to three percent per year over a 26-year period,” said Edmans in a TedX Talk on the topic. “Simply put: companies that treat their workers better do better. And this fundamentally changes the way that managers should be thinking about their workers.”3

Greater Stability During Economic Downturns

Organizations that provide the most inclusive, high-trust culture for all their people are the ones most likely to avoid Flatlining during a recession.

Companies That Did Well During the Great Recession

The S&P 500 suffered a 35.5 percent decline in stock performance from 2007–2009. A lot of companies lost a lot of value — but they didn’t all share evenly in the pain.

Companies in our study whose Key Employee Groups had very positive experiences posted a remarkable 14.4% gain.

Take a moment to let that sink in: In a recession, these companies saw their performance improve. For that group of 69 “Thriving” companies, gains started before the downturn and continued well past it as competitors struggled.

From January 3, 2006, to February 1, 2014, the Thriving group saw their stock performance increase 35%, while the S&P 500 had just a 9% gain. These companies didn’t merely outperform the typical business; they blew it out of the water, yielding a gain of roughly 4 times that of the S&P 500.

*Our study of the Great Recession considers two entire years of stock performance, from Dec. 2007 to Dec. 2009. The official definition of the Great Recession is from Dec. 2007 to June 2009.”

The Work Experience of Key Employee Groups Unlocks Performance

At Thriving companies, five Key Employee Groups were having positive, high-trust experiences around inclusivity, innovation, fairness and integrity. The key groups of employees are:

  • Women
  • Front-line workers
  • Hourly male workers
  • Long-tenured employees
  • People of color**

The daily work experiences of people in these groups predicted how well organizations fared during the Great Recession.

We also found that particular aspects of the work experience were vital for those Key Employees:

  • Treated as a full member of organization
  • Meaningful opportunities to innovate
  • Management delivers on promises
  • Promotions are fair
  • People are welcomed to new teams

Our latest research indicates that the same applies to the global coronavirus recession that began in 2020.

** By people of color, we are referring to people who identify as African American or Black, American Indian or Alaskan Native, Asian, Hispanic/Latinx, Native Hawaiian or other Pacific Islander, or identify with two or more races.

Lower Levels of Voluntary Turnover

Each year, the Best Workplaces have substantially lower voluntary turnover than their peers—which can cost companies up to 200% of each exiting employee’s base salary. Depending on the industry, turnover rates of 100 Best companies are 26% to 68% smaller than those of their industry peers. By the same token, turnover rates among all Certified™ companies are consistent to those of the 100 Best.4

Great Place to Work® research also shows that a high-trust culture is critical to employees across generations. Notably, millennials who reported their company was a great workplace were 50 times more likely to plan a long-term future with their company, as compared to millennials who did not believe their company to be a great workplace.5

Trust is Serious Business

We help our clients create great workplaces that outpace peers on key business metrics like revenue growth, profitability, retention, and stock performance. Building a high-trust, high-performance culture for all employees is a journey, and we at Great Place to Work know the path for organizations of all sizes to navigate.

We offer a thoughtful, data-driven, and systematic approach, designed to accelerate change among leaders and across the entire organization. No matter where you are on your culture journey, we know that when you build a high-trust workplace that is better for people your business will profit.

About Us

Great Place To Work® is the world’s leading employee experience company. Our mission is to help every place become a great place to work for all.

Fueled by an unwavering commitment to equity for all people, we give leaders and organizations the tools, insights, recognition, and resources to create a consistently and overwhelmingly positive employee experience.

Our unique methodology and platform enables organizations to truly capture, analyze, and understand the employee experience. Our groundbreaking research provides the insights to take action and improve the experience of every employee. Our certification and lists are the most coveted and respected in the world, the only recognition based on actual employee feedback.

Our coaches, events, and community bring together the boldest leaders, ideas, and innovations in employee experience. Founded in 1992, our global benchmarks are the industry standard, built on data from more than 100 million employees in over 90 countries around the world.

To begin transforming your culture into a high-trust, high-performance culture, contact us today.

 

References

1. Nold, H. “Using knowledge processes to improve performance and promote change: The continuous loop model and cultural enablers.” The International Journal of Knowledge, Culture, and Change in Organizations: Annual Review, 12 (2012): 53-70.

2. Edmans, A. “The link between job satisfaction and firm value, with implications for corporate social responsibility.” Academy of Management Perspectives, 26.4. (2012): 1-19.

3. Edmans, A. “The social responsibility of business.” Online video clip. YouTube. YouTube, 9 July 2015. Jan 2022.

4. Great Place to Work® 2022 Fortune 100 Best Companies to Work For data and 2022 Great Place to Work Certified™ company data.

5. “Three generations: One great workplace.” Great Place to Work®. July 2016. Web. 16 Aug 2016.

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Great Place To Work identifies Best Workplaces in Asia™ by surveying 2.1 million employees in Asia and the Middle East about the key factors that create great workplaces for all and analyzing company workplace programs impacting 5.9 million employees in the region.

To be considered, companies must first be identified as outstanding in their local region by appearing on one or more of our Best Workplaces lists in Bahrain, Greater China (including China, Hong Kong and Taiwan), India, Indonesia, Japan, Kuwait, Oman, Philippines, Qatar, Saudi Arabia, Singapore, South Korea, Sri Lanka, UAE, Vietnam during 2022 or early 2023.

Companies rank in three size categories: Small and Medium (10-499 employees); Large (500+); and Multinational. Multinational organizations are also assessed on their efforts to create great workplaces across multiple countries in the region. They must appear on at least two national lists in Asia and the Middle East and have at least 1,000 employees worldwide with at least 40% (or 5,000+) of those employees located outside the headquarters country.

To determine the 2023 Indonesia Best Workplaces™, Great Place To Work®️ analyzed confidential survey feedback representing nearly 20,000 employees across different industries in Indonesia.

Employees responded to over 60 survey questions describing the extent to which their organization creates a Great Place To Work For All™️. 85% of the evaluation is based on what employees say about their experiences of trust and reaching their full human potential as part of their organization, no matter who they are or what they do.

Great Place To Work analyzes these experiences relative to each organization’s size, workforce make up, and what’s typical in their industry. The remaining 15% of the rank is based on an assessment of all employees’ daily experiences of innovation, the company’s values, and the effectiveness of their leaders, to ensure they’re consistently experienced.

To be considered, companies had to meet the Great Place To Work-Certified™ standard. To ensure survey results truly represent all employees, Great Place To Work requires that Trust Index©️ survey results are accurate to a 95% confidence level with a 5% margin of error or better.

We review any anomalies in survey responses, news and financial performance to ensure there aren’t any extraordinary reasons to believe we couldn’t trust a company’s survey results.