Brave Hearts: Strategic Minds SPDS Annual Seminar November 8 th 2012

1. Professor Veronica Hope HaileyHead of Strategic and International Managementvhh20@management.bath.ac.ukUniversity of Bath Brave Hearts: Strategic Minds SPDS Annual Seminar November 8th 2012

2. So – what to do?

3. Everything has to be taken on trust… it’s the currency of living Tom Stoppard Rosencrantz and Guildenstern are Dead (1967).

4. Old Dutch Saying “Trust comes on foot but leaves on horseback.”

5. Definitions of Trust? • A psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behaviour of another” (Rousseau, et al., 1998: 395) • “An individual's expectation that some organized system will act with predictability and goodwill" (Maguire and Phillips 2008).

6. Benefits of trust (Dietz, 2011) Employee Engagement (extra effort, job satisfaction, commitment) Individual, Group & Organizational Performance Operational Efficiencies Trust levels at work Cooperation & Problem Solving Positive Work Climate Information Sharing & Knowledge Exchange

7. Drivers of trustworthiness (Dietz and Den Hartog 2005)

8. Qualitative and Quantitative data – September 2011

9. Research sample • Ernst and Young • GKN • Cable and Wireless • Bank Group • Day Lewis Pharmacy • Orvis • John Lewis Partnership • Norton Rose • HMRC • Department for Business, Innovation and Skills • Norfolk County Council • Sunderland C Council • Royal Mail • Hants County Council

10. Case Study Sample industry sectors Financial services Multinational companies Family businesses Local authorities National government / public sector Retail partnerships Professional services firm

11. Key trust relationships

12. Within each of these there are positives & negatives

13. Trust in each other – “We’re all in this together” STRENGTHS • In adverse times everyone pulls on the large trust fund created during the good times to help each other through • Huge emphasis on INTEGRITY of leaders

14. Trust in each other WEAKNESSES • In the good times the organisation can become inward looking, overly trusting of its competences, morally superior and not interested in learning from different organisations or people. • In bad times, staff can be more shocked by difficult decisions which results in higher breach of trust.

15. Trust in our leaders STRENGTHS • Provided leaders can demonstrate their ability, benevolence and integrity they will be able to lead people through adverse times • Particular emphasis on BENEVOLENCE in leaders (followed by integrity)

16. Trust in our leaders WEAKNESSES • If leaders are found to be lacking at a personal level in Ability but particularly Benevolence and Integrity then trust can collapse • In good times there can be too little distrust

17. Trust in our organisation STRENGTHS • Strong on procedural justice through promotion of extremely fair HR systems • Trust is in the systems and the goodness of the purpose of the institution • Not dependent upon the cult of the individual leader to promote trust

18. Trust in our organisation/institution- WEAKNESSES • In adverse times if the organisation’s purpose is either under attack or subject to change, trust relations become eroded. • Senior managers may have underdeveloped their individual and relational ability to lead people – little emphasis on demonstrating their benevolence and integrity • Seen as impersonal and more concerned with implementing downward performance monitoring systems which staff interpret as a lack of trust in them • Particularly bad if external stakeholders are critical as senior managers have to attend to rebuilding trust relationships with externals rather than rebuilding internal trust.

19. Trust for our external customers is key STRENGTHS • Leaders focus on their ABILITY to keep business on track • Benevolence of leaders is less relevant as focus is on external rather than internal Senior Mgnt Staff Customers

20. Trust for our external customers is key WEAKNESSES • In adverse times, previous lack of attention to internal trust may mean that integrity or benevolence of leaders is questioned. • Organisations may not be able to relaunch growth through innovation or be an attractive employer in tight labour markets Senior Mgt Staff Customers

21. Trust in the Line Manager

22. Trust in Line Manager - Weaknesses

23. Climbing out of the valley of distrust

24. So – what to do?

25. Key Learning from the Research • 1. Create a Trust Fund – pre-crisis manage trust as a precious commodity • 2. Leadership as Service – serving employees as well as shareholders throughout the change process • 3. Kill spin – honest communications, especially during redundancy programmes • 4. The Middle and the Local is the Master – the local manager is the key trust relationship and so engage them in planning and designing change • 5. Reposition the Employment Relationship – manage employeeexpectations – change as evolution

26. 1. Create a trust fund – keep charging the batteries

27. 2. Leadership as Service • Senior managers to be more visible, locally, in a face to face capacity, as well as virtually. • If they cannot be more visible face to face, delegate “leadership” down to local middle managers. • Senior managers need to dialogue with their employees. • Senior managers need to demonstrate their personal benevolencev. self serving behaviour • If there had been a serious mistake, leaders needed to verbally apologise to the workforce.

29. Leaders and followers • Both Sunderland CC and Norton Rose’s handling of downturn and cuts illustrate the benefits of individual CEOs being bold, courageous and taking a moral stance • Public sector leaders were required to become more personal, relational and accountable in their approach to leading their employees. • The nature of followership also had to change- creating trust is everyone’s responsibility at all levels as in John Lewis • Benevolence becomes “two way”

30. Communication – avoid spin and face the storm! • Needs to be a form of “authentic dialogue” with as much emphasis on listening as on giving information • Delivered at a local level, as well as corporately and with face to face dialogue, not just electronic. • To assess trusthworthiness, watching senior leaders’ behaviours not just their written words. • When delivered locally, the messaging needed to be regular, relevant, and personal to people’s lifes . • Above all, avoid “spin”. Face into the storm!!!! • When senior managers had made a mistake, apologising for their error actually increased trust. • Admission of senior manager’s vulnerability also helped people trust more.

32. Communication - Restructuring and redundancy • Transparency and openness in the process e.g. BIS • Sharing business information wherever possible even if it is bad. • Applying same principles and measures regardless of their status • Emphasising that it is jobs that are being made redundant, not the people. • Offer redeployment wherever possible – see John Lewis • Consulting and surveying the whole workforce, providing options of salary cuts and/or flexi working in order to save jobs – see Norton Rose for more details • Making time to listen to the “fall out”.

33. Engaging the middle and the local • The Middle and the Local is the Master! • The relationship with the direct line manager is the most pivotal in terms of determining trust relationships with the rest of the organisation. • The more customer facing your local staff the more critical the local manager is in ensuring that the trust chain of the organisation – senior manager – local manager – employee is not broken. • Don’t ignore, denigrate or undermine local managers because of their position in the trust chain – instead consult and respect and include!

34. Renegotiating the employment relationship • Redefining the psychological contract • Organisations may need to promise less but be sure to be able to deliver on, or exceed, that promise • Don’t promise more than an employer in the 21st century can guarantee.

35. And what of HR/Personnel? • Have we become too human RESOURCE? • How much support can a downsized department give? • Have we become too associated with strategy to be seen as bothered about employees?

37. Drivers of trustworthiness in Leaders (Dietz and Den Hartog 2005)