Build companies on trust, not fear

Almost all companies are built on fear, not trust. It’s so common, we don’t even notice it. Quite the contrary, when we see companies built on trust, and not fear, they seem highly unusual — that can’t possibly work, right?

Most practices we see in modern companies stem from fear. Why do decision-making hierarchies exist? Because of fear. Fear that those in non-executive roles won’t or can’t make good decisions. Why does most of the legal language of any employment contract focus on what happens if things go wrong? Because we fear that employees will leak trade secrets, defect to a competitor, slack off at work, and poach ex-colleagues. Why limit holidays to a certain number of days a year? Because of fear that someone (and then, gosh, everyone!) will abuse the system and take an extra week. Why not allow employees to set their own salaries? Because of fear that everyone will abuse the system and rob the company. Why approve expenses reports? Because of fear that someone will report a personal lunch as a business expense. Ever heard the phrase “adult supervision” in the office? That’s the fear that your teammates aren’t smart and reasonable people. This list could go on and on. Our workplaces are designed with fear in mind, built on fear and are often led from a place of fear.

An ultimate example of a place built on fear is a large bureaucracy: you can’t do anything without following the protocol for the sake of it. An ultimate example of a place built on trust is a tiny startup.

Trust is one of the key reasons early stage startups can be so incredibly efficient, disrupting powerful incumbents. The founders and early employees trust each other to do their best. Everyone is aligned around the same goal. Everyone is trusted to make decisions in the best interest of the startup. Everyone has access to the information they need. In fact, one of the biggest reasons startups fail (other than not building something people want) is co-founder conflicts, almost always resulting from a break-down of trust.

A trust-based environment attracts top players. Instinctively, nobody wants to work for a company that doesn’t trust you to do whatever you think is best — but most have to. We are motivated by autonomy, mastery and purpose; trust is a prerequisite for autonomy.

Have you ever been surprised when a key employee quits without much warning? That’s a breakdown of trust: they didn’t share their concerns when it was still possible to fix them. Have you ever been demoralised having learned that a colleague is paid twice as much doing the same job? That’s because you were in an environment where establishing trust wasn’t a priority.

Few startups are built on fear — those that are don’t last long. The problem is that as companies grow, they sleepwalk into traditional fear-based management practices, shooting themselves in the foot, because they don’t know better, and because it’s the easy option. They often feel that something is wrong and try to “empower” employees or introduce perks such as unlimited holidays or flexible hours but it’s often a facade hiding a company built on fear and distrust.

I believe that companies built on trust will outperform those built on fear and will be much nicer places to work at. I’m glad to see many leaders understand this and lead their companies in this direction: Buffer, Zappos, Buurtzorg (video), Morning Star, and many others. At Makers Academy we’re consciously building the company on trust, not fear.

A particular way to describe a company built on trust is to look at an implicit contract between the company and an employee. Traditionally, the company asks the employee to do some job, and the employee’s responsibility is to do it well. A company built on trust would allow any employee to choose what to do but then expect to explain how their actions were beneficial to the company. This is the ultimate trust in the workplace: that the employee will do the right thing.

So, what does it mean to build a company on trust, and not fear? It means trusting the team in everything they do, assuming they are smart and motivated individuals that can achieve amazing things, welcoming a great degree of self-management.

It means focusing on holding the vision and communicating the information necessary for the team to do their jobs.

It means helping the company to evolve, instead of expecting it to execute decisions made at the top. Evolution means that even the founder may not know where exactly it will lead. This is the difficult bit — relinquishing ultimate control, while still assuming ultimate responsibility for the result.

It means eliminating management roles that exist to control and organise others. Everyone should focus on providing support and guidance but not having the power to tell others what to do.

It means being radically transparent. To build trust, you must act in a fair and open way. The team also needs access to a lot of information to decide what’s the best course of action. Financials, salaries, equity, board minutes, strategy essays, critical feedback and almost everything else should be available to the team. There can be no questions that can’t be asked.

It means trusting the team with how to spend the company’s money, including making purchases, logging expenses and setting salaries. The role of “management” changes to providing advice and sharing their expertise regarding the likely consequences of a suggested course of action.

This is neither chaos nor a democracy. The consent of the majority is not required to make things happen but everyone’s point of view must be considered. There should be specific rules describing how decisions are made in a high-trust, self-regulating environment.

Will everyone thrive in a high-trust environment? Probably not. Neither will it be right for every company. However, optimising for trust is a viable strategy for building high-performing companies that also happen to be really nice places to work at.