The following is a conversation between Paul Zak, author of Trust Factor: The Science of Creating High-Performance Companies, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.
Denver: At the heart of the highest performing organizations is trust. But why is that so important, and how do you go about building trust in an organization?
That is the subject of a recent book entitled, Trust Factor: The Science of Creating High-Performance Companies. And here with us this evening is its author, Paul Zak, who is also the Founding Director of the Center for Neuroeconomic Studies at Claremont Graduate University.
Good evening, Paul, and welcome to The Business of Giving.
Paul: Thanks, Denver. I’m happy to be on.
Denver: Before we get to building trust in an organization or corporation, it would be helpful if you briefed us on your groundbreaking research around the molecule, oxytocin. I think what you’ve dubbed as the moral molecule and the role that it plays in trusting behavior.
Paul: Thanks. Humans are unusual in many, many ways compared to our animal cousins. And one of those ways is that we like being around other people, even strangers, in big cities like Chicago. So, how do we do that? How do we live in these giant communities of strangers where most other animals would kill people that they don’t recognize? We do that because we have this mechanism in our head that tells us; that Denver seems to be a safe guy. I can interact with him, maybe do a project with him. Thus, a value to forming relationships. Your producer, Bob, is a really sketchy character. I don’t want to be around him. So, you know, this system is part of a larger brain network that it uses as a chemical your brain makes called oxytocin. As you mentioned, our lab was the first to develop an assay, a test, to measure in humans the brain’s acute production of oxytocin, and we found that when someone is essentially nice to you, when they trust you, when they share you kindness, when they’re generous towards you, your brain makes this chemical, then it motivates you to reciprocate in kind. So you can think of oxytocin as your biological basis for the golden rule; if you’re nice to me, my brain will make oxytocin, and usually; and that’s of course, where the story gets interesting; but usually, I’ll reciprocate and be nice back to you. So, oxytocin is kind of the social glue that holds our civilizations together, our communities. Then the natural extension is, gosh, what happens at work? At work where we’re around people for eight or 10 hours a day and sometimes it’s really pleasant, and sometimes it’s really unpleasant. So, how might we use this 15 years of research we’ve done on the brain basis for quad group behaviors to help improve outcomes at work.
…it’s recognizing people close in time to when they meet a goal. It’s doing that recognition in public. It’s providing something that’s unexpected. Allowing recognition to come from peers. So, having this unexpected, tangible public recognition is a great way to recognize individuals but also, set up a feedback within the brain that says, in our community, in our organization, we value people who are high performers, who put in the extra effort to wow our customers.
Denver: Well, let’s get to that.
Through experiments and surveys, you’ve identified eight management behaviors that foster trust at work, and I’m going to ask you to say a word about each. We’ll start with recognizing excellence, and this I gather is exceptionally important.
Paul: It is. As you know from the book, I know it’s important in this day and age in which everybody at work, everybody has special skills, to treat people like volunteers. If you’re a volunteer, then you need to be asked, and you need to be thanked. And so, ovation is a way to institutionalize thanking people for their hard work, their discretionary effort, and enlisters will go, that sounds like employee recognition. Yes and no. Denver, I’m a super cheap guy. I hate to waste resources. Because I run my own businesses. I run my lab, and so the neuroscience tells us how they get the biggest bang for the buck from the limited resources that we have.
So, for ovation, it’s recognizing people close in time to when they meet a goal. It’s doing that recognition in public. It’s providing something that’s unexpected. Allowing recognition to come from peers. So, having this unexpected, tangible public recognition is a great way to recognize individuals but also, set up a feedback within the brain that says, in our community, in our organization, we value people who are high performers, who put in the extra effort to wow our customers. So, let’s make that part of our set of norms in our community.
So, to induce the brain to make oxytocin to facilitate better teamwork, we need to set challenge goals as leaders, and challenge goals focus our attention, causes us to avoid distractions but also give us a reason to work hard together.
Denver: Then there’s an X for expectations— what is setting high but achievable goals have to do with trust?
Paul: For listeners, unfortunately, your brain is a super lazy organ. It’s lazy because it takes so much energy to run it; about 20% of your caloric intake. So, your brain wants to idle most of the time. So, to induce the brain to make oxytocin to facilitate better teamwork, we need to set challenge goals as leaders, and challenge goals focus our attention, causes us to avoid distractions but also give us a reason to work hard together. And so that challenge is really important but it’s got to be a challenge that is limited. It’s got have a clear, concrete endpoint in time or when some amount of work is done. If it’s a chronic structure that inhibits oxytocin release, I should say what oxytocin does — psychologically — is increase our sense of empathy. So, now I’m a better social creature and understand more why you’re doing what you’re doing and you understand why I’m doing what I’m doing. It also reduces physiologic stress. So, we want to induce a little bit of what we call challenge stress; Okay, let’s work really hard the next two weeks to hit this goal. That’s a great way to facilitate more effective teamwork neurologically.
Denver: Very interesting.
Third, there’s allowing people to execute projects their own way. What are the benefits of providing this kind of self-management?
Paul: Yeah, we call this [yield] an acronym as you said. Oxytocin for these eight factors somehow magically we got this acronym. Because everyone at work is a volunteer in my view, I want to train extensively and then delegate generously. When you control the execution of your own project, then you take ownership of it, and that means that the person doing that project will do it a little differently than their boss, whatever, someone else would have. So, it means from a leadership perspective, you need to allow learning through mistakes. We all want to live in this mistake-free world but a mistake-free world means that we’re just going through the motions, and we’re never going to get innovation.
It’s a real change in the way we view what we do at work which is in a constant improvement process. So, you can’t have that unless you give people some freedom to do things a little differently and search for those positive outliers that we call innovation.
Denver: You know, Paul, I visited a lot of different organizations, and I am always taken how delighted people are when they tell me they can choose what they want to work on. In fact, in some cases, they actually can write their own job description.
What is the impact of transfer?
Paul: Transfer is job crafting. All of us do stuff at work that we’d rather not do. But if we could sort of focus our attention on the stuff that we love the most, we’re going to do that better. It’s just human nature. Because of that, organizations that enable self-management allow their colleagues to focus on the things that are most important to them and because of that, they perform better.
Denver: It has been shown that one of the greatest sources of stress that people have in the workplace is inadequate information to do their jobs effectively.
What occurs when this is the case and what are the benefits of having open information going both ways?
Paul: Boy, that’s a great question. The short answer is, neurologically, chronic stress inhibits the brain’s production of oxytocin. So, rather than being a great team player, I’m worried about survival, right? What’s happening? So, from a leadership perspective, you can get rid of a lot of that chronic stress by being open and honest about communication. Also, as a leader, you want to be an information aggregator. And if people are afraid to share information, your leadership abilities will be inhibited. So, many organizations practice what’s been called radical openness. Buffer which is social media optimization company publishes online. Listeners can see this. Search for Buffer. They publish salaries, how much stock ownership everyone has, their bonus plan. They put everything out, and I think in the world we live in now, rich information in social media. Honestly, everything is going to get out, so why not start from scratch and say, you know what? We have open books here, and if our competitors want to see it, awesome. Good luck, we’re going to be faster and smarter and more nimble. It just gets the ball back to watercooler talk among employees about what’s happening next to our company. So, people love that and it really will improve performance.
…when we care about the people we work with, we work harder for them.
Denver: That is radical transparency. Six, you talk about the importance of building social ties in relationships at work.
Now, most of the places I have worked, they just told me to get the job done. How is it tied to performance and what is the importance of caring?
Paul: For some reason, we’re so busy to look good that when we go to work, we have to have work Denver, and then there is home Denver. Work Denver doesn’t fraternize with the employees. You have to be in charge. But if you look at our brains, we are built to form relationships, and it’s insane to think that we’re not going to form relationships with people we work with. I’m talking about friendships or really deep caring relationships. In fact, Gallup and many other organizations have shown that when we care about the people we work with, we work harder for them. Surprise. So, the point of research we’ve done here is to facilitate that. So create a space where employees can get to know each other. That could be in the snack room. It could be like in Google with the free food. A simple thing that people can do at work is just to recognize the emotions you see in others. Instead of walking in to work and saying, “Hey Denver, how are you?” “Good.” “How are you? Walk on. Say, “Hi, Denver…” Now, fill in the blank. “You look ___” happy, sad, joyful, or worried, dead tired. Now, we have a much different conversation because I’m recognizing emotions you have, and I’m recognizing you as a complete individual as a person with real emotions. Not a piece of human capital but a real human being.
Denver: That’s a wonderful insight.
You know, you say Paul, that high-trust workplaces help people develop personally in addition to professional. Why should an organization invest in doing this?
Paul: Because people need a sense of growth, to feel like they’re mastering life and in organizations, we have found that foster both professional and personal growth have employees that are more engaged. So, one way that we’ve done that is to create something we call the whole-person review. So, it’s a forward-looking review because in this system, I’m giving you feedback all the time on your performance. As a leader, I’m giving you challenges, I’m recognizing and celebrating you when you do well, been getting constant feedback so that backward-looking annual performance review goes out the window. So, I want to use that meeting we have once a year to look at a forward-looking review we call the whole-person review and we discuss where you want to go professionally, personally, and professionally I like to use the question, what do you want your next job to be? Let’s have that discussion. So, in this world in which the highest performing colleagues at work are rare, if you really want to move and work at Facebook, as one of my people in my lab did recently, I’m the first person to say go for it. Because I’m investing in you as a human being, not you as an employee. So, I’ve invested in you as a human being that I need to encourage you to grow. Maybe your next job is with me, right. You still like, I really want to move in to our Division X. Awesome. How do we get you there? How do we teach you the training to do that? Let’s work on that, so I want to keep you here because you’re a high performer. If you move to Facebook, guess what, now I got a guy at Facebook. How awesome is that? So, I can collaborate and Google calls this “boomerang employees”. So you worked at Facebook for two years, and you come back and work with me, and you got two years of training with Facebook I didn’t pay for, and you got a bunch of skills you can bring back to my workplace. This forward-looking reviews is important. And the second part is the personal part. Are you happy? Is your spouse happy? Are your kids doing well? The last thing I want is someone coming to my office and saying, “I got to quit. My wife has to move back to Chicago because her elderly parents are there and I just can’t take it anymore.” Let’s talk about the advance because we have an office in Chicago, right. So, that’s your goal. Let’s work on getting you to the Chicago office. I’d rather be ahead of the curve on those kinds of factors. And again, focus on you as a complete human being and give you a place at work where you are professionally and personally fulfilled.
Denver: I think when you show you really care about me personally and not just a cog in a wheel, you really engender my loyalty. So, I can see how that would work.
Finally, you indicate that when a leader shows vulnerability, ask others for help, that can build trust.
What is the dynamic at play there?
Paul: Isn’t that a little counter-intuitive? So, a lot of research from my lab and many others have shown that we kind of hate people who are too perfect, too beautiful, too godlike. But we really enjoy and will work hard for people who know their own shortcomings and so leaders who show their vulnerabilities, who ask for help, who create an environment in which you can bring your authentic self to work, are much more effective. So, to create an environment of trust which is what all these factors do, a leader himself or herself must be trustworthy and to do that, just show that, look — we had this discussion in my lab recently. I said, look, we build all these statistical models, predictive models, and I bring out this new thing, machine learning. I’m not really sure what it is. Roughly I know what it is. You guys are super smart. Can we start taking some data and doing machine learning, see if we can improve our predictions. A couple of graduates then said, “Oh, yeah. I want to do that. Awesome.” And they started telling me about it. I said look if you want to explain it to me. But he doesn’t. I don’t want to know. So, you guys are smart, you can figure out how to do this. I’m old, I can’t do that. So, work on this, I’ll pay you. But work on this and see if you can get better. If I said, machine learning is the thing to do, and I’m an expert. They would know it’s crap. Allowing our imperfections to show is a very effective way to really have people around want to work for you, want to put in that discretionary effort and not just go through the motions.
Denver: Yeah, it would seem that if the leader shows his or her imperfections, it then allows me to do the same with my people. So, that just frees up the entire organization.
Paul: Right, and not be punished for that. I think it’s really understanding that — just like in our personal lives with our kids or our spouse, nobody’s perfect. No one’s perfect at work, and the leadership certainly isn’t perfect either. So. Let’s all just try our best. Let’s try to get a little better. Let’s discuss what we’re doing well and what we’re not doing well. As long as we have this tight feedback loop, the brain will instantiate that, hey in our community, we just want to get better and better. If we make mistakes, awesome learning opportunity. I live in California. Many of the tech companies have these monthly congratulations-you-screwed-up celebrations where employees come in and discuss the stuff that they really tried that failed badly. Why? Because, personally, we want try to innovate. So, that means some failures, number one. And number two, if it didn’t work for me, it’s not going to work for you. Just get that information, so we don’t make the same mistake again.
Denver: Nothing like a good fail fest, I always say.
So, for an organization, Paul, that does these eight things, does this simply make it a nicer place in which to work or is there a real and tangible impact that can be measured?
Paul: That’s the key question. If it just made you feel good, that’s kind of nice. But we’ve done many experiments at for-profit businesses with measured brain activity while people worked and directly measured productivity. We did a survey late last year of about 1100 working adults in the US, representative sample, and we found that individuals who work in the top quartile of organizational cut compared to those who work in the lowest quartile are 106% more energetic at work; say 70% less chronic stress; 50% more productive. They enjoy their job 60% more. They’re much more likely to stay. They take fewer sick days. Even they’re more satisfied with their lives outside of work. You and I have worked in places, I’m sure, where you’re just beat down, and you can’t be a good spouse or a good parent or a good citizen when you’re just being beat up at work. So, we find that people who work in high-trust organizations are more satisfied with their lives overall. So, they’re healthy, happier. They work harder, and they work more effectively. That sounds like the place that we should work at. That’s a place I want to work at.
Paul, there are a lot of companies that are already doing this that you cite in your book — Google, Disney, SAS Institute, The Container Store — but for those who haven’t, how would you advise them to get started?
Paul: I think you start small. Basically, for listeners, this is the scientific method applied to culture which is measure. The book comes with a free survey tool, and I’ll give the URL for listeners. They can actually get data on the organizations for free using our O-factor survey. So, the website is ofactorpulse.com. First of all, get some data. What do you recon if you want to improve your culture? Look at measuring these eight foundational factors that we just talked about. Then create a management experiment. We’re kind of low on ovation. We don’t really recognize and celebrate people who are high performers. So, let’s put in place some ways to recognize that. It could be peer recognition program or it could be a monthly celebration where we all vote for who worked the hardest this month? Whatever that is, put that in place and then re-measure. So, it’s measure, intervene, see if the intervention improved the outcome, and trust is a powerful leading indicator for organizational performance. So, if you can increase trust which is measurable using our tool. Then three months later, you’re going to increase some performance, as little as three months to start changing culture. And then they do that continuously. Start small, measure; not every intervention will work; for whatever reasons, and there’s tons of examples in the book, of course. It think it’s, just like we would constantly improve on production process or improve our supply chain, culture can be measured and constantly improved, and it should be to gain leverage and increase performance.
Denver: Great stuff. Paul Zak, the author of Trust Factor: The Science of Creating High-Performance Companies. I want to thank you for being with us this evening. It was real pleasure to have you on the show.
Paul: Thank you so much, Denver. It was a ball.
Denver: I’ll be back with more of The Business of Giving right after these.
The Business of Giving can be heard every Sunday evening between 6 and 7 PM Eastern on AM 970 The Answer in New York and on I Heart Radio. You can follow us at bizofgive on twitter and at facebook.com/businessofgiving.