Why Is Trust So Important in Leadership?

Business leader discussing with his staff

The qualities of effective leaders have evolved over the last couple of decades. Where once an efficient entrepreneur was a distant authority figure who could inspire a competitive spirit in employees, today the best leaders depend on strong interpersonal relationships and the trust that comes with them.

Indeed, industry leaders have praised trustworthiness as the simple but effective counter to buzzwordy qualities, so let us look at why it is considered such an important aspect of leadership - and discover what you can do to promote it in your business.

The Importance of Trust in Leadership

Twenty years ago, the conversation around what makes a strong leader would have revolved around a different set of values than those permeating the corporate world today. The assumption was that leaders who got the best results from their team were ultracompetitive and ruthless, pursuing shareholder value and a scale economy before staff communication. 

Unfortunately, this led to the development of an entrenched leadership style, and the cultivation of poor leadership qualities among managers. A separate relationship emerged between business owners and leaders at the top of the hierarchy, and their employees at the bottom. Some of the more negative effects of this dynamic included the ideas that:

  • leading a team was a vertical operation, one where ideas and directives trickled downward to be obeyed without question;
  • strong leaders were rare and special individuals, with unique talents that elevated their worth over their followers (who were, in turn, commonplace and easy to find);
  • horizontal interactions built on the strength of relationships and trust were reserved for clients and partner companies and were in the domain of strategy, not leadership.

This model for leadership left companies waiting for their next visionary to arrive and lead the organisation to greater heights, instead of looking at the value of the team members they already had.

Luckily, the business world has been transformed by the virtual revolution, allowing horizontal relationships to thrive. With the advent of virtual contractors and SaaS providers, the operations of a single organisation are often divided up, sent to remote teams, and reconfigured in ways that need more than a single authoritative voice.

Now, one of the most important things for leaders and entrepreneurs to consider is how they will use their powers of persuasion to convince employees and contractors to collaborate on a shared goal. Leaders must build a rapport with their team members and establish a trusting relationship with everyone around them.

As a leader, you will need to focus on building these kinds of connections in your business while helping to enable the kind of corporate culture that thrives on trust. Let us look at how this benefits a modern company and what you can do to make trust the norm in your organisation.

The Impact on Employee Effectiveness

A team that has real trust in its leader will share their leader’s commitment to the organisation’s overall goals; after all, an open business is one that will see high engagement. Individuals should feel that their work represents your company’s mission and that they are growing alongside the company, not in spite of it.

This idea is backed by research, too. In 2017, the Harvard Business Review published a study analysing the impact of high levels of trust in a business, and found a multitude of measurable benefits, including:

  • 74% lower stress levels
  • 106% higher energy levels while at work
  • 13% fewer absences and sick days
  • 29% higher general satisfaction

These improvements can have a significant effect on your company’s work environment across the board. You will see benefits to innovation, accountability, and profitability. Your employee’s adaptability will improve, too, alongside their respect for your leadership and their optimism about the ability of the business to overcome its competitors. By fostering an environment that encourages trust and builds it between managers, leaders and employees, your business will be healthier and better equipped to face such challenges.

To facilitate these improvements, there are some specific areas you should focus on:

Improving Interpersonal Trust

The nature of your relationship with the managers who surround your decision-making process and the employees who carry out those decisions sets the tone for your entire company. This interpersonal relationship comes from the point of confidence in your own ability to follow through on commitments.

Establishing healthy levels of interpersonal trust is a foundation for building employee confidence in your leadership. To acquire this sort of faith, you need to express a clear vision for the kind of company you want to run. Clarity of purpose will help all of your employees know they are moving in the same direction, and measure the value of their own contributions.

Make sure that you are not the only person in a senior position working to build these relationships, too. Your managers should have the same level of dedication to pursuing trust, as these are the individuals who are taking the most ownership over producing action from the vision you have for your company.

Building Trust Through Communication

For trust to thrive in an organisation, there needs to be a viable pathway for upward communication. This is important to not only facilitate collaboration, but to ensure that staff have an actionable way of communicating their concerns or making suggestions.

Transparency is key to enabling trusted communication. Team members should know that there is always an option to make their voice heard, and there should be dedicated avenues of contact to ensure this. An environment where individuals can admit mistakes and offer suggestions for improvements will create a corporate culture where a team is far more likely to succeed.

Enabling Trust Through Competence

While a large component of improving trust depends on building stronger relationships, competence still means a great deal. Effective teams trust in one another and in their leaders to put their advanced knowledge to use to make bold decisions. Make sure that your employees are aware of what you bring to the table when it comes to taking them to the finish line.

However, to truly build a strong level of trust in your company, you also need to have faith in your employees. Empower them to utilise their talents and expertise to lead projects to success. Give them the autonomy they need to do the best job that they can and build better relationships. Employees want to know that they are following a capable leader, but also one who is trusting enough to allow them to contribute their skills in the way they think fits them best.


Building a trusting environment is not easy, and it is not done in a single day. By committing to these methods of improving trust, though, you will see your company’s internal processes improve and observe better levels of cohesion from your staff. All these components put together results in a stronger organisation that is moving towards one goal, in unison.

Do you have any observations on the nature of trust between leaders and employees? As a leader, is increased employee autonomy a good thing, or should staff members know their place? Join the conversation, and let us know your thoughts and experiences in the comment section below.