How Your Relationship with Your Employees Can Help Boost Your Bottom LineDavid Cawthon
Trust can bolster your business’s bottom line. But so many business owners don’t trust their own employees, and that can mean less coin for your business. I’ll show you how to build trust into the management hierarchy of your business … and that could mean a lot less stress for you and a boost to your bottom line.
As a business adviser, I learn some surprising revelations from my clients. One of the most recent was when my colleagues and I spoke with some business owners and asked them if their customers trusted them. Everyone said yes. But then we asked the owners if they trusted their employees, and their answer was a resounding “no.”
For this group, the intimate relationship between owners and employees results in less trust than the arms-length relationship with customers. That puts the owners in a tough spot having to deliver in their business without support they can count on.
Trust Begets Trust
How can we spend so much time with our employees and not trust them? And if we don’t trust those who work for us, how can we expect them to trust us?
Trust is reciprocal, much like a smile: It’s hard to not smile at someone if they are smiling at you. You must be trustworthy if you expect the same in return. And just like that smile, someone has to start. If you ever want to build a business that isn’t dependent on your involvement in the day-to-day tasks, you will be the one to start the trust cycle.
In a Harvard Business Review article titled “Want Your Employees to Trust You? Show You Trust Them,” the authors find that productivity and employee engagement suffer if a trusting relationship between managers and their team doesn’t exist. In a small business where keeping good employees is critical, building a culture of trust can make a huge difference in the business’s success. Owners can focus on managing their business while employees enjoy the freedom to reach their potential.
Establish Guardrails of Trust
You’ve worked hard to build your business. You can’t expect anyone to care about its success as much as you do. So how do you build trust in your employees? How do you develop a team that you can depend on to deliver high-quality service to your customers without your personal involvement?
It starts with establishing guardrails. Guardrails are rules, policies and norms that govern the behavior of your team.
Your foundational guardrail is your company culture, as described by your mission, vision and values. These principles establish the baseline of your culture and say what’s important to you. But only if you communicate them often and show you believe by walking the talk. Whenever you contradict these basic guidelines, the guardrails will erode.
Create a culture of discipline where it matters how much inventory you lose or how accurate you keep your records. Establish a policy of routinely counting your inventory, and investigate any discrepancies to understand the root cause. Don’t be that business owner who will take merchandise out of the store without proper documentation yet will fire any employee who does the same. Walk the talk.
Managed empowerment, team organization and structural controls are other effective guardrails you can put in place.
Empowering your employees is a clear signal of trust. The trick to granting authority while maintaining control is to know what is important to the business and what deserves your involvement. These are the things that you should focus on while delegating the rest to others in your organization.
Take purchasing, for example. The decision to spend thousands of dollars for equipment should be under your control. But you can assign smaller or routine purchases to an employee as long as you provide sufficient guidelines. Large corporations assign authorization limits to different levels in the organization, where a buyer has $25,000 in spending authority while a director can spend up to $500,000. A detailed budget can provide guardrails on spending.
Empowered employees make mistakes. You need to accept this risk so they will learn from these mistakes and strengthen your organization. Setting authorization limits will limit your exposure to this risk while still allowing employees the freedom to grow.
Establish effective guardrails of trust by building an organization of teams and capable team leaders. You can maintain control by assigning leadership to a trusted employee who has the right knowledge and experience and who has exhibited positive behaviors. This has the added benefit of enhancing the value of your business and reducing your day-to-day involvement in the business.
It takes a certain skill to manage teams through others. This includes setting clear limits of authority and having constant communication and emotional restraint. Establish policies that determine when a leader on your team can act and when they need to consult you beforehand. Work with the new leader to set team goals and require that they keep you posted on team activities, including both successes and failures.
Resist the temptation to bypass the supervisor and manage the team yourself. Praise to the group and credit its leader when they succeed. But direct your disappointment at the leader when the goals aren’t met. This takes emotional maturity and constancy of purpose to empower your employees in this way, but in the long run, you will accomplish more with fewer sleepless nights.
Delegating team responsibility to others is the highest form of empowerment. To be successful, make sure the new supervisor embraces your guardrails and understands the important role they play in empowering others on their team.
Accounting processes often rely on the premise that you can’t prevent fraud but you can force collusion. This means you can control your risks by structuring the workflow so that more than one person is involved in certain areas of risk. People are far less likely to commit illicit behavior while others are watching.
An example of structural controls is the three-legged stool in accounting, where one person places purchase orders, another receives the goods and a third pays the vendor’s invoice. It would require all three employees to collude to commit fraudulent activity, so it’s less likely to happen.
A Final Note
One common source of mistrust among employees is the suspicion that the owner doesn’t care about them. Be genuine in helping employees succeed in their career goals, even if it means preparing them for their next job. Tie their success to the success of your company to encourage growth for both of you. You will probably find that 99 percent of your employees will respond with their trust. Just like they would with a smile.