Leadership and trust

2nd September 2011

Leaders are not all-powerful. Even the mightiest depend on other people to support them. And when those subordinates let their leaders down, disaster can swiftly follow. The phone hacking scandal at News of the World illustrates this perfectly. Morgen Witzel, FSN writer and honorary senior fellow at the University of Exeter Business School offers some insights into how large organizations can build a culture of trust.

In his testimony before the House of Commons select committee, News Corporation chairman Rupert Murdoch denied personal knowledge of events surrounding the scandal, and also denied personal responsibility. ‘I feel that people I trusted let me down’, he told MPs. ‘They behaved disgracefully and betrayed the company.’ Mr Murdoch made it clear that he felt he had been betrayed personally as well. 

Setting aside for the moment the issue of whether ignorance of events absolves a leader of personal responsibility – an interesting question which can perhaps be discussed another time – let us focus on the issue of trust. Can leaders trust the people who work for them? Should they trust them? The News Corporation experience would tend to suggest that they should not. Without effective supervision from the top, a handful of employees seem to have taken the law into their own hands – with potentially catastrophic results for the company. 

But here is the paradox. It would seem that leaders should trust their subordinates; and yet they must. They have no choice but do so.

The reason why they have no choice lies in a fairly simple but often overlooked concept called the ‘span of control’. The notion of the span of control was first introduced by a British general, Sir Ian Hamilton, in a thoughtful book entitled The Soul and Body of an Army, published shortly after the First World War. Reflecting on lessons learned from that conflict, General Hamilton concluded that most leaders have no idea of how to exert authority over large groups of people. Apart from problems of communication, most of us are not able to manage continuous ongoing relationships with more than a handful of people at any one time. We simply do not have the brain capacity to think along many dimensions simultaneously, or to keep many people in our mental focus at the same time. 

Hamilton concluded that the maximum span of control – that is, the maximum number of other people over whom one person can exercise continuous authority and control – was about eight people. Subsequent studies have suggested that, especially with the effective use of modern telecommunications, the span of control can be stretched to as many as twenty people; which is still not very many. 

Therefore, once any organisation grows beyond the span of control of a single leader, then the leader must delegate some authority to subordinates. And in doing so, the leader trusts that the subordinates will not abuse that authority and will carry out their duties in a right and proper manner. This is true of any large organisation: businesses, military units, political parties, religious establishments such as the Catholic church, international sports federations and the like. 

The leader is not, cannot be, omniscient and omnipresent. News Corporation employs approximately 51,000 people around the world. It is simply not possible for Rupert Murdoch and his top team to monitor the actions of all of them on an ongoing basis. They had to trust other people; and the result, Mr Murdoch says, is that other people have betrayed that trust. 

Here, then, is one of the dark aspects of leadership. Leaders are forced to delegate authority and place their trust in other people, but if they follow the logic above, they do so in the sure and certain knowledge that at some point in the future some of those subordinates will let them down. They may fail to act in the best interests of the company; they may fail to carry out essential tasks so that the rest of the company is affected and the overall strategy goes off the rails; they may engage in power struggles with other subordinates in order to achieve personal advantage; they may even engage in fraud or other forms of criminal behaviour, as for example in the ‘rogue trader’ scandals at Barings, Société Générale and other banks. 

How does the leader prevent these things from happening? Perhaps the first step is simply to recognise that the problem exists. Writers on leadership today – perhaps overly influenced by scandals such as that at Enron, where it was the company’s leaders who betrayed their employees rather than the other way around – often talk about the need for leaders to inspire trust in other people and to motivate people so that they will work towards a common vision. The danger here is that too much responsibility, and too much expectation, is placed on the shoulders of the leader. If a team leader tries to motivate her staff to behave honestly and ethically and they instead ignore her and go off and plunder the stationery cabinet, is it the team leader’s fault for not motivating them enough? 

In the book The Human Side of Enterprise, Douglas McGregor argued that leadership is not something that is done by leaders to other people. In other words, it is not a simple matter of giving orders and having them obeyed. The real essence of leadership, said McGregor, lies in the personal relationships between the leader and others. People will behave and respond according to how that relationship is managed. For example, if you are a leader who is respected by others, and if you demonstrate to other people that you are trustworthy, there is a greater likelihood that other people around you will behave in a trustworthy manner too. Not a certainty; but a greater likelihood. 

But here we come back to the span of control. If we can only manage about twenty personal relationships at a time, how do we control an organisation of 50,000, or even more? The answer requires us to redefine what we mean by ‘relationship’. Instead of direct face-to-face relationships at a personal level, good leaders try to build more subliminal relationships by creating an image in the minds of other people. 

Jack Welch, the former chairman of GE, spent much of his working life on the road travelling around to the company’s many subsidiaries around the world. He also visited every intake of new people at GE’s management training centre and spent a good deal of time, often a full day, with new recruits. His purpose was not to control his subordinates or even to get to know them personally. His purpose was to let them get to know him; to understand what he stood for, what his personal values were, what his expectations of them were. By the end of these visits and training sessions, Welch might not know his employees, but they certainly knew him. 

Welch and other successful corporate leaders past and present try to create a culture in which it is expected that people will do the right thing. In these cultures people know, often without even thinking about the issues consciously, what is right and wrong and where the boundaries are. India’s Tata group, which employs about 300,000 people around the world, achieves this result in part through training and in part through a steady stream of corporate communications, videos, ‘values days’ and the like, all of which emphasise one concept over and over again: trust. ‘Leadership with trust’ is one of Tata’s advertising strap lines. 

As a result, Tata has built a culture where trust is ingrained into people’s ways of thinking. Several years ago a young Tata managers was approached by two customs officers who asked for a bribe. Without hesitation, without even informing his bosses, the young man informed the anti-corruption police and helped them set up a sting operation in which the two men were arrested. The first his employers knew of this was when the affair was reported in the Indian press. 

That is the opposite of the problem faced by Rupert Murdoch; employees so trustworthy that they do the right thing without pause, without even needing to consult their leaders. But Tata also knows that no organisation is perfect. The group has a zero tolerance policy on corruption, and even a hint that an employee is involved in corrupt practice leads to instant dismissal.

John Adair, the British professor and writer on leadership, acknowledges in his book Understanding Motivation that an element of control is necessary. It is important, he says, that leaders maintain standards throughout the organisation, and ensure that those standards are adhered to by everyone. We all know – many of us from practical experience – that ‘rotten apples’ do occur, and that they must be identified and got rid of quickly before the corruption spreads. This means that it is not enough to simply inspire trust. Leaders also need control and compliance processes to make certain that trust is not being abused, and when abuses do occur they must act ruthlessly against those responsible. 

Of course, the leader also needs to be able to trust those who run the compliance processes to make certain they are not covering up for others. When Rupert Murdoch spoke of being ‘betrayed’, he was not talking about the journalists who were involved in phone hacking. Almost certainly, he was talking about those whom he had trusted and promoted to positions of power and authority, and who had let him down. News Corporation’s tragedy may be simply that the wrong people were in the wrong jobs.