In our daily lives, trust is something that impacts everything we do. While not openly discussed, it's an invisible force subconsciously guiding who we talk to, what establishments we visit, and how we interact with others. As it is important in our personal lives, trust is equally essential in a professional environment. For construction organizations and the project teams they work with every day, this extends even further. When projects run smoothly, there is likely an underlying level of trust that can be credited for that success. On the other hand, when schedules slip and the bottom line takes a hit, distrust could be a contributor.
“Trust is like the air we breathe. When it is present, nobody really notices. But when it’s absent, everybody notices.” - Warren Buffett
Despite its obvious impact, trust has typically been considered an intangible resource in construction. Unlike clear KPIs like profits and safety, it has been more difficult for firms to measure as a standalone figure. But what if we could qualify the financial impact of trust and provide steps to deliberately create a trusting environment within our industry?
In a new report, “Trust Matters: The High Cost of Low Trust,” FMI and Autodesk have done just that. Surveying over 2,500 industry professionals across the globe, the study uncovered the benefits and cost of trust in construction, both internally within a company and between other organizations across the project site.
While 93% of participating construction professionals reported above-average levels of trust within their organization, only 37% achieved very high levels of trust. Why does this distinction matter? According to the research, there’s a correlation from the level of trust to profits and organizational performance. High trust organizations are able to generate more repeat business, retain more employees, and drive a higher level of success.
Take a look at some of the key findings from the report in our infographic:
When evaluating the responses, construction teams fell into three categories of trust. They include very high, above average, and average to below average. On average, construction professionals rated trust in their organization as “above average,” or a 4.1 out of 5.
Interested in learning more about what trust means in construction? Watch our recent webinar!
In many areas, “above average” would be considered a “good” rating. But when it comes to trust, good is simply not good enough. The research shows that there is a significant performance gap between firms that scored “above average” and firms with the highest level of trust. This indicates that trust directly impacts a business’s bottom line.
Teams with the highest levels of trust benefit in several key ways including lower voluntary turnover, fewer schedule delays, and more repeat business. The research indicates that there are significant performance gaps between organizations with the highest levels of trust and firms with just above average trust. The takeaway? It’s worth it to invest in trust.
With the labor shortage always top of mind for most industry leaders, the thought of voluntary turnover can cause anxiety. Losing top talent for unexpected reasons hurts the bottom line of the business and can even cause schedule delays if executives leave at an inopportune time during a project.
The numbers speak for themselves, as the majority (56%) of construction professionals at high trust organizations voluntarily choose to stay in their roles, versus just 32% at organizations where trust is above average. Furthermore, FMI found that high trust organizations save as much as $750,000 annually by simply not having to onboard new employees.
Even the smallest change can have a long-term unexpected impact on the schedule. Unusually adverse weather, rework due to mistakes or miscommunication, and material delays are just some of the many ways a construction schedule can end up running amok. According to FMI estimates, missing schedules can cost a $100 million contractor approximately $17.5 million a year in direct and indirect expenses. When compared to organizations where trust is above average, high trust organizations could benefit by as much as $4 million a year by meeting their deadlines.
“When everyone works towards the common goal, they are more confident that their schedule and budget will be met. They know what work is getting done and when it will be completed.”
-Head of BIM and Digital Engineering, General Contractor
Repeat customers aren’t simply a familiar face; having them is good for business. Existing clients come with the certainty that a new one simply can’t provide. Acquiring new clients is estimated to cost 5 to 25 times more than an existing one. Furthermore, increasing client retention by 5% can increase profits by 25% to 95%. The research shows that construction companies with the highest levels of trust have more repeat business, driving gross margins 2% to 7% higher than that of organizations without high trust.
At firms where trust is very high, the majority of respondents (57%) say more than four out of five of their projects are repeat business. In turn, the higher your level of trust, the more repeat business you’ll achieve, which may result in higher profits across the board.
As a result of lower turnover, reduced schedule slippage, and more repeat business, the benefits come full circle. Research found that at high trust organizations, 74% of staff would recommend their organization as a place to work. Additionally, high trust employees go above and beyond with 49% routinely exceeding expectations in their work.
To further understand the data behind how high trust organizations boost their bottom line, download the full report.
The responses for this research represent the experience and opinions of 2,527 industry stakeholders from across the globe – project owners, architects, contractors, and specialty trades – including eight countries and four continents.
Levels of trust appear relatively consistent worldwide, with the United States, Canada, UK, Ireland, and New Zealand all recording a mean score of 4.1 out of 5. The score for those countries with a slightly lower view of trust does not deviate much from this, including Australia (4.0) and Hong Kong (3.8).
In construction, trust is not typically a preexisting condition on a jobsite. Instead, it’s built over time. According to the report, high trust teams share some important traits. Many of them can improve the bottom line of the business including:
“Contrary to popular perception, developing a high trust culture is not simply a soft skill—the highest performing leaders and organizations recognize that trust is an urgent necessity to stay ahead of the ever-growing competition.” - David Horsager, CEO, Trust Edge Leadership Institute
High trust organizations also openly share information and project data, have increased schedule and budget confidence, and show greater enthusiasm for working on new projects with existing customers.
Fortunately, teams can take steps to create trust within their organizations. This means your employees will be more engaged, loyal, and productive. You will reduce costs associated with voluntary turnover and boost profit margins.
When first starting this process, make sure you define trust for your team. Focus on creating definitions for both organizational trust and trust between organizations on your projects. For the purpose of this study, we defined organizational trust and project trust as follows:
Now that you have a definition for what trust truly means, let’s walk through the more tactical steps of building it for your organization.
After defining trust, find out how much your team trusts one another and the organizations you collaborate with most frequently. Make this process a routine one, possibly by issuing a short annual survey with a few questions related to trust across your projects. You can ask your employees how they rate trust levels internally and with other organizations they work with, how often their expectations are met by others, and how easy it is to earn trust from others on the team.
Uncertainty is a blocker to trust and teams that do not feel certain about the information they have will make poor decisions or worse yet, no decisions at all. An organization that defaults to being transparent and shares great detail about how things are progressing is much more likely to make appropriately risked decisions than those that withhold project information from others.
Steps your organization can take today to minimize uncertainty include:
Three simple steps can help simply project team collaboration. They include making communication easy and transparent, creating a solutions-focused organization, and developing clear commitments between team members on their contributions.
When challenges arise and fingers are pointed, it erodes trust with that individual and possibly the entire team. If that happens, it may be hard to recover the lost trust.
“Often I’ll tell somebody to do something and then things go wrong later. Somebody will come up and say, ‘Why did that man do that?’ I just tell him, ‘Because I told him to.’ I try never to blame an employee for something I did, and that’s a big deal in our industry. It’s easier to blame somebody else than take the blame yourself. When employees see you blame them, they will lose all trust in you.”
-Senior Superintendent, Mechanical Subcontractor
Organizations that are struggling with trust can start by deliberately creating it at the top of the org chart and allowing it to expand from there. When the leaders are seen as trustworthy to the rest of the team, employees will have confidence that they are being given the right guidance to succeed on both a personal and organizational level. As that confidence grows, trust will start to expand across the organization.
Employee confidence in the business also relates to their overall sense of job security. The research indicates that organizations that have the highest levels of trust are three times more likely to retain their staff even if they don’t have an established pipeline of work than organizations where trust is low.
For more detailed guidance on how to increase trust as a construction business, watch our webinar.
Facilitating and retaining organizational trust isn’t always going to be an easy initiative, especially as teams scale in size and spread out into new regions. As companies transition from smaller, local businesses to national or even global organizations, the challenges in creating trust may also change. Fortunately, you now know that putting in the effort to become a high trust organization has clear business value. Keep in mind, trust levels can be variable, so once you’ve established trust, don’t stop putting in the work. Trust is a long game in the construction business, but the reward is substantial.
To learn more about how construction professionals think about trust and what you can do to elevate trust across your organization, download our report, “Trust Matters: The High Cost of Low Trust”.
