SMEs need to build a culture of trust, accountability for profitable growth

Trust is the bedrock of most successful workplaces, while accountability encourages employees to take ownership.

Trust and accountability are absolutely crucial in workplaces for driving profitable growth. They serve as the foundation for a healthy and productive work environment, driving employee engagement, customer loyalty, and innovation.

Trust is the bedrock of most successful workplaces. When employees trust their leaders and feel trusted, they are more likely to be engaged in their roles. Engaged employees are enthusiastic about their work, committed to the company’s goals, and willing to go the extra mile to contribute to its success. Increased employee engagement directly translates to higher productivity, improved efficiency, and profitable growth.

When employees have a sense of belonging and trust, they are less likely to seek opportunities elsewhere, which reduces the turnover rate. High turnover can be costly for businesses due to recruitment and training expenses. By retaining talented employees, small and medium enterprises (SMEs) can save costs and build a more experienced and skilled workforce. According to a study by Gallup, highly engaged teams show a 21 percent higher profitability and a 41 percent reduction in absenteeism. In contrast, disengaged employees can cost SMEs up to 34 percent of their annual salary.

A culture of accountability encourages employees to take ownership of their responsibilities and empowers them to experiment and innovate. When employees feel trusted to make decisions and take calculated risks, they are more likely to come up with creative solutions to pressing problems. Innovation is a key driver of growth, as it allows businesses to stay ahead of the competition. A study conducted by GPTW found that organisations with high levels of trust and accountability are twice as likely to be innovative.

This also extends beyond internal relationships to customer interactions. Customers will do business with companies they trust, as trust is a fundamental element of building long-term relationships. Trustworthy businesses are transparent, reliable, and consistently deliver on their promises. According to the Edelman Trust Barometer, 81 percent of customers stated that they needed to trust a brand before purchasing from it.

I have noticed that employees are more willing to embrace change and adapt to new circumstances when such a culture is prevalent. They are not afraid to take ownership of challenges and work collaboratively to find solutions. Such employees are more confident in their abilities to make decisions that benefit the organisation. This decentralised decision-making approach speeds up processes and enables the SME to respond swiftly to market changes.

How can you create such a culture of trust and accountability? I will outline a few possibilities and strategies for driving this in SMEs. These strategies are based on best practices from across the world, where organisations have succeeded in building a culture of trust and accountability and achieved growth targets.

Transparency in communication

Open and transparent communication is fundamental to building trust within an organisation. SME leaders should clearly communicate their business mission, vision, goals, challenges, and decisions with their employees. Regular town hall meetings, one-on-one sessions, and transparent email updates will nurture a sense of belonging and encourage employees to take ownership of their responsibilities. A thumb rule to make communication stick is seven ways, seven times — the same message can be conveyed in multiple ways and also modified to make different levels of employees understand it.

Empower employees and give them job autonomy

Trust cannot exist without empowering employees to make decisions and take calculated risks. Provide employees with the necessary resources, training, and support to make informed decisions. Do not micromanage them. Do not continuously look over their shoulders at the work they are doing.

Smart Growth

The American Psychological Association found that employees who feel empowered are more likely to be engaged and committed to their work. As my esteemed colleague from Stanford, Jeff Pfeffer, says, lack of job autonomy is the leading cause of mental illness at workplaces, leading to other physical illnesses that affect individuals, society, and businesses.

Recognise and reward accountability

Recognising and rewarding accountability reinforces its importance within the organisation. SMEs must implement performance-based reward systems and acknowledge employees publicly for taking ownership of their tasks and delivering results.

There are tools, such as balanced scorecards, that can help SMEs achieve not only this but also their overall strategic goals. Several SMEs in India have clocked revenue of more than Rs 500 crore using such strategy execution frameworks. The idea is to align individual goals with corporate goals at every level. According to the Corporate Leadership Council, employees who feel recognised are 50 percent more likely to be engaged.

Establish clear expectations

Setting clear expectations and goals is essential for promoting accountability. Employees should know what is expected of them and understand the impact of their contributions to the organisation's success. The strategy-focused organisational framework that we deploy for SMEs enables them to do this in a rational way. A study by the Harvard Business Review showed that teams with well-defined goals had a 17 percent higher performance rate.

A culture of trust and accountability is not achievable overnight but requires a continuous effort that yields remarkable benefits for SMEs in the long run. We have enough case studies and success stories that have seen visible improvements within the first 12-18 months.