A decade ago, Paul Zak began measuring brain activity from people while they worked and he soon made an important discovery: There are scientific reasons why some organizations perform at high levels while others flounder.
He discovered from his tests that people work more effectively – and deliver better results for their companies – when they are working in trusted cultures, such as an environment where workers are not reprimanded or fired if they make a mistake.
Zak, who is trained as an economist and a neuroscientist, helped launch the field known as neuroeconomics, which measures brain activity while people make decisions.
“If you want innovation, then you need to let people make mistakes,” he says. “Innovation requires taking a risk, and people need to know that’s OK.”
In his new book, “Trust Factor: The Science of Creating High-Performance Companies,” Zak explains that he’s sometimes been called a “vampire economist” because he takes blood from volunteers in order to measure neurochemical changes during decisions.
Zak is the first scientist to show that the brain synthesizes the neurochemical oxytocin when people are trusted by others. The oxytocin then causes others to reciprocate trust by being trustworthy, he explains.
In other words, it’s the oxytocin that is the biological underpinning for the Golden Rule, he says. “If you treat me nice, my brain makes oxytocin, signaling that you are a person whom I want to be around, so I treat you nice in return,” he says.
Zak says that it’s important that leaders understand that it’s the oxytocin that makes employees want to be part of a company. Employees get rewards from their brains for cooperating and treating others well, including being trustworthy when they are trusted.
“Trust begets trust,” Zak says.
Zak’s research published in 2001 reveals that a culture of trust is one of the greatest predictors economists have ever discovered to explain why some countries are rich and others are poor. Trust acts as an “economic lubricant” that reduces the friction common in economic activity, he says.
What this means for organizations is that the science makes it very clear that if employees lack trust, then it’s going to be very difficult for organizations to be successful.
“Most companies aren’t even thinking about this,” Zak says. “But the research shows that trust isn’t some squishy, misunderstood component.”
So what are some keys for establishing trust within an organization? Some of Zak’s recommendations include:
Some organizations still allow leaders to use fear to get results from workers, and distrust is often rampant when there are mergers, layoffs or downsizings. Leaders who instill fear guarantee one thing from their team: failure.
“People acclimate to fear quickly,” he says. “Fear and threats might ramp up productivity for a time, but there are really only so many threats someone can make.”
Even if organizations don’t support a fear-based management approach, they need to monitor managers carefully to ensure even the most mild-mannered worker doesn’t turn into a jerk once promoted to the leadership ranks, Zak says.
“High levels of stress inhibit the release of oxytocin. The other oxytocin inhibitor is testosterone. It makes men – especially young men with high levels -- selfish and demand more from others,” Zak says. “Testosterone whispers to our brains that we have won the social lottery and makes us behave like demigods.”
Zak says that stress isn’t bad for you. It’s the chronic stress that can lead to cardiovascular disease, depression and diabetes – and inhibit the release of oxytocin. The consistent two sources of stress? 1) the boss and 2) not knowing the boss’s plans. For example, employees may not understand why the organization is acquiring another company or making system changes because the boss isn’t talking about it or even addressing their concerns.
That’s a missed opportunity to bring a team together and motivate them, Zak says.
“You have a short honeymoon period when you are in a time of making changes, when employees can be asked, ‘What can we do better? What can we do differently? How can we use this as an opportunity?’ Zak explains. “Give them a roadmap. Put it out there why you’re going in a certain direction.”
Zak says that only about 40% of employees report they are well informed about an employer’s goals, strategies and tactics. But there is a mountain of evidence that shows when workers know why decisions are being made, they are more motivated and productive.
Zak says some estimates show that women and minorities have been responsible for 15% to 20% of economic growth in the U.S. from 1960 to 2008. If leaders regularly share information with everyone – and encourage diverse opinions – then a fairer workplace is created. “Otherwise, why would everyone be equally engaged at work?” he says.
While management is about humanity, it can also be understood through science, Zak says.
“I believe that management that blends humanity and neuroscience is the most effective,” he says. “It is a process, not an end point.”