To understand how trust is created, and the positive outcomes it can create on construction projects, Autodesk partnered with FMI Corporation for the industry study: ‘Trust Matters: The High Cost of Low Trust’. We examine the findings, which quantify the costs and benefits of different levels of trust within construction organisations.
10. Financial boost
Just 37% of those surveyed rated their organisation as having a high level of trust, while 93% reported a basic level (average or above) of trust. Organisations with the highest levels of trust reported millions of dollars worth of benefits. These benefits include lower voluntary turnover that would otherwise be spent on staff saving up to $750,000, fewer missed schedules resulting in gains of up to $4mn a year; higher levels of repeat business driving gross margins 2-7% higher and, by creating a secure environment, the majority of high trust firms (51%) would retain all staff even without a confirmed pipeline of work.
9. Enhanced collaboration
A reported 43% of the highest trust firms make collaboration central to how they work with other organisations across projects. When working with other firms, the highest trust organisations share information openly and easily (two thirds have a single source of truth for project information), receive responses to queries more quickly (they are more than twice as likely to get faster responses from owners and general contractors) and hear about problems faster (nearly one third believe general contractors and sub-contractors would share a problem immediately).
8. Return business
When asked how frequently they work with repeat clients, a third of respondents answered more than 80% of the time. In the US alone, the majority of those surveyed said they almost always work with repeat clients. The report found that great relationship building between the field and the office makes for a more successful project. A forged relationship between contractors and architects facilitates communication in subsequent projects, and a history of successful projects leads to trust and loyalty between contractors and their clients, which results in future partnerships.
7. Lower employee turnover
The shortage of skilled labour is a consistent challenge. The UK struggles to recruit for one in three roles, while 80% of general contractors in the US face challenges hiring qualified workers. Voluntary turnover – when employees choose to leave the business – is a big issue. Experienced workers take skills and knowledge out of the organisation when they leave, while the cost of replacing an employee is estimated to be one-third of their annual salary. Levels of trust appear to have a direct impact on retention, as the firms with the highest trust report the lowest voluntary turnover. Turnover rates are good – staff are choosing to stay – at the majority of firms with the highest trust (56%), compared to nearly a third of firms (32%) where trust is above average.
6. Fewer missed schedules
Construction businesses with the highest levels of trust are the most confident about meeting their project schedules. Organisations where trust is high are twice as confident as those where trust is “above average” (43% compared to 21%). Missing deadlines can be expensive. According to FMI estimates, missed schedules can cost a $100mn contractor approximately $17.5mn a year in direct and indirect expenses. Compared to organisations where trust is above average, organisations where trust is very high could benefit by as much as $4mn a year by meeting their deadlines.
5. Client loyalties drive profits
Bain & Company found that a 5% increase in customer retention can produce an increase in profits of between 25% and an astounding 95%. The cost of serving retained clients is lower, because you’ve already completed the onboarding process. There’s no need to align your technology, confirm billing processes, and even conduct background checks – cutting upfront admin costs and delays. This can make a significant difference to the profitability of each job and adds up over time.
4. Autonomy on the jobsite
“You have to have trust for staff autonomy. If you don’t trust your staff, then you end up being autocratic and you basically become a micromanager,” a commercial project manager from a New Zealand construction company explained. “If you don’t have a high level of organizational trust, you will lose employees.” Micromanagement is a poor use of time for those in executive positions who could be more productive in other areas, and it tends to diminish company culture and leave staff feeling less secure about their contributions to the company.
3. Transparency and Consistency
Consistency fosters trust. Across project planning, building, close out, and lessons learned meetings, organisations with the highest levels of trust are significantly more likely to take a consistent approach to their work. Consistent processes ensure that employees know what to expect and what is expected from them from project to project. Internal communications are similarly consistent. When requests are clear, employees understand what’s desired and can focus on completing the task, while managers can be confident about the outcome – fostering trust on both sides.
2. Higher productivity
Employees of firms with a high level of trust are more engaged and therefore they are also more productive and do better quality work. Equally, the greater the level of trust, the more likely employees are to exceed what’s expected of them. There’s a notable difference between the most trusted firms and firms that are just above average: the highest trust firms are twice as likely to outperform. Employees will go above and beyond when it comes to helping each other. These organisations foster a more positive working culture capable of delivering improved results.
- 1. Inclusive cultures improve outcomes
An environment that begins with a tight-knit team of employees who trust each other generates a great sense of pride in the job. This culture needs to be cultivated by every employee so they feel heard. New tradespeople build their skillset faster and with excitement, and all parties feel a sense of responsibility to each other and the overall completion of projects. This inclusive culture boosts employee satisfaction and, overall, a better standard of work. Stakeholder investment in everyday work, as well as the final outcome, results in superior craftmanship.
The essential ingredients for building a company where each stakeholder trusts their co-workers and their leadership starts with respect and engagement. All opinions should be valued and workers need to be supported so that they can continue to improve their craft.