Oxytocin, Economics, and Management: How Does Trust Really Work?

In the Sixth Episode of the “Leadership Podcast” – a joint project by the Center for Leadership of UCU and “Radio SKOVORODA” – we follow the lead of the host and Executive Director of the Center, Andrew Rozhdestvensky, in exploring the topic of Trust as a foundation of effective Leadership.

Why is trust so essential in today’s fast-paced and uncertain world? How can it be built within a team? And why is trust not only a social factor, but also one that directly affects employee retention and the economic success of your organization? Answers to these and many other questions await in today’s episode analysis!

So get comfortable – because we’re about to embark on a journey into understanding something without which true Leadership simply cannot exist.

Why Trust Is the Foundation of Leadership: At the Intersection of Economics and Biology

In today’s world, where constant change is the new normal, trust is not just a “nice-to-have” quality in a team. As Andrew Rozhdestvensky argues, it is a genuine strategic advantage. Research in behavioral economics, neuroscience, and organizational psychology consistently shows that organizations with high levels of trust deliver better economic outcomes. Leaders who can foster trusting environments activate not only higher engagement but also the biological mechanisms of collaboration within their teams.

One compelling example is found in the work of neuroeconomist and Claremont Graduate University professor Paul J. Zak. In his 2017 “Harvard Business Review” article “The Neuroscience of Trust”, author demonstrates that employees in high-trust companies experience:

• 74% less stress;
• 106% more energy at work;
• 50% higher productivity;
• 13% fewer sick days;
• 76% more engagement;
• 29% greater satisfaction with life;
• 40% less burnout.

According to the host, trust within a team also brings other critical benefits: it reduces transactional costs, lessens the need for excessive control and bureaucracy, and speeds up decision-making processes. On a broader economic scale, countries with higher levels of interpersonal trust tend to have higher GDP per capita.

These findings were already supported back in 2001 by the aforementioned Paul J. Zak and World Bank economist Stephen Knack in their joint publication “Trust and Growth” for “The Economic Journal”.

The Biochemistry of Trust: Oxytocin in Action

Zak’s work is also pivotal in understanding the biochemistry of trust. In his well-known Trust Experiment, scientist demonstrated that trust has a biological basis – and that the release of the hormone oxytocin in the brain directly affects a person’s willingness to trust others.

In the 2009 article “The Neurobiology of Trust” published in the “Annals of the New York Academy of Sciences”, co-authored with Robert Kurzban and William T. Matzner, he describes the core of the experiment: participants were given the opportunity to send money to another player, knowing that the recipient could either return a larger sum or keep all the money. The higher a player’s oxytocin level, the more likely they were to trust – and to act in favor of cooperation.

Interestingly, oxytocin levels increased in response to empathy, gratitude, and open communication – traits commonly associated with effective leaders. What does this mean for Leadership?

A leader who creates an atmosphere of safety, openness, and support:

• stimulates oxytocin release within the team;
• strengthens motivation to collaborate;
• reduces stress;
• and, as a result, improves performance.

In this way, trust is not only an ethical category, but also a neurobiological and economic asset. It forms the foundation for long-term results, innovation, and team cohesion in complex environments.

How Can Trust Help You Become a Better Leader? A Model from Ivey Business School

A vivid example of the central role that trust plays in authentic Leadership is the “Be a Better Leader” model developed by our strategic partners at Ivey Business School. The model outlines six key dimensions that help define a leader’s authenticity:

• Delivering Results 

Leadership begins with achieving clear and measurable outcomes. Effective leaders set high performance standards, stay goal-oriented, and implement strategies that generate real value.

“I love this example: in the Tour de France, only the rider who delivered the best performance in the previous stage gets to wear the yellow jersey. No one else receives any recognition. [It’s a great metaphor for the status granted to those who get results]”,

says Andrew Rozhdestvensky.

• Taking Smart Risks

Leaders don’t avoid risk. They evaluate it carefully, anticipate consequences, and make well-considered decisions. This involves stepping out of the comfort zone and seizing opportunities for growth.

• Stretching

This refers to a leader’s constant push for personal and team growth through difficult tasks, challenges, and ambitious new goals. Leaders who “stretch” themselves and others – like athletes during training – fuel innovation and boost performance.

• Learning

Leaders see all experiences – both successes and failures – as opportunities to learn. They actively seek feedback, analyze mistakes, and turn them into growth points.

• Self-Awareness

Understanding your own strengths and weaknesses, values, emotions, and the way you impact others is crucial. Self-aware leaders make better decisions, foster healthier relationships, and enhance emotional intelligence within their teams.

• Building Trust

Finally, the central theme of this episode – Trust – is the foundation of Leadership. Leaders build trust through consistency, transparency, honesty, and genuine care for others. Trust significantly strengthens collaboration, engagement, and team cohesion.

13 Behaviors That Build Trust

Research confirms that trust is an essential component of a healthy team culture. But how exactly can it be cultivated? The host refers the audience to “The Speed of Trust” by Stephen M. R. Covey and Rebecca R. Merrill. The authors recommend the following behaviors as trust-building strategies:

I. Principles of Honesty and Transparency

1. Talk Straight

Be honest and clear. Avoid manipulation, hidden agendas, or sugar-coating the truth.

2. Create Transparency

Make actions and decisions visible, understandable, and verifiable. Openness builds trust.

3. Confront Reality

Don’t shy away from problems – even the uncomfortable ones. Tackling tough issues strengthens trust.

4. Right Wrongs

If you’ve made a mistake, own up to it and make amends. This reinforces your moral authority.

5. Clarify Expectations

Unclear expectations breed distrust. Define roles and responsibilities clearly to foster accountability.

II. Behaviors That Show Respect for People

6. Show Respect

Treat everyone with dignity, regardless of their position. Respect is shown in tone, gestures, and acknowledging effort.

7. Demonstrate Loyalty

Support others even in their absence. Don’t say behind someone’s back what you wouldn’t say to their face.

8. Listen First

Genuine listening shows respect and a desire to understand. Only after listening can action be truly effective.

“In that sense, let me say something simple yet important: there’s a reason God gave us two ears and one mouth. As you can see, the authors share a similar view”,

adds our colleague.

III. Behaviors That Drive Results and Growth

9. Deliver Results

Trust cannot grow without delivering on what you promise. Consistent success strengthens credibility.

10. Get Better

Ongoing self-improvement shows that you’re serious about progress and not complacent.

11. Practice Accountability

Take responsibility for your actions. Lead by example and expect the same from others.

12. Keep Commitments

Perhaps the most powerful trust-builder. If you commit to something – follow through.

IV. Behaviors That Spread a Culture of Trust

13. Extend Trust

Trust must be given before it is earned. Leaders who delegate with trust spark accountability in return.

As the Executive Director of the Center for Leadership of UCU notes, this model is a highly practical tool for managers and leaders. It enables them to develop trust intentionally through specific actions. Ultimately, as the authors emphasize, trust is not an abstract concept – it’s a skill. One that has speed, economic value, and can be measured by behavior.

No Progress Without Metrics

You can only manage what you can measure. If HR doesn’t track the level of trust over time, changes remain intuitive and their impact – immeasurable. Trust metrics:

• identify “bottlenecks” in team interaction;
• help respond in time to trust issues with leaders or colleagues;
• become a foundation for strategic decisions (restructuring, replacing a manager, launching training programs, etc.).

How to Measure Trust in an Organization?

To measure trust indicators, the host recommends using straightforward approaches:

• Regular surveys include questions such as: “I trust my immediate supervisor”, “It’s safe to express opinions in our team”, “The company is consistent in its actions and values”, etc.

• Trust indices, such as:

• Trust Index (by Great Place to Work);
• Trust Inventory (models based on the 13 trust-building behaviors by Stephen M. R. Covey);
• The Trust Equation by David Maister.

• Cross-checking with business metrics: where trust declines, you often see higher turnover, increased conflict, or slower decision-making.

At the same time, trust should not be reduced to a number. It’s not a “happiness index”. The goal of measurement is dialogue, not control.

Why You Shouldn’t Change Methodology Every Year

“If you base your assessment on a particular trust survey, continue using the same one over the years. If you keep changing the questions – even if they’re similar – it’ll be difficult to compare results over time. That’s why it’s important to choose your approach with a 3-5-year horizon in mind”,

warns the researcher.

Consistent use of metrics brings a number of advantages:

1. Comparability Over Time

Without a stable methodology, it’s impossible to observe trends – whether trust is growing or declining. You need a consistent baseline to detect movement.

2. Building Trust Is a Long-Term Process

It’s like a muscle: it strengthens gradually. Frequent changes in tools create noise and distract attention. People lose reference points and stop taking surveys seriously.

3. Organizational Learning

Repeated use of one methodology builds a habit – both in HR and among leaders. They start to understand what affects trust and how to influence it.

4. Shaping Culture

Regular trust measurement is also a signal from HR: “This matters”. If the tools change constantly, the message becomes diluted.

How Is Trust Formed in the Ukrainian Context?

Trust is gaining increasing attention not only globally but also in Ukraine’s academic community. A vivid example is the inter-institutional study “Trust in Ukrainian Business and Education”, conducted by Paul Clyde (University of Michigan), Serhii Hvozdov (Kyiv School of Economics), and Sophia Opatska, founding dean of the UCU Business School and Vice-Rector for Strategic Development at the Ukrainian Catholic University.

As we previously highlighted in the blog of the Center for Leadership of UCU, the authors of this publication identified key trust criteria for various actors in the Ukrainian market. Following Andrew Rozhdestvensky, we cite their findings here.

The main factors in building customer trust toward companies were:

• corporate social responsibility;
• product and service quality;
• openness and transparency in communication;
• market stability and long-term presence.

In business-to-business relationships, other factors were critical:

• honoring commitments;
• responsibility;
• honesty in the face of changing agreements;
• compliance with pre-agreed terms.

Findings on internal team trust were equally insightful:

• shared understanding of the company’s strategy;
• support in challenging times;
• open and honest communication.

The most sensitive area was trust between business and government institutions. The determining factors were:

• transparency of legislation;
• institutional stability;
• predictability of public policy.

Thus, if we aim to foster a culture of trust in Ukrainian society, the points outlined in this study offer clear guidelines on how to get there.

Does Leadership Potential Depend on Your Zodiac Sign?

This was the first – somewhat tongue-in-cheek – question posed by viewer Kateryna Kryshkevych to our colleague. And the latter had to disappoint those inclined to believe in astrology: science, of course, has found no direct link between the month of our birth and our predisposition to Leadership.

Still, that doesn’t mean a fondness for horoscopes is harmful. Quite the opposite – it can have a surprising effect: not only as a form of entertainment, but also as a way to find confidence and stability in times of uncertainty.

“If reading horoscopes is a fun ritual for you – a way to clear your mind in these turbulent times – then go for it!”,

the host concludes.

Is “Shadow Leadership” Possible?

The next question reflected a long-standing debate: can hidden Leadership be considered true Leadership? And the answer here is unequivocal – yes! Public Leadership, of course, expands your audience. And with it, the influence you can exert. But is it always possible? What if you’re a talented manager working in intelligence or highly classified structures? Does that cancel out your Leadership potential?

As the speaker explains, it all comes down to the level of public visibility you are willing – or realistically able – to afford yourself.

What Role Does Empathy Play in the Life of a Leader?

When we talk about empathy, we need to understand that it is, first and foremost, an indicator of emotional intelligence. Effective team management, building trust-based personal and professional relationships – all of these, including the concept of trust that lies at the heart of this episode – are impossible without empathy.

“[However, we must remember that] there are two types of empathy: from the heart and from the head. And the first, deeply emotional kind, can be risky [for us as leaders]. Taking on others’ emotions as your own can speed up your own “burnout”…”,

cautions the Executive Director of the Center for Leadership of UCU.

Can a Social Media Influencer Be Considered a Real-Life Leader?

“To be, not to seem” – that, according to the expert, is what truly matters for any leader. Social media, with its blend of anonymity and algorithm-driven influence, often promotes the desire to seem rather than be.

“You become a true leader [not on social media, but] when you stop merely talking – and start combining public presence with action in the real world”,

concludes Andrew Rozhdestvensky.

Did the Soviet Model of Management Kill Leadership in Ukraine?

The governance methods of the USSR – inherently totalitarian in nature – didn’t “kill” Leadership as such. Rather, they taught many Ukrainians (and other peoples too) to rely on Directive Leadership. Or more precisely, directive management, as the host clarifies. And that, in itself, is not necessarily a bad thing – it implies a clear hierarchy and a centralized decision-making system.

But far more damaging was the “virus” of collective irresponsibility that this system fostered. And to build on our colleague’s point, we can refer to studies such as the 2017 research by Arturas Rozenas, Sebastian Schutte, and Yuri Zhukov – “The Political Legacy of Violence: The Long-Term Impact of Stalin’s Repression in Ukraine” – which vividly demonstrates how the repressive machinery affected the leadership potential of an entire society.

Do Music and Sports Influence Leadership Potential?

“Can music and sports foster Leadership? Or do they, rather, reflect a desire for self-expression?” – this final question served as the closing chord of the episode. And the answer ties many earlier thoughts together.

These kinds of hobbies – as long as they don’t turn into professional pursuits, often accompanied by hardships and trauma – are indicators of our desire for holistic development. They help us improve in various areas, build new partnerships, and even develop new neural pathways. All of this makes a person more socially attractive – a trait that undeniably contributes to Leadership in its classical sense.

Whether you give your “inner leader” that extra boost, however, is entirely up to you.

Final Thoughts

So what is Trust, the core theme of today’s episode? It is not just an ethical element of Leadership – it is a powerful tool for achieving high performance in any setting. Leaders who build a culture of trust are able to drive innovation, engagement, and motivation in their teams. And as practice shows, investing in trust means investing in long-term success and stability.

May this episode inspire you to explore this vital human dynamic more deeply – and to become the kind of dependable presence your team can truly count on!