As U.S. economist Joseph Stiglitz once pointed out, “It’s trust, not money, that makes the world go around.” Unfortunately for the business world, that asset has experienced considerable depreciation lately.
Although global PR firmshows an increase in trust in business overall (from 48% in 2015 to 53% in 2016, as rated by the general population), there are significant variations across industry sectors, and only 53% is a pretty stark number.
Technology was shown to have the highest trust rating (74%) while financial services—perhaps not surprisingly—the lowest at 51%. And this was before both VW and more recently Wells Fargo took significant business hits due to untrustworthy acts.
The most cited reason for this lack of trust in business is because, “the business fails to contribute to the greater good.” Indeed, across all the key attributes that Edelman’s survey identified as important to building trust in today’s leaders, each had a performance gap. The most sizeable gaps being the way leaders treat their employees, their level of openness and transparency, and the extent to which they exhibit highly ethical behaviors.
In North America we want our top leaders to be honest, ethical, competent, transparent and sincere. Absent that evidence, we just don’t trust them. And in terms of how far employees trust the companies they work for “to do the right thing,” the findings for the U.S. and Canada (64% respectively) fall just below the global average (65%). Seriously lagging behind China (79%), India (83%) and the top country, Mexico (89%).
Given that situation, is it at all surprising that employee engagement levels are also low? Or that, according to the World Economic Forum the U.S. is lagging behind countries such as Switzerland, Sweden and the U.K. when it comes to innovation?
Trust is one of those concepts we intuitively understand but often struggle to define. That’s because it’s comprised of a number of different character traits and competencies including those listed above (e.g., honesty and transparency) as well as caring, fairness, intent and authenticity.
Many of my clients use a formula I developed to help clarify the attitudes and – more importantly – the actions we need to authentically embrace in order for trust to be established:
Trust (T) is a function (f) of three factors:
- Evidence (shown through actions and an adherence to stated values) of good Intentions (I). “I” increases as others learn—through your actions—that you are motivated by shared interests, that you have the other’s needs in mind as well as your own;
- Multiplied by Consistency (C) of actions over time. How well do your actions match your words, and how well do you keep your commitments to others? (Note that as consistency increases, so does trust, but if one of these functions is zero, trust is non-existent.)
- Divided by the amount of Risk, or what’s at stake. The greater the risk involved, the higher your intentions and consistency needs to be for trust to be sufficiently established.
*Adapted from “The Decision to Trust” by Robert Hurly, Harvard Business Review, 2012
One of the biggest impediments to building a high level of trust that I have found in my 30 years of working with companies to improve performance through more effective leadership and teamwork, are the assumptions or erroneous beliefs we hold about other people’s motivations. The Mark Twain quote “nothing so needs reforming as other people’s habits” seems to apply too often. You’ve undoubtedly experienced this yourself—either in terms of developing trust in others, or being trusted yourself.
For example, let’s imagine that your boss “imposes” an outside consultant on you, to help move along a crucial project that has hit some bumps on its way to completion by you and your team. You may not even be consciously aware of how, thinking about this in terms of an “imposition,” automatically predisposes you to assume or believe this person is “the enemy.” Given what we know about “confirmation bias,” without a full level of consciousness, you will look for evidence that you’re right, rather than question whether you may be wrong or making snap judgments.
Holding onto that cognitive impediment to fairness, is it any surprise that we find ourselves unwilling to be flexible in giving the new consultant the benefit of the doubt, and end up undermining what could have been a strong and mutually supportive relationship?
Resilient Business Relationships
As I point out in my book and research, it’s especially essential to quickly shift from doubt to trust today. That’s because the volatile, uncertain, complex and often ambiguous circumstances in which we operate (the VUCA environment), requires us to increase both the speed and quality of innovation, creating a lot of change very quickly. This increases the need to establish resilient business relationships that can withstand any amount of “heat” and stress and still perform. In short, they need to be strong, flexible and fair.
Assuming the other side’s motivations and intentions
Asking clarifying questions in order to identify shared goals and intentions (Strong)
Buying into a blame culture, meaning you avoid taking full responsibility yet set it up so the other party(ies) take the fall, should things go wrong.
Assigning each member of the team their individual responsibilities, yet identify shared ownership and accountability for the overall goal (Strong)
Showing a lack of confidence in the capabilities, skills and resources of the other party(ies), putting them under even more stress
Acknowledging that each person has value to add and doing whatever is needed to help them succeed (Flexible)
Accepting, at face value, statements or assessments that may be inaccurate or biased
Committing to always telling the truth yourself, and seeking a diversity of opinions in matters concerning others (Fair)
Fearing that other’s self-interests are driving them
Developing confidence that each party is working to the best of their ability to meet shared goals (Fair)
Adapted from “From Breakdown to Breakthrough” by Michael Papanek with Liz Alexander, PhD.
If trust truly is what makes the world go around—and history shows that we have always looked for ways to do business with those we trust, from kinship groups like the medieval guilds to the larger, more efficient institutions of the past 200 years that helped promote greater economic prosperity—then this is an asset we must actively invest in and grow.
The advantage being that when trust is established in a way that is strong, flexible and fair, the resulting relationships achieve the kind of breakthrough resilience that can withstand anything the VUCA environment throws at them.