The Speed of Trust

One of the keys to my work in supporting leaders and their organisations to thrive is the development of trust. To that end I attended a seminar last week at The Hilton Hotel in Sydney where Stephen M R Covey, the son of Stephen Covey, famous for “The Seven Habits of Highly Successful People. Covey junior, was delving into his best selling book “The Speed of Trust” which has just become a best seller.

Stephen M R Covey on the left and yours truly on the right.

Three of the highlights that I though I would share with you were how:

1. We have a crisis of trust
2. High trust drives engagement
3. High trust increases speed and reduces cost

 1. A Crisis of Trust

• Only 51% of employees have trust and confidence in senior management
• Only 36% of employees believe their leaders act with honesty and integrity
• Over the past 12 months, 76% of employees have observed illegal or unethical conduct on the job—conduct which, if exposed, would seriously violate the public trust
• The top reason people are passed over for promotions is a lack of trust that they will perform
• The number one reason employees leave their jobs is a negative relationship with their boss

Sociologist David Halpern’s research shows that 4 decades ago in Great Britain 60 per cent of the population believed other people could be trusted; today it is down to 29%. In Australia it is 40%; New Zealand 49%; Scandinavia - 68%; The Netherlands 60%. Latin America was only 23% and Africa 18%. Mexico is 31% up from 19% in 1983 indicating that it is possible to increase societal trust.

Trust in Government, media, education and business was low - lowest was business. Consider the number of students who acknowledge that they cheated in order to improve their odds of getting into graduate school.

Liberal arts students 43%
Education students 52%
Medical students 63%
Law students 63%
Business students. 75%

2. Trust drives engagement.

Think for a moment about what it is like working with someone you trust and someone you distrust. Do you behave differently with someone you trust compared to someone you distrust? I know I do. I am more likely to run with things with people I trust with far less scrutiny. With people I feel low trust with I can tend to end up micro managing. What does that do to engagement?

According to the New York Times the Top 20 innovative companies in the world have high trust as the common denominator. A study in the Netherlands of 11 companies found that for every point of trust increase – engagement doubled. 96% of engaged people trust their leaders. Only 46% of those not engaged trusted their leader.

3. High trust increases speed and reduces cost.

“Organizations with high trust outperform organizations with low trust by nearly three times.” Watson Wyatt 2002

“Mistrust double the cost of doing business” Prof John Whitney
Columbia Business School.

The Sarbanes-Oxley Act was passed in the U.S. in response to the Enron, WorldCom and other corporate scandals. While it appears that Sarbanes-Oxley may be having a positive effect in improving or at least sustaining trust in the public markets, it is also clear that this has come at a substantial price. More rules and regulations that have to be followed – more cost and time. Compliance regulations have become a substitute for the lack of trust.

“When you break the big laws, you do not get liberty; you do not even get anarchy. You get the small laws.” G.K. Chesterton (an influential English writer)

Warren Buffet CEO of Berkshire Hathaway and the richest man in the world recently completed a major acquisition of McLane Distribution (a 23 billion company) from Walmart. Typically a merger of this size would take several months to complete and cost several million dollars to pay for all the due diligence. But, in this instance, because both parties operated with high trust, the deal was made with one two hour meeting and a handshake. In less than a month it was completed.

How about this. A donut and coffee street vendor in New York City located outside of one of the big office buildings found that during breakfast and lunch hours he had long lines of customers waiting and many would get discouraged and go elsewhere. As a one man show he realized that what took a disproportionate amount of his time was giving change.

So Jim simply put a small basket on the side of the stand with dollar bills and coins in it and trusted his customers to take their own change. Now far from being ripped of what he found was that his tips went up, he moved people through at twice the speed, customers liked being trusted so came back and his revenues doubled without adding any new cost.

When trust is low, speed goes down and cost goes up. When trust is high, speed goes up and costs go done.

According to Covey, leading organizations who ask their employees directly the following question in formal, 360 degree feedback processes “Do you trust your boss? find this question is more predictive of team and organizational performance that any other question you might ask.

“When trust is high, the dividend you receive is like a performance multiplier, elevating and improving every dimension of your organization and life.” Stephen M R Covey.

When customers feel they can trust you and what you offer they buy more, more frequently and if something goes wrong are more likely to give you the benefit of the doubt.

In conclusion Stephen Covey describes 13 behaviours that induce trust stemming from Character and Competence. 5 behaviours relate to Character; 5 to Competence and 3 are a combination of the Character and Competence.

I trust you found this blog article of interest. Thanks for reading.

For more information check out www.coveylink.com or email me your questions at success@jonpratlett.com.

Want to increase the level of trust in your organisation? Call Jon on 61414369412 or 61 2 93694120.