Friday, 24 February 2012

One little word...

As with love we have a basic human need to trust. From birth, we trust our mother to look after us, feed us and protect us from danger.  Even in the worst cases of abuse or neglect the bond of trust between mother and child is incredibly strong. But we’re also taught from an early age to mistrust; don’t talk to strangers, take care crossing the road. Generations ago the relationships we had were confined to those geographically closest to us; friendships and commerce were all conducted within a community of people we knew personally. Trust was easy to define. In today’s super connected global economy we frequently have relationships, however brief with people we’ve never met and will never meet. We communicate, transact and even propose marriage to people who we’ve only known digitally as part of our “virtual” community. It’s much more difficult to be certain of who we can and can’t trust and we have to base these decisions on new criteria. So what impact is this having on businesses?

Confucius told his disciple Tzu-Kung that three things are required for government; weapons, food and trust. If a leader cannot hold on to all three he should give up the weapons first and the food next. Trust should be guarded to the end; without trust we cannot stand.

There’s now a large body of research and evidence to support Confucius’ belief. In his book “The Speed of Trust” Stephen Covey suggests that things can happen up to 60% faster in “high trust” organisations. People follow leaders they trust, allowing decisions to be made and implemented faster, creating a more agile, responsive organisation. Customers are more loyal to organisations they trust creating further competitive advantage.

But why can some people or organisations let us down and yet still retain our trust, whilst others make mistakes from which they never recover?

Trust – it’s so hard to build, and so easy to lose. Most of the time we barely think about it and yet it’s at the root of practically every decision we make.

In a business environment, we build trust most quickly by demonstrating capability and delivering results. This is why managers often speak of getting “quick wins” when they take over a new job or team. Trust is lost most damagingly when integrity is brought into question, or when self-interest influences actions and behaviour; we trust people who we believe will act in our interests, or who we at least believe are looking for a mutually beneficial outcome. There are many recent and well publicised examples of how trust can be damaged when integrity fails or self-interest governs behaviour; consider the “News of the World” and telephone tapping, Politicians and their expenses, Bankers and their bonuses. Once integrity is damaged or actions are driven by self-interest, trust is lost in a way which can be almost impossible to recover from.

But when trust exists great things can happen. As Chairman and CEO of Berkshire Hathaway, Warren Buffet leads by example; comprising 77 operating companies with over 250,000 staff and annual revenues in excess of $140 Billion, Buffet has just 27 Headquarter staff to co-ordinate and manage his empire. When Berkshire Hathaway acquired the McLane supply chain Company from Wal-Mart in 2003 for $1.5 Billion, it was done on a handshake, without due diligence and the whole deal was completed within a week. McLane is now the largest non-insurance company in the Berkshire Hathaway Group worth over $28 Billion. Contrast that with Royal Bank of Scotland's (RBS) acquisition of ABN Amro in 2008, which also attempted an accelerated process and limited due diligence. Shortly after that deal, the British tax payer bailed RBS out to the tune of £47 Billion. What made the difference in these two cases with remarkably different outcomes? Quite simply it was all about the behaviours associated with TRUST – as Covey suggests, things can happen much faster in a high trust environment and risk is greatly reduced. Ask yourself what the respective motives of Warren Buffet and Fred Goodwin (CEO of RBS) were? Which of these two leaders was being driven by self-interest? Who would you trust..?

Trust isn’t just important in multi-billion dollar deals and in huge global organisations; it starts when individuals build personal credibility, extend trust to others and see that trust repaid. With these principles as a foundation trust can grow and everyone benefits.

So why should people trust you? What are you doing that inspires trust and what might you inadvertently be doing that destroys trust?

How can you develop leaders who are trusted and how can you create a “high trust” organisation which is agile and inspires loyalty?

Start with your own personal credibility by building skills and knowledge that are relevant to your role, organisational strategy and the market in which you operate.  Use these capabilities to deliver great results; take the occasional risk and strive always to be the best you can be.

Take care always to demonstrate integrity; be honest, stand up for what you believe in and have the courage to do the right thing even when it’s the most difficult path. Finally, don’t allow self-interest to lead you astray; be open, give credit where it’s due and be supportive of other people and their needs. Look for “win-win” outcomes rather than “win-lose”. This is how people will judge your character; get it right and people will both trust and follow you.

For more information on how to build trust in your organisation contact me at

Trust: Self-interest and the common good; Marek Kohn. Published by OUP Oxford
The Speed of Trust; Stephen MR Covey. Published by Simon and Schuster UK Ltd