Trust is Currency in Business
There are no alternatives to trust. You must establish trust to be a better leader, create a healthy culture, and gain the loyalty of your people.
Trust = Character + Competence
Character is intent. And integrity.
Competence is capability. And results.
In my years of working with a variety of people in organizations big and small, I’ve found trust is the essential ingredient for flourishing interpersonal relationships—from families and friends to colleagues in the workplace. As a better leader, it’s important for you to understand, define, and establish trust with your people before you do anything else.
Trust Me, I Know What I’m Doing
So the question becomes, why should your people trust you? Why should you trust your own company? We usually trust someone because we think they have our best interests at heart. We trust their intention (why they do something). We also trust people who do what they say they will do (integrity). We trust those who have knowledge and experience (capabilities), and those who have a proven track record (results).
Ernest Hemingway said, “The best way to find out if you can trust somebody is to trust them.” In my experience, people extend trust in two ways:
It’s yours to lose.
You have to earn it.
Life experiences generally determine how someone offers trust. It’s imperative that you understand not only how others extend trust but how you extend it to others.
Whom we trust and what we trust them with isn’t always straightforward. It doesn’t just vary from person to person. It also varies from subject to subject and task to task. You can trust your accountant for financial advice but not for legal tips. You can trust an employee to work for you but not trust them to interact with your clients. You can trust your manager to submit an important report, but not trust them to solve the morale issue on the team.
Because there are several factors that go into determining who trusts who, understanding the nature of trust is easier if we break it down. In The Speed of Trust, Stephen Covey Jr. does it perfectly with this equation: Trust = character + competence.
To put it simply: You trust someone because of a combination of their character and competence. If they trust you it’s for the same reason.
We can break it down even further like this:
Trust = character + competence
Character = intent + integrity.
Intent = why you do something.
Integrity = doing what you say you’ll do.
Competence = capabilities + results.
Capabilities = are you able to do it?
Results = have you done it?
Note: We judge ourselves by our intentions while others judge us by our actions. For example, a salon owner recently updated all of his employment agreements at the same time as the COVID-19 epidemic. During this time, the government offered the Payroll Protection Plan to business owners, allowing the owner to give each of his employees $500. He positioned that money as a bonus for signing an updated employment agreement.
The owner’s intent was to give each person an extra $500 to help them through tough times, but some of the employees interpreted it as taking advantage of the unprecedented COVID-19 situation to renegotiate their employment.
All the pieces that go into building trust have to be constantly considered in relation to the other pieces. Understanding this phenomenon is useful when you set out to build your trust in other people—or earn the trust of others. Rather than saying, “I trust her” or, “I don’t trust her,” find one aspect of the other person you trust and build on that.
It’s important to understand all of the pieces that go into building trust have to be constantly considered in relation to each other. For example, a lawyer’s client may trust his intent, integrity, and capabilities but still shop around for another law firm. Why? The lawyer wants to ensure a good outcome (intent) he has impeccable references (integrity) and he has a degree from the top law school in the country (capability). But he lost the trial and the client had to pay a hefty fine (results). For complete trust to exist: intent + integrity + capabilities + results need to happen all at the same time.
The Trust Gap
In my discussions on trust, I’m often asked, “Is it easier to recover from a breach of trust in character, or in competence? Answer, it’s always easier to recover from a breach in competence.
In 2014, the Target Corporation had a data breach that affected the credit card information of about 110 million of its customers. This breach of trust cost them hundreds of millions of dollars. When the hackers hit Target it caused their customers to mistrust Target’s competence. Do you still shop at Target today? Why? Because their failing was related to competence (competence = capabilities + results). Target got bad results. But we all make mistakes, and as long as we know the other person is doing their best (intentions), we tend to give them a second chance to get better results the next time. Do you still shop at Target? Most people do because theirs was a breach of competence, not character.
Now let’s compare the Target incident to another kind of breach of trust that is listed as one of the top ten unethical business scandals we saw play out on the national news.
Enron was an American energy, commodities, and services company in the 1990s. Before its bankruptcy in 2001, Enron employed approximately 20,000 people. It had revenues of about $111 billion and Fortune named Enron “America’s Most Innovative Company” for six consecutive years. However, behind that supposed innovation, was a culture of accounting fraud that misled investors about Enron’s financial strength. Fraud is lying. Lying is a breach of character because one intends to mislead. Enron is no longer in business—not because they weren’t good at lying and cheating—they were really good at it. They lost the confidence of their customers, regulators, and investors because their intentions were bad. When customers don’t trust your character they leave.
A Culture of Trust
Paul Zak, author of Trust Factor: The Science of Creating High- Performance Companies, conducted research that found building a culture of trust makes a meaningful difference. Employees in high-trust organizations are more productive, have more energy at work, collaborate better with their colleagues, and stay with their employers longer than people working at low-trust companies. These employees experience less chronic stress and are happier with their lives, which fuels stronger performance. The 10-year study also revealed that in comparison to people at low-trust companies, people at high-trust companies report:
74% less stress.
106% more energy at work.
50% higher productivity.
13% fewer sick days.
76% more engagement.
29% more satisfaction with their lives.
40% less burnout.
In a 2016 global CEO survey, Price Waterhouse Coopers reported 55 percent of CEOs think a lack of trust is a threat to their organization’s growth. But most have done little to increase trust, mainly because they aren’t sure where to start.
Answer these questions for yourself on a scale of 1-10:
Where is my trust in myself?
Where is my team’s trust in me?
Where is my trust with my team?
Where do I need more trust?
Keep in mind that trust will vary from person to person, subject to subject, and from task to task. Be specific about the people, tasks, and subjects you want to assess—don’t only examine trust in an overall sense. Better leaders constantly measure and monitor trust. Better leaders know how to give it, get it and retrieve it if lost. Better leaders understand trust is the new currency.