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Trust is a tricky thing....

...it can take a company years to build and it can be destroyed in moments

Chris MacDonald Business Ethics Blog @Canadian Business - "Valeant Pharmaceuticals has suffered a crisis of trust over the last few weeks. More specifically, the trust that investors had in the company was substantially diminished in the wake of revelations that Valeant had an unclear but apparently too-cozy relationship with specialty pharmacy called Philidor. The loss in trust in this case was quite concrete, measured by a substantial drop in the company’s share price.

The source of this loss of trust was, as is generally the case, a question about the company’s ethics.

Doing business in the long run absolutely requires ethics. At the very least, doing business requires a degree of mutual respect, embodied in our commitment to getting things from others by offering them what we think they want in return. It also requires a commitment to basic honesty, and a commitment to honour our contracts. These ethical basics are essential because they are the foundation of trust. And if you don’t trust someone—at some level—you’re just not going to do business with them.

If trust enables business, then trust has a real value, in real dollars and cents. So what, then, is the dollar value of trust? I estimate the dollar value of trust, within the global economy, at roughly $102 trillion—in other words, the entire nominal Gross World Product for 2014. Without trust, all commerce on the planet would literally grind to a halt.

The fact that trust is crucial in markets is evidenced by the fact that businesses have come up with such a dizzying array of mechanisms designed to generate trust—everything from brands (which carry reputations) through to warranties, return policies, endorsements and third-party guarantors.

But what exactly is trust? What does it mean to trust someone? Functionally, it’s an expectation that someone will behave in certain ways. Trust is also an attitude—part calculation, part emotion—that involves an expectation of goodwill, or at least good behaviour. It is an expectation that the other party to a transaction will not do us harm. As my friend and fellow philosopher Daryl Koehn once put it, trust is a mean between paranoia and foolish faith.

But what happens when trust is broken? How can a company like Valeant (or Volkswagen, for that matter) regain the trust of consumers and the investing public? There are many ways to rebuild trust, and none of them is quick.

A company that has lost the trust of the investing public is likely going to need to show a consistent pattern of trustworthy behaviour over a substantial period of time. And the focus, here, is on the showing. CEO Michael Pearson has said how important ethics is to the company. And—present appearances aside—that may well be true. But in the light of the current wave of mistrust, the company is going to need to do more. It is going to need to engage in substantial disclosures, far beyond detailing the nature of its relationship with Philidor. In the face of a failure of disclosure, the company may well find that that it needs to engage in more disclosure than any company—even one with nothing to hide—would be fully comfortable with."

The question is, how do organisations diagnose where it has gone wrong in the first place and have specific insights into how the organisation and individuals within them feel.

Does Ethics Matter In Business?

Having 'consulted' for many years in a plethora of organisations from commercial through to public service and charity on areas from leadership, through team working and subsequently high performance cultures, I am left with some common threads that seem to always be present in those that work most effectively.

These include;

What actually are organisations (whether from Commercial FTSE 100s or Church)?

Perhaps it's better to look at them as a 'system' constructed by its members through the interaction of its members. So to be a bit off-the-wall, an organization is just a thought, not a thing. An imaginary construct of what is happening. Fundamentally it works because on the whole people come to work each day to do tasks that, should they agree locally it is right to do and this extends out throughout the whole group, it all works as a whole rather than by 'divine direction' from the physical top.

If leaders do decide what we do and set the vision, then why are we here now? Would they have designed the current position for any one of their organisations? NO.

So, the organisation emerges. The effective partnership emerges.

Ultimately, if individuals interact positively and agree what they do is right, this affects others near them and the overall thing creates patterns that appear coherent and effective – known therefore as emergence – though one has to accept somewhat unpredictable.

 Ethics and the critical role it plays in leadership success.

One critical facet to include of course is the issue of ethics – not so much ethics of the whole organisation, but the ethics of each person in the individual decisions at the most local of levels (1-2-1) through the individual actions we take.

Let's face it, ethics form the basis of trust, and trust is only gained through actions (I see what you do – so you mean it, but only believe you when you repeat it consistently over time).

So the big question is, what do you do if you know this or understand this construct and want to influence and effect good leadership or leadership for good?

Leadership therefore in our context is NOT a 'heroic figure', but more all about the local interactions between human beings. Too many people are pre-occupied with the 'game' and not thinking how to decide what is best, so are engaged in 'politics, persuasion and negotiation' rather than what actually the whole thing is aiming to achieve. So for effective leadership we should stop thinking of pre-designed solutions or ultimate master plans, but more how to influence the 'group' in the 'right direction'.

Excellent leadership (which is in my mind a social phenomenon arising through the interaction between people) is where others recognise you lead and you recognise their roles. Leadership is therefore co-created.

Ethical Leaders therefore must:

  1. Interact locally (regularly)
  2. Communicate to large numbers of people. However remember the interpretation is how it is taken up by local interactions. Pronouncements are but gestures and the effect once again is through local responses – we can't control how it is interpreted.
  3. Understand how it works locally which ultimately is by 'conversations'. Conversations within groups and between individuals.
  4. Realise they are leaders, only if they are sensitive to the situation and able to articulate what is emerging, which helps the group move forward and on.

Ethical Leaders therefore have to:

  1. Widen and deepen communication to help the group move forward
  2. Try and explore what to do in change (options)
  3. Stimulate ordinary conversations in times of anxiety. Why? Because if we don't, people jump to conclusions as they look for safety (or to meet their own agenda).
  4. Live longer with being anxious so they keep the conversations going longer so a solution arises that is far better than jumping to quick fixes and mundane solutions no one in the end believes really work.
  5. Be self-reflective to realise they should not be idealised as this can lead to ultimate denigration – let's face it, Barak Obama realised this when he said he is 'not the Messiah' or has all the answers.
  6. Help others take the next step. 

So, I agree with those that say selection and training of leaders is essential. That same training should open leaders' minds to all these insights and help them understand how to manage this uncertainty, while finding the way forward for themselves and for the group as a whole. We have a portfolio of products and services that can affect leadership for good in your organisation. Should you wish to know more, or even put something in place for your leaders, Entrusted can help you put the right things in place.

'Jive Talking'

I remember when the Bee Gees released the song "Jive talkin'" in 1975. Oh those halcyon days as a teenager with no cares in the world, enjoying school (I actually really did!), and that enjoyment in life extended to most things including sports and playing football that summer in the streets of north London where I lived. Good times indeed. Truth is that at that time I didn't realise what the words really meant to the song, but sensed it was something about double talking and being misunderstood.

Anyway, it was only the other day while working with a client I asked a question to explore further with her why an excellent initiative to bring about innovative solutions to enhance business performance and productivity had floundered. It transpired she had taken the lead in offering to co-ordinate the work we had begun with her team and draw together their support – offered publicly at the time – to return to a final event and share the outcomes. Sadly she announced the initiative had not delivered as expected, although on the original day everyone was both enthused and enjoyed the work. Indeed, they came up with many robust ideas and potential ways of delivering the solutions, but when it came to working with her to bring them into practice she found everyone had a reason not to either reply, commit or even take their level of responsibility, declaring in most instances that they were either too busy or felt their personal priorities took precedence.
While this short synopsis spares any further details to save exposing anyone, it is fair to say these sorts of outcomes are not uncommon. Why do so many initiatives, plans and stated actions, whether around cost-savings, increased productivity or simply improved customer service, flounder?

What is it about making promises when the spirits are high only to back down, finding excuses or simply avoiding doing what we said we would do? It all sounds like "Jive talkin'" to me.
Truth is it doesn't have to be that way. By developing real trust within a team through open dialogue, conversations and discussions that really say what we think and think what we say, followed by doing what we say, consistently, things can be different, promises fulfilled and success achieved beyond the norm. All these simple, yet necessary actions will fundamentally serve as the true building blocks to sustainable trust in relationships, teams and organisations.

Have you had similar experiences? What worked and what actions complement the fundamental principle of trust?

The Value of Trust

If I may be so bold, I would like to make a big deal about TRUST as I really feel it is the key to a brilliant team, individual fulfilment and personal success.

So here are some thoughts I’ve gathered on Trust that I hope shed some light on the value of trust.

Trust is the fabric that binds us together, creating an orderly, civilized society from chaos and anarchy. Trust is not an abstract, theoretical, idealistic goal forever beyond our reach. Trust –– or lack of it –– is inherent in every action that we take and affects everything that we do. Trust is the cement that binds relationships, keeping spouses together, business deals intact, and political systems stable. Without trust, marriages fails, voters become apathetic, and organizations flounder. Without trust, no company can ever hope for excellence.

Understanding the meaning of trust allows you to work toward being a trusted and trusting person. The truth is that trust is never guaranteed, and it can’t be won overnight. Trust must be carefully constructed, vigorously nurtured, and constantly reinforced. Trust is established over time, gradually, through a long chain of successful experiences. In the early stages of relationships, whether personal or business, we extend ourselves in small ways and observe the responses to our actions. Then we take appropriate action, withdrawing, maintaining our behaviour, or extending ourselves a bit further each time until trust is established. Although trust takes a long time to develop, it can be destroyed by a single action. Moreover, once lost, it is very difficult to re-establish. Building trusting relationships is a process that can best be described as stacking layers on a foundation one at a time in such a way that each layer bonds on top of the prior one before another layer is added.

In a world where time is a precious resource, where we must often move without having the time to explore all the options, we use shortcuts to circumvent the process. For this reason, an individual’s or organization’s history or track record is often evaluated to gauge how we may be treated in a relationship.

Winning Trust: A Step-By-Step Guide

To expand on what constitutes the building of trust and how each of us wins the trust of others, the following simple four-stage diagram and subsequent explanations should provide you with a clearer picture of not just the value of trust, but the critical components that take time to build upon and enable a truly trusting relationship between you and others, within the team itself, throughout the business and critically with your customers, clients of stakeholders.

It is important I stress that each and every building block is important for the establishment of trust and that there are no quick fixes to achieve lasting trust, but with mindfulness and constant attention to your behaviours, predictability ultimately results and with that faith amongst all participants. It is this faith that would be the ultimate measure for the successful achievement of trust.

Trust: First stage

FoundationTrust Leadership

The foundation, or first stage, represents the beginning of a relationship and depicts the history of those involved. We generally start off with some preconceived notion about others. We meet and develop first impressions about people through the friends we have in common; watching how they treat others; the things they talk about in meetings, while commuting, at parties; and general observations during work. We develop first impressions of companies by seeing an advertisement, getting references from people, or reading articles about them on the Internet.

Trust: Second stage

Support structure | The values on which trust restsTrust Leadership

The second stage represents values that lead to trusting relationships, such as integrity, reliability, and openness. Once these characteristics are demonstrated, they form the support structure of a trusting relationship. When these actions are repeated time and time again, the relationship is strengthened and becomes part of the framework of the next phase.

Trust: Third stage

ConsistencyTrust Leadership

The third stage, consistency, enables us to anticipate probable actions. It provides a certain degree of comfort that helps us to maintain the relationship even through difficult times.

Trust: Fourth stage

From predictability to faithTrust Leadership

The fourth stage is faith. As these layers are stacked on top of the other three stages, everything that came before them strengthens the framework. This is the stage at which actions are so predictable that we don’t consciously have to think about the relationship. At this phase, trust has become so integral a part of the relationship that we expect it to work. At their peak, relationships imbued with trust are bonded together by a faith so strong that it is very difficult to destroy the relationship. It is at this stage that people allow themselves to become entirely vulnerable to others.

To conclude this insight into Trust, I would like to share a short blog post by Ted Colne which talks of why trust is so important for a leader like you in the long run:

Why is trust so important for a leader in the long run?

In a word, faith.

A leader whose people trust her, is someone whose people have faith in her; people who will give her the benefit of the doubt when things go wrong; people who stick with her when she stumbles, or when the group fails as a unit. That faith, that trust, is like money in the bank saved for a rainy day. Without it, a leader’s people will desert her at the first sign of trouble.

This could be physically, as in quitting the team, the business unit, or the company. It could also be emotional, and this may actually be worse. When people come to work disgruntled, they won’t put in their best effort. They’ll infect newcomers with their negative attitudes. Their customers will catch the vibe. So will potential customers, and potential employees. How do you measure sales that don’t happen, or talent that doesn’t come aboard? Yet these immeasurables can spell the slow, painful death of an organization.

On the other hand, it is trust that provides the opportunity to lead the team out of danger when trouble strikes – as it always will, no matter how amazing a leader one is.

For instance…

  • Edison resisted moving from Direct Current to Alternating Current for far too long; had his investors not trusted him, he would have lost control of his company and might have died a failure
  • The people of South Africa trusted Nelson Mandela to lead them out of white rule and into democracy peacefully, rather than through bloody revolution; trust made all the difference to the entire nation

How about you, Mr. or Ms Leader?

Do your people trust you? When you stumble, do they forgive you and remain by your side, or do they roll their eyes at each other and say, “Here she goes again?”

Chances are very high you cannot answer this question properly yourself.

The higher we get on the org chart, the less in-touch most of us are with our people – and most leaders compound this tendency, of isolation-through-position, by surrounding themselves with yes-men or with like-minded individuals.  That means few leaders can trust someone to tell them when their people have lost trust in them.

Who tells you when your baby is ugly? And what is the price of not knowing?

Changing companies’ minds about women

Diversity is the key to driving change in any organisation. As the wage gap slowly decreases, the need to break down invisible barriers for women in the workforce is still prevalent. How do we overcome these and manage these challenges?

Brash, J and Yee, L. (2011) Organisation Practice: Changing companies’ minds about women. McKinsey Quarterly.

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