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The June Trust Matters Review

Trust Equation

This month at the Trust Review we’re going to intersperse the more recent articles and posts with some goodies, but oldies, including one article from the 90s because, really, trust, trust never changes.

Yves Smith tries to answer the question, how long can trust created by public institutions last? Well, here’s a hint, you can tell where the Hapsburg Empire once ruled by levels of trust in public institutions? Whoa.

Doug Bartholomew of Industry Week discusses the issue of trust between manufacturing suppliers and their customers, including hard data from 90s on how top suppliers operate. I wonder if it’s still true that trust pays for suppliers.

Knowledge@Wharton, back in 2005, had Peter Cappelli lead a discussion on a question which is eternal, at least since the creation of Human Resources. Does HR exist to be a bureaucratic pain in the neck, or is it actually useful, and, dare I ask, worth trusting to find top talent (what used to be known as good workers?)

The Trust Diva blog wonders if a contract can actually save you from the bad intentions of someone you’re doing business with. Or, to put it another way, should you do business with someone you don’t trust, trusting the contract to keep them on the straight and narrow?

Daniel H. Pink writes about a Columbian bank’s efforts to use incentives to convince its loan officers to not leave their work till the end of the month. Did it work? And more broadly, do incentives work?

Brad VanAuken makes a point about brands, a brand is nothing without trust. Or, to put it another way, like McDonalds food, or hate it, you know what you’re getting when you order a Big Mac. A brand is a promise. At the same blog, Mark Ritson meditates on Sri Lankan beer and trust.

The McLaren blog has a 12 part series on trust building behavior, and they’re up to number 11. A good reminder of the basic points. Start with number 1 – straight talking.

Anthony Iannarino writes about delegation—the art of giving tasks to their rightful owners, which means trusting them.

Dave Brock writes about the commoditization of referrals, the invitations to join “referral networks” with people you don’t even know and receive prizes in exchange for referrals.

Discover magazine on how the perception of choice makes us lose our compassion for people. Even if those people were completely the victim of circumstances.

Denny Coates: trust and they will trust back, give and they will give back. Do you believe this is true?


The Trust Matters Review highlights the best articles and posts on trust our research has turned up in the last month.

If you’d like to share a great article about trust, let us know, in the comments here.

For more links to outstanding articles on trust, see:

 

Warren Buffett and Managing Through Trust

On March 30, Warren Buffett’s Berkshire Hathaway announced David Sokol’s resignation. Buffett’s reputation quickly took a bit of a hit from the likes of Joe Nocera.

Nocera suggests it wasn’t the first time Buffett had tap-danced his way out of a tight spot; he cites the Salomon Brothers’ bond scandal in the 1990s, and the General Re dustup in the mid-2000s.

What’s Nocera’s point? He later elaborated that Berkshire Hathaway is run by “rules that are extraordinarily lax by the standards of good corporate governance…Standards and practices have to change.”

Do Trust Violations Invalidate Trust?

Nocera’s examples amount to once per decade over the last 30 years. Buffett’s reputation is probably pretty safe, because a great truism about trust isn’t true at all: you know, that bit about how trust is hard to gain, but can be lost in an instant? Not true: trust takes roughly as long to dissipate as it took to create (see Toyota, J&J, Madoff).

But Nocera’s reaction is the norm. Ethical problems? Time to double up on compliance, standards and practices, procedures.

Nocera is speaking for business when he sees violations of trust as prima facie evidence of the failure of trust as a strategy.

In this regard, he could not be more wrong.

Charlie Munger and Wisdom of Managing through Trust

Charlie Munger is Buffett’s much-less-in-the-press partner. Buffett credits Munger with at least half the wisdom of the two, and quotes him often.

Munger lives up to his reputation in a trenchant article[1] by Darden Professors Brian Moriarty and Edward Freeman:

In response to a question about whether Berkshire needs more compliance controls Munger said:

…the greatest institutions in the world…select very trustworthy people and then trust them a lot.” He added, “I think your best compliance cultures are the ones which have this attitude of trust, and some of the worst with the biggest compliance departments, like Wall Street, have the most scandals.”

To Munger’s comment: Amen.

The violation of trust by someone who was trusted does not justify giving up on a strategy of trusting. In fact, if you never have a violation, one has to wonder how real your trusting is.

If all of Wall Street ran themselves like Berkshire Hathaway, and had one scandal per decade, we’d all be vastly better off.

Instead, we have an institutionalized belief system that the solution to ethical problems is a set of adversarial business processes. Dealing with ethical issues solely via compliance departments is the best way to take the trust and ethics out of management.

And if the bar is set at once per decade by famous journalists thinking they are acting in service to greater trust in business–well, heaven help us.


[1] The article was in the Washington Post, though the Post will make you jump through hoops to get it. I’ve linked to the hoops.

Trust Primer Volume 11

Our goal at Trusted Advisor Associates is to help people and their organizations become more trustworthy and trust-enhancing. It’s always exciting when we meet people who believe as we do. It’s even more exciting to talk to those who have found success by applying the same principles we talk about.

This month we place a spotlight on real trusted advisors, success stories of real professionals who make trust part of the foundation of their business strategies.

The Trust Primer Volume 11 features three powerful interviews: Chip Grizzard, CEO of Grizzard Communications; Jeb Brooks, son of author Bill Brooks and Executive Vice President of the Brooks Group; and Mahan Khalsa, partner of Ninety-five-5 and author of Let’s Get Real Or Let’s Not Play.

Each of these three demonstrate in their own unique ways how concepts of trust have played out for them in sales and leadership careers.

Get the Trust Primer volume 11 here

If you enjoy this ebook, you can email it to friends by following this link. Better yet, stop by the blog and join in the conversation. If you received this from a friend or colleague and would like to subscribe to the series, click here.

Upcoming Events and Appearances: Trusted Advisor Associates

Join us at one or more upcoming Trusted Advisor Associates events. This Spring, we’ll be hosting and participating in events in New York, NY; Fargo, ND and through globally accessed webinars.

Also, a word about the Trusted Advisor Mastery Program.

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Tues. Mar. 15th New York, NY Charles H. Green

Charlie will be speaking in New York, March 15th, with Jordan Kimmel at NYU Alumni’s Executive Forum. The subject is “Restoring Trust in Post-Madoff America: What it Means for Advisors, Companies and Investors.” National Arts Club, 15 Gramercy Park South. 5:45 Cocktails, 6:30 Dinner, 7:30 Speakers. $75. RSVP for the event here.

 

Wed. Mar. 16th Global Charles H. Green

Charlie will interview investor relations expert Laura Rittenhouse, on the subject of “How the CEO Candor Crisis is Strangling Our Economic Recovery.” Laura is president of Rittenhouse Rankings, Inc., an investor relations company that advises managements on strengthening corporate candor in order to improve execution and financial valuation. The Rittenhouse Rankings annual survey is the world’s only benchmark to correlate financial performance with CEO Candor. She is the author of Buffett’s Bites and Do Business with People You Can Trust. Log in to listen at www.voiceamerica.com. 12pm EST.


Mon. Mar. 28th New York, NY Sandra Styer

Sandy Styer will be speaking on “Building Your Trusted Advisor Skills” at the Masa Israel Journey on Monday, March 28th in New York City.

 

Wed. Apr. 27th Fargo, ND Sandra Styer

Sandy Styer will be presenting “The Heart of Trust: Keys to Becoming a Trusted Advisor” at the Tristate Trust Conference of the North Dakota Bankers Association on April 27th.

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The first tranche of the Trusted Advisor Mastery Program is entering its final month. Members are taking stock. Here’s what one participant has to say:

“This course works because it is not based upon the newest fly-by-night pet theory, but upon rock solid principles of human nature and social psychology. The ability to engender trust is the one attribute that separates those who succeed both in business and in life. Take this course and you will be well on your way to success in both realms.” (Nils Victor Montan, Of Counsel, Dannemann Siemsen Bigler & Ipanema Moreira, Rio de Janeiro, Brazil)

Stewart Hirsch, head of Trust-based Coaching, will do a live online walk-through of the program on February 28th at 2PM US-EST. If you would like more information or an invitation to the walk-through please email us at: mastery@trustedadvisor.com.

Radio Interview with Charles H. Green: Trust and Business

Monday night I was the guest on an hour-long radio show on PBS Station KCBX, in San Luis Obispo, California. The program is Trust in America, hosted by program director Guy Rathbun, with guest host Charles Feltman, of Insight Coaching

This was part two of a three-part program; part 1 was trust in government; part 3 will be Trust in Media. I was the guest for the segment on Trust in Business.

The interview was one of the better I’ve been invited to. Host Feltman teed up issues like:

·    the difference between trust, trusting and being trustworthy (3:00);

·    trust in corporations, vs. trust in business (5:30);

·    should we distrust corporations (11:30);

·    how you can build a more trustworthy organization (14:30)

·    the root of mistrust in business (20:00);

·    what influences citizens have over businesses (32:00);

·    economics of trust, trust and timeframe (38:30);

·    systemic effects of shift from relationships to transactions (43:00);

·    customer relationships and trust (52:30).

The show was broadcast live, and we had 3-4 callers contributing to the show.

If you like audio files; if you’d like to hear me instead of just read me; or if you want to hear a good discusison about trust–then listen to the mp3 file of this interview.

Trust, Trust, Trust

There’s a major bear market right now—in trust.  Or so it seems reading the papers, blogs and broadcast media.  The only bull market to be found is the bull market in talking about the bear market in trust.

So it’s very appropriate for this blog to have a point of overview.

First, a sampling:

This Tuesday, Henry R. Kravis said trust is the"The Single Biggest Factor" in the economic crisis:

Both the Economist and the NYTimes agree that trust is a Big Deal at Davos this year.

Paul Krugman says trust is a big part of the problem.

Robert Reich agrees with Kravis, that what we are facing is "a crisis of trust.”

Edelman’s Trust Barometer dropped precipitously across institutions this past year.  As the FT’s John Gapper  points out, Edelman’s survey suggests “only 49 per cent of Americans, living in the country of capitalism and free enterprise, thought the free market should be allowed to operate independently.” 

So—what does all this mean?  Above all, it means two Big Things:

1.    we are facing a Big Opportunity cleverly disguised as an economic crisis;
2.    at the heart of all trust is personal trustworthiness.

A Big Opportunity Cleverly Disguised as a Trust Crisis.  The academic research on trust is staggering in the breadth of definitions of “trust.”  We trust stoplights, Amazon book reviews, the kindness of (some)strangers, some businesses more than others, neighbors, those we know, those with similar names or facial features or religions—and we trust each in different ways.

How curious that, despite our inability to provide a concise dictionary definition, we nonetheless know from context pretty much what is meant when we use the word.  Which means, to say “trust is down” is not meaningful without context.

Other statements requiring context include “trust takes time,” “trust takes years to build and only a moment to destroy,” and “trust but verify.”   All are true in their place—and not so true outside that place.

Context is critical.

Most trust-talk these days is about institutional trust—the SEC, the institution of business, trust in the media.  Interestingly, it doesn’t take long for attitudes about institutions to change—a charismatic leader (a Pope, a President) can rather dramatically affect trust levels.  (By contrast, it takes much longer to change cultural attitudes toward trusting “others,” or toward strangers.)

All of which means getting the context right is critical.

Trust is Personal.  Former House Speaker Tip O’Neill famously said, “all politics is local.”  So is trust, in the sense that if is unlinked from people, it loses its breadth of meaning. We don’t say we “trust” that the sun will rise in the East, or that the law of gravity will work every time.  We may depend on or predict based on laws of nature; we “trust” people. 

We cannot afford a society based on 18th century models of a competitive state of nature.  We cannot even rely on "the rule of law"–society is too complex.  We cannot afford social constructs based on the suspected evil of others–we need models based on values and standards to which we demand people aspire.

This is a fundamental truth about trust.  In all the debates about institutional trust and the need for regulation, we ignore this truth at our peril. 

At the risk of using the same quote twice in a week: Samuel diPiazza, CEO of PricewaterhouseCoopers, and Robert G. Eccles, a former HBS professor, wrote, in Building Public Trust:

…even transparency and accountability are not enough to establish public trust. In the end, both depend on people of integrity. Rules, regulations, laws, concepts, structures, processes, best practices, and the most progressive use of technology cannot ensure transparency and accountability. This can only come about when individuals of integrity are trying to “do the right thing,” not what is expedient or even necessarily what is permissible. What matters in the end are the actions of people, not simply their words…without personal integrity as the foundation for reported information, there can be no public trust.” 

If there is any common message about trust, this should be it.  The "trust issue" is not fundamentally about disclosure, or process regulations, or even transparency: at root it is, as it always has been, about the personal integrity and trustworthiness of human beings in relationship to each other.