The June Trust Matters Review

/0 Comments/in , /by

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:

 

Managing For Trust

/2 Comments/in , , , , /by

Supposed you asked me the score of the latest Boston Red Sox vs. New York Yankees game, and I told you “12.”

You: Twelve? What kind of score is that?

Me: Twelve points were scored in the game; you asked the score, that’s it.

You: Well, who scored how many?

Me: New York scored 7 and Boston scored 5.

You: Well thanks; you could have led with that!

Silly. But that’s exactly what happens with trust metrics. People say, “Trust in business is down.” Cue the dialogue.

You: Trust is down? What kind of metric is that?

Me: Well, some people trust less, some businesses are less trustworthy; the net is down.

You: Wait: how much of the “down” is made up of people trusting less; and how much of the “down” is made up of business being less trustworthy?

Me: 73% of it is business being less trustworthy; 27% of it is people being less inclined to trust.

You: Well thanks; you could have led with that!

Are you trying to improve trust in your organization? You might want to start with clarifying the problem you’re trying to fix.

Are you trying to create more trustworthy employees and managers, so that customers and other stakeholders will trust you? Then focus on the personal attributes of trustworthy people, and on the kinds of principles and values that are observed in trustworthy companies.

Or are you trying to get your people more willing to trust others? Getting better at trusting means better risk management, delegation, personal growth, people development and innovation, to name a few benefits.

What is it that you are trying to manage?

Never mind, “You can’t tell the players without a scorecard.” Heck, you can’t tell the score without knowing what game you’re playing!

Man Bites Dog: A Relentless Onslaught of (Online) Civility

/22 Comments/in /by

Rodney Dangerfield said, “I went to the fights; a hockey game broke out.”

The crusty old editor says to the cub reporter, “Don’t give me dog bites man; if you’ve got man bites dog, now that’s a story!”

Something like that is happening over at Forbes Magazine, where TCU Economist John T. Harvey has guest-written a rather unusual post, titled How to Destroy the US Economy? Balance the Budget. Here are the opening two sentences:

I can think of nothing more fundamentally foolish, more unequivocally self-destructive to our economic well being today than attempting to balance the US federal budget. It is totally unnecessary and every dollar we cut from government spending is a dollar taken from someone’s income.

I say “unusual” only because the title and the opening lines lead one to believe Harvey is a raging Keynesian liberal, which one hardly expects to see in Forbes. What will the readers think!

The Emergence of the Flamers

Sure enough, initial reader comments did not disappoint. The flamers jumped on Prof. Harvey with track shoes, e.g.:

The trouble with you young people is that you do not understand the use of money. Money is a foreign element to you. You don’t even know what it looks like! All you understand is plastic, and that means borrowing.

This is absolutely asinine. You cannot seriously believe that it is more expensive for the government to provide unemployment benefits etc than it is to EMPLOY someone and then tax the salary that the government is giving them. If that’s how the system worked, the USSR would have long ago become the lone superpower.

Professor Harvey started to respond. He quickly (within an hour) answered every comment—calmly, rationally, taking every person seriously. He greeted each person warmly (“Howdy, psumba, thanks for reading!”).

He didn’t coddle (“you seem to have misunderstood my point”), but he never talked down to anyone either—no matter how tortured the logic, no matter how rude the tone.

And then a remarkable thing began to happen.

Some commenters started to get honest. The level of vitriol declined. Issues began to get discussed. Look at these excerpts from commenters:

“John I hope you come back and help me to understand [more].”

“John, I have found this discussion enlightening and fascinating. I am old school and too old to stalk you and besides I live in Arkansas..[but] see you can teach an ole dog new tricks.”

“That’s an epiphany for me. This is a very informative post. It makes perfect sense, though. I just wish more economists would be as explicit as you…This is so interesting!”

The Power of Civility

So many people, certainly including politicians, pander to the negative in all of us. It’s a cheap trick, and it works depressingly well, particularly because it’s a quick hit.

I find it gratifying when you see proof that the long game, the game of sincerity and respect and civility, when allowed to play out, is extremely powerful. Harvey’s post is less than 48 hours old at the time I’m writing this one and already civility has calmed a few beasts, added to the net economic knowledge of many, and I think lowered the political temperature of debate by a tiny but measurable fraction as well.

Harvey’s column, by the way, is called Pragmatic Economics. He is proud that his views are hard to label. And you might want to subscribe to his RSS feed, and get you some practical wisdom too.

I think Dangerfield would’ve gotten a kick out of it.

Warren Buffett and Managing Through Trust

/8 Comments/in /by

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.

A #TrustTip Highlight Reel

/5 Comments/in /by

We’re counting down the days until “The Trusted Advisor Fieldbook: A Comprehensive Toolkit for Leading with Trust,” a new book written by myself and Andrea Howe (to be published by Wiley Books, hitting the shelves on October 31) by lighting up the twittersphere with a series of daily Trust Tips.

You can find these snippets of insight on Twitter by using the hashtag (or pound sign) followed by TrustTip, like this: #TrustTip. Or, if you prefer, you can go straight to the source by finding us on Twitter at @AndreaPHowe and @CharlesHGreen.

We’ve had some good discussions on Twitter and would love for you to put your two cents in.

For those of you still averse to Twitter, we keep a running tab of all the Trust Tips right here on our site.

The Tips

The Tips are concise. They’re published every work day, helping to increase your trustworthiness and build better work relationships.

If you need to catch up, see our recaps of Tips #144-135 and #134-115. Below are #114-105.

Trust Tips Redux: #114–105

#114: Do you know your main customer’s kids’ names? Should you?

#113: Be relentlessly discreet; honor confidentiality

#112: An expectation is a premeditated resentment; stay curious and bemused

#111: Sign up for a Google alert on yourself and your firm: See yourself the way others see you

#110: Send a hand-written note of acknowledgment/thanks

#109: In conversation with your client, occasionally wait half a second longer before talking

#108: Offer to take notes in a meeting

#107: Tell your client something you appreciate about him/her

#106: The great thing about always telling the truth is you have only one version to remember

#105: The easiest, safest and most durable way to make others trust you is to actually be trustworthy–worthy of their trust

A Couple of My Favorites:

#112: An expectation is a premeditated resentment; stay curious and bemused

We all have ideas about what’s going to happen in the future; we couldn’t function without them. But when those ideas turn into expectations to which we become attached–when we start rooting for an outcome, twisting the evidence to support or even encourage a particular result–we are setting ourselves up for disappointment. Just down the street from disappointment lives resentment; and resentment poisons everything.
Be light on your feet. If the home team loses, hey, it happens. If the sale didn’t come through, don’t let it ruin your sleep. If you didn’t get what you wanted, be grateful for what you got. Learn for the future, but don’t let the learning ruin today.

#109: In conversation with your client, occasionally wait half a second longer before talking

Sometimes we can be too eager to answer a question or solve a problem. Next time, don’t you be the one to fill that silent hole in space. If what you say sounds too rehearsed, even if it isn’t, trust begins to erode. Pausing, even for just a moment, can make a noticeable difference. Indicate that you’d like the other person to speak next. Not only will you seem more thoughtful, but you will be more so. And you’ll hear stuff.

Which tips did you find most meaningful?

We’ll be publishing more Trust Tips next week and every week to book publication. Share the wealth; tell others about #TrustTip—new tips posted every weekday at 8:30AM.

The Dishwasher’s Tale

/12 Comments/in , /by

During a recent conversation, a friend–General Counsel for a large listed company–mentioned that she does not feel appreciated by her CEO for all the work she does; and that feels disheartening.

How often do we hear this? Is this a gender issue? Do females need to feel workforce appreciation more than males?

A Little Appreciation

One of my biggest lessons in life came 30 years ago. I had time between University semesters. I wanted to travel to the country nearest Ireland, where I was studying, where they didn’t speak English. After getting a bus, boat, and train…I arrived at my destination: Belgium, where Flemish is the first language and French the second. Because of the language barrier, I had to work in a position that did not require customer contact.

Hence my job: dishwasher.

Day in and day out I washed glasses, dishes, pots and pans. I think it was the hardest job I have ever completed. Only one of the waiters would come up to me at the end of a shift to say ‘thank you.’ This simple, genuine ‘thank you’ was so warming to my soul that it would make me feel motivated enough to come back into work the next day. Luckily this was a summer job to fund my holiday travels and I only had to work there for one month. I cannot begin to imagine what it must be like to have that job long term.

A Question of Perspectives

I walked away with from that job knowing what a huge difference it makes if someone feels appreciated. Ever since, I have tried to make a point of showing my appreciation–from my client, to the person in the office emptying the rubbish bins, to the lady in the bathroom at the airport cleaning the cubicles, to the tram driver when I get off at my stop and I leave via the door beside the driver.

Recently, I have become more aware of how many others do not do this. I asked colleagues in the office why they do not say ‘thank you’ to the person cleaning their rubbish bins. The answer was almost always, “It’s their job, why should I thank to someone for doing their job?” Maybe this is the perspective of the CEO at my friend’s company.

A Little Less Self-orientation

Imagine if we all proactively practiced genuine appreciation–what a wonderful world we would live in. It reminds me of one lesson of the Trust Equation; that as we empathetically reach out to others by giving them a sense of importance, we simultaneously reduce our own self-orientation.

An old Chinese proverb says it all “Flowers leave some of their fragrance on the hand that bestows them.”

When we make people feel good about themselves we elevate ourselves to greatness as well.

You’ll take this deal and like it: the limits of rational trust, part 3

/0 Comments/in /by

In the previous posts I discussed four ways in which rational trustworthiness, that is, the decision to be trustworthy because it is seen to pay off in the long run, breaks down. Today I’ll take a look at the last type of trust breakdown: the dominant strategy.

In game theory a dominant strategy is one a move or series of moves you can perform without the other players being able to stop you. Dominant strategies won’t necessarily leave you as well off as cooperative ones, though they can, what they are is things you can do and force the other players to accept.

In the business and commercial worlds dominant strategies are usually the purview of monopolies and oligopolies. If there are only one or a few businesses providing something you need, whether that’s insurance, internet or credit cards, you accept the price and service offered, or you do without. In the old days this used to be called the company store syndrome, where you had to use company scrip at the company store, and the company store was often the only store in your town. You paid what they charged, you bought what they offered, or you did without.

The dominant strategy relies not just on having an oligopoly or monopoly, but on having a product that some group of people must have. In the modern world there are a pile of things you can’t do without a credit card. Going without internet or phone service isn’t an option for most people, and while many people do go without insurance, most people would rather not. Companies which are in this position: no real competition, and a product which people must have, do not need to act trustworthy. Rational trustworthiness is not a factor for them, because they usually don’t believe they’d do better by being trustworthy, and even if they would, doing so is more work than simply saying “this is the product, this is the price, take it or leave it, no one else is going to give you a better deal.”

Which brings us back to the original point, which is that organizations or people who are trustworthy only because it is rational, only because it is to their advantage, aren’t actually trustworthy. The second it is in their interest to betray, they will do so. This may be because they can cash out, because they won’t be in the business for long, because they’re not long for the world, because enforcement mechanisms have broken down or because you’re lunch, not a customer, but whatever the reason, trust that is rational isn’t actually trust.

(Read part one and part two for the details on each way that rational trust breaks down.)

Muses: Really Entertaining Business Blogs by Women

/3 Comments/in /by

Some of the most entertaining, content-rich and downright helpful business blogs we love are written by women. Here are a few of our favorites. What are yours?

Danah Boyd’s Apophenia is both scholarly and immensely readable. She has real research, real clues and real heart about what’s going on with young social media consumers. Want to know what ‘privacy’ means to teens? Read it and feel smart.

The Barefoot Executive, Carrie Wilkerson, speaks directly to entrepreneurs about such things as the 3 “I”s common to business owners: indecision, insecurity and inactivity. If the shoe fits…add Carrie to your feedly.

Laurie Ruettimann, thecynicalgirl, is the funniest woman on the planet, with no-nonsense (she would say, no bullshit) advice on careers, recruiters, what working means, HR, deodorant, open-toed shoes and cats.

We almost hate to mention Michelle Golden’s Golden Practices Blog, because her posts are infrequent and we’d like a lot more of them, but they are also thoughtful, thought-provoking and full of heart.

In Nina Nets it Out, Nina Simosko covers topics for leaders of all stripes – recently “leaders should do what only they can do.” Simple, straightforward and with many aha moments!

Maureen Rogers writes Pink Slip Blog from Boston, but manages to range all over the world in her writings on layoffs (you knew that from the blog title), the workplace, management and other stuff. Cuban cigars. Yep. McDonalds’ National Hiring Day. Yep. Baseball. But of course.

Chock full of podcasts, webinars and video clips, Jill Konrath’s Selling to Big Companies helps everyone adapt their sales techniques to the Twitter era. This blog is all killer and no filler with plenty of guest bloggers offering their two cents.

And for a longer list, see Natalie MacNeil’s top 30.

Who do YOU love?

The Limits of Rational Trust: Part 2

/2 Comments/in /by

Last week we talked about how rational trust, which is to say, being trustworthy because it can be shown that being trustworthy leads to more money or other benefits, can break down, either because a the person involved knew they wouldn’t be around for the long term, or because the reward for betraying a trust was so great that they could cash out.

Other failures of rational trust are:

  • When you’re not at the table, but on the table;
  • when the social mechanisms of reputation and deterrance break down;
  • when someone has a dominant strategy, something they can force on other people.

This post we’ll discuss not being at the table, and the breakdown of social mechanisms of trust.

Are you the roast beef being carved up?

It is rational to be trustworthy to people who are your customers because you want repeat business. But often even if you’re buying something, you aren’t the customer. So, for example, who are the customers for credit cards?

Here’s the odd thing about credit cards. Credit cards which charge merchants more, and that therefore also cost consumers more, since merchants have to pass those costs on, are the ones that are chosen by banks to be offered. Chosen by banks is the key phrase. Almost everyone gets their credit card through their bank. The banks control the pipeline, therefore the banks are the actual consumers. They, and the credit card companies are at the table, retailers and consumers are on the table. The real customer for credit cards isn’t consumers, and it isn’t businesses, who feel they must accept them or give up huge amounts of business, instead it is the banks. Since this is the case, it is rational to charge consumers and businesses more, not less, because the more you charge them, the more you can give to the real customer, the banks, who can deliver what amount to captive audiences.

Just because you’re buying something doesn’t mean you’re the customer, it just means you are paying.

Heads I win, tails you lose!

The next failure point of rational trust is when the social mechanisms for enforcement break down. If CEOs can materially misrepresent their company’s positions, and still be paid millions, if outright systemic fraud can occur throughout an industry, for example, mortgage origination and packaging during the housing bubble, and virtually no one is charged with a crime, and many of the companies which engaged in the fraud are bailed out at taxpayer expense, then why shouldn’t they engage in fraud?

Call it “heads I win, tails you lose”. If I know that I’ve done so much damage that the entire world’s economy is at risk, well, what’s to fear? On Wall Street they used to call this the “eat babies” scenario, which is to say, if the government didn’t step in, things would be so dire that everyone would be eating babies. Apocalytpically bad. Now, one can argue over whether failing to bail out Wall Street would have been so bad (I don’t think so), but it certainly seems the prime actors thought it would be, and unquestionably many actors at the Federal Reserve, Treasury and in power in DC thought it would be.

In capitalism, the joke runs, bankrupt companies go out of business. On Wall Street, they get bailed out. The political mechanism, which is ultimately a social mechanism, for enforcing law and basic capitalist principles broke down.

This has far less grandiose forms than the late financial crisis. It occurs any time when breaches of trust will not materially affect someone’s ability to continue to operate in business and to make money. If the social circle one moves in doesn’t care about breaches of trust or ethics, then it is rational not to care about either. Rational trust is about consequences, if the consequences are less than the benefits, why be trustworthy?

Next post: Dominant strategies, or “you’ll take this deal because you have no choice.”

Counting Down the #TrustTips: Daily Tweets on Trust

/5 Comments/in /by

In celebration of the “The Trusted Advisor Fieldbook: A Comprehensive Toolkit for Leading with Trust” a new book written by myself and Andrea Howe in partnership with Wiley Books, we’ve been tweeting a series of Daily Trust Tips.

Andrea and I tweet one #TrustTip per business day, counting down until publication day, October 31. You can access these daily trust tips on Twitter, by using the hashtag (or pound sign) followed by TrustTip. Like this: #TrustTip. You can find us on Twitter at @AndreaPHowe and @CharlesHGreen.

The Tips

We try to stay away from platitudes. They’re meant to be precise and provocative, things you can apply today to enhance your trustworthiness and build stronger, more trusting relationships.

And if that still isn’t enough to motivate you to get on Twitter, we keep a running list of all the #TrustTips right here on our site.

The past two weeks of tips have sparked a good deal of talk on Twitter. Below is the recap of Tips #134-115. You can find the recap of #144-135 here.

Trust Tips Recap: #134– #115

#134: The purchasing agent is your new client. Treat them so. Their needs go beyond beating you up.

#133: If you feel odd about something: notice it. Say it out loud. Talk about it. Trust your gut.

#132: Don’t say what you’ll do, do it. Doing is the best talking. Sell by doing, not by talking.

#131: When you don’t know the answer: say, “I don’t know the answer.” What a concept.

#130: Don’t lie. Don’t fake it. Don’t justify it. Don’t leave things out. Don’t mislead. Don’t lie. Don’t.

#129: Easy way to increase reliability: say you’ll do something—then do it. On time.

#128: Under-promised and over-delivered means you’re lying. Better to do exactly what you said you’d do.

#127: Over a drink, ask your client what (s)he thinks their boss most wants from them.

#126: Dress code: one tiny notch higher than your client—no less, but no more either.

#125: Subscribe to your 2nd biggest customer’s 2nd most important industry trade publication.

#124: Adopt the safest cultural time standard: if you’re on-time, you’re late.

#123: Return calls unbelievably fast. You can wait to get the fix, but return the call unbelievably fast.

#122: Make lots of small promises & consistently follow through.

#121: Announce changes immediately & acknowledge the impact—especially when you won’t deliver as promised.

#120: Don’t just not lie; tell as much truth as possible, except where hurtful to others.

#119: Use pre-meetings; the final meeting should be ceremonial, no surprises.

#118: Identify some of your customers’ unique terminology; if it fits, use it yourself.

#117: Five credentials after your name on the business card is three too many.

#116: Give your meetings goals—not just agendas.

#115: In a meeting, notice who looks like they want to say something. Ask them to do so.

Here are a couple of my favorites:

# 129, Easy way to increase reliability: say you’ll do something—then do it. On time.

How many times have we been reliant on someone to get their job done in order for us to complete ours? It starts in middle school—from home-made science projects—and carries through to our professional lives. Efficient teamwork is part of every successful business. That teamwork extends outside of your office and into your client’s. Your client’s ability to rely on you to get the job done when you say you will makes for a smooth relationship, where no matter what, they feel they can trust you. Reliability is one of the four key factors in the Trust Equation, and one of the key factors we reference in any recommendation.

#116, Give your meetings goals—not just agendas.

Meetings seem to be a way of life when it comes to maintaining a steady business. It’s a practice that we all acknowledge for its necessity but in a way, seem to dread. Why is that? Many times meetings abide by a checklist of items to be discussed but after just thirty minutes minute details start taking over and the overall goals are lost. Creating goals as well as agendas for your meetings allows for the bigger picture to be maintained. It’s important to ensure everyone feels that they aren’t losing valuable time doing something else while they are listening to you veer off course.

#131, When you don’t know the answer: say, “I don’t know the answer.” What a concept.

It is amazing how simple this concept is–yet how few people subscribe to it. One of the quickest ways to reduce your customer’s trust in you is to answer their question incorrectly or to dodge it entirely. The reverse is ironically true as well: if you truthfully answer a question—especially if the answer is, “I don’t know”—they will trust you in that moment, and from then on as well.

Which ones did you find most meaningful?

We’ll be publishing more #TrustTip next week and every week to book publication. Share the wealth; tell others about #TrustTip—new tips posted every weekday at 8:30AM.