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Recovering Lost Client Trust (Episode 29) Trust Matters, The Podcast

A manager at a global consultancy firm asks, “How do I mend lost trust with a client whom we used to have an excellent relationship with? This relationship went sour due to a disagreement with one particular executive a few years back, and he still maintains a leadership role.”

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Stupid Crazy Trust

Sometimes I get annoyed. Usually, that means I’m thinking like an idiot. Sometimes, however, it produces useful ideas.

Lately I’m annoyed by the constant repetition of a myth about trust. You know this one: “Trust takes a long time to create, but only a moment to destroy.” There’s no need to name names here, but you can see examples of it here and here and here and here.

This time, my annoyance produced some good: I can now explain why that myth isn’t merely annoying, but positively harmful as well. Here goes.

The Truth.

Let’s start with the truth. Most human relationships, like most emotions, take roughly as long to get over as they took to develop. Marriages or friendships don’t end overnight. There may be a flash point, a straw that breaks the camel’s back. But we cut slack for people we trust. We don’t dump them abruptly.

If trust were lost in a minute, battered women wouldn’t stay with the men who beat them; things are a little more complicated than that.

If trust died quickly, the SEC would have investigated Bernie Madoff when Harry Markopolos first lodged charges against him. If trust died quickly, the steady drip drip drip of evidence at Penn State, Enron, Toyota, and Johnson & Johnson would have ended at the first drip.

Most examples of “trust lost quickly” turn out to be either just the last drip in a long series of drips or a delusion about trust’s existence in the first place. You don’t “violate the trust” of a subscriber to your email list by sending them a worthless referral. The relationship you have with a name on your email list may be many things, but “trust-based” is probably a stretch.

Trust formed quickly can be lost quickly. Trust formed at a shallow level can be lost at the same level; trust formed deeply, or over time, takes deeper violations, or a longer time, to be lost. The pattern looks more like a standard bell curve than a cliff.

But, you might say, so what? Why are you annoyed? Why is that harmful? 

The Harm

If you believe that trust can be lost in a moment, then you likely believe you must be cautious and careful about protecting it. You are likely to think about trust as a precious resource to be guarded against being tarnished. You are inclined to institute rules and procedures to protect it and to give cautionary lectures about the risk of losing trust.

Yet these are precisely the kinds of behavior that result in trust lost.

I don’t trust the man who talks with me while pointing a gun at me‬—partly because he looks threatening to me, but also because he clearly does not trust me.

Trust, at a personal level, is like love and hate: you tend to get back what you put out. You empower what you fear. Those afraid of getting burned are the most likely to get burned.

This totally works at a corporate level too. I remember vividly the convenience store chain that gave monthly lie detector tests to store managers to prevent theft—and then wondered why the theft kept on happening.

Trust is a Muscle

Thinking of trust as something you can lose in a minute makes you cautious and unlikely to take risks. But the absence of risk is what starves trust. There simply is no trust without risk—that’s why they call it trust.

If your people aren’t empowered, if they’re always afraid of being second-guessed, then they will always operate from fear and never take a risk—and as a result, will never be trusted.

Trust is a muscle—it atrophies without use. And the repetition of the mantra “trust can be lost in a moment” just tells people not to use it.

Turns out the stupidest, craziest trust is the trust you never engaged in because you were too afraid of losing it. The smartest trust is the trust you get by taking a risk.

Straight from the Headlines: Trust in People, Companies, Nations

Three trust-related headlines last week:
  1. An insider trading conviction for hedge-fund billionaire Raj Rajaratnam,
  2. free-fall in Morgan Stanley’s stock price, and
  3. drop in the Chinese government’s credibility.

A Person

Mr. Raj Rajaratnam, former head of the Galleon Group hedge fund, and once worth a billion and a half dollars, was sentenced to 11 years in prison.  His crimes were the stuff of movies—secret deals and secret messages—insider trading.

Some finance theorists think “insider trading” should be legalized, though most people would sooner see heroin legalized if they had to choose.  Rajaratnam’s white-collar hand-in-the-cookie-jar crimes are, it is generally agreed, egregious and immoral. He’s going where he belongs.

Raj is a poster child for low trust. Lying, cheating, conniving, sneaking—he was everything you wouldn’t want in a trusted partner.

But he is a sideshow. Rajaratnam, Bernie Madoff, Ivan Boesky—these are the movie versions of white-collar crime. Raj and Bernie no more caused our current financial malaise than Bonnie and Clyde caused the Great Depression. And we cannot solve our global trust problems by simply picking off colorful foot soldiers from the Dark Side, no matter how untrustworthy they are.

A Company

Jesse Eisinger in the NYTimes notes that by nearly every financial measure of strength and trustworthiness—more capital, longer-term financing, lower leverage—Morgan Stanley is a stronger bank than it was in September 2008, at the height of the crisis. So, why has their stock price dropped 42% this year?

Trust, that’s why.

Morgan Stanley, and other banks, still holds massive amounts (defined as over $50 trillion) in unregulated derivatives. And of course they don’t want regulation. But they are not stupid—the banks themselves are not about to trust each other when they know the other guy is holding part of that unregulated $50 trillion. As Eisinger puts it:

“Surely no bank would be so reckless as to accept dodgy collateral these days. It would hold out for something unassailable, like, say, Triple A mortgages on American homes. Wait, scratch that. It would accept sovereign debt, perhaps from some European realm that has been around for centuries. Whoops, no, no. Well, O.K., maybe United States Treasuries—and we’ll agree to ignore that one of the country’s two major political parties was willing to plunge the United States into default to achieve its aims.”

The banks don’t trust each other. They do agree that they don’t want governments checking their numbers; they also agree that letting Lehman go was a big mistake—that governments should be willing to bail them out.

But the people are not too happy about their governments bailing out the rich guys, whether they’re at OWS, in Greece, or even in Germany.  The governments are looking like neither paragons of virtue nor representatives of their citizenry.

A Country

Never mind the GOP playing chicken with the US’s credit ratings; never mind Germans and Greeks playing chicken with Europe. As Reuters notes:

Equities jumped 10 percent on the day three years ago when China said it would buy up bank shares in the market. They barely budged after a similar announcement on Monday. The difference is credibility. A sustained financial crisis has shown that governments around the world have a limited ability to make things better.

Nations around the world have kicked the can down the road regarding public expenditures. They’ve done the same thing regarding energy and the environment.

The human race has been conspicuously failing recently at two key trust skills—collaboration and constructive confrontation.

Trust Recovery: Where Do We Start?

Yes, it’s complicated. There are feedback loops everywhere. Beware of simple answers. 9-9-9 may work in a computer simulation game, but does not a tax plan make.  8-8-8 is not the answer to health care, and 7-7-7 is a better lotto number than a plan for campaign finance.

But complexity works both ways. It means the whole system is loaded with causality.  No single change at the person, policy or institution level may be necessary, or sufficient. But actions at every level do have impacts. We can push back at the personal level, at the company level, and at the national level.

It is a good thing that Raj Rajaratnam got the longest-ever prison sentence for insider trading; it sets a moral tone that is in stark contrast to an amoral ideology that we have allowed to infect our entire commercial sector.

It is a good thing that people are protesting the serious transfer of wealth and power that has taken place in recent years, because increasing inequality ruins social trust.

Yes, it’s complex to recover trust, but it can start simply. Here are three steps.

1.    Promote personal character. Don’t fudge your taxes. Don’t lie, don’t ask others to do so, and just say no to those who ask you to do so. Teach your children. Thank people who do good and shame those who don’t. Stick your neck out a little. On alternate Thursdays, pay the toll for the car behind you.  Pick out a small sum of money and give it to a charity that needs it more than you do.

2.    Promote better thinking. We have seen the result of four decades of economists who think that markets are self-clearing and that financial institutions will self-regulate out of concern for their reputation; business theorists who preach competition instead of collaboration; CEOs who think the purpose of a company is to raise shareholder wealth; and politicians who think either that government is a feeding trough or that interstate highways are communist plots.

The result is not good, and much of the trouble arises from bad beliefs. We will not solve our problems through belief in econometrics, patent litigation, or demonization of foreigners. Tell the b-school professors, the law schools, the think tanks and the industry associations to apply their talents to understanding and building systems around collaboration instead.

We are, in fact, all in this together. We need to start believing it so we can act on this belief.

3.    Promote better politicians. Don’t support simplistic ideologies.  Stop contributing to single-issue pressure groups. Scream for campaign finance reform; on everything else, stop screaming.

Read up. On alternate Tuesdays, watch Fox or CNBC, whichever one you makes you uncomfortable. On alternate Fridays, read a foreign newspaper online. Don’t give money to, talk about, or vote for candidates who out-negative their opponents.  Support those with a message and a plan of their own.

Tell the media, the politicians and anyone who wants your support that you’re done with vague platitudes and simple slogans. Tell them you want the truth.

Ask them, “Why should I trust you?” And don’t settle for an answer you can’t believe in.

Story Time: An Unexpected Way to Recover Lost Trust

When it comes to trust-building, stories are a powerful tool for both learning and change. Our new Story Time series brings you real, personal examples from business life that shed light on specific ways to lead with trust. Today’s anecdote zeroes in on an unexpected way to recover lost trust and appease an unhappy client: listening.

A New Anthology

Our upcoming book, The Trusted Advisor Fieldbook: A Comprehensive Toolkit for Leading with Trust (Wiley, October 2011), contains a multitude of stories. Told by and about people we know, these stories illustrate the fundamental attitudes, truths, and principles of trustworthiness. In the coming months, we’ll share a selection of stories from the new book with you.

Today’s story is excerpted from our chapter on listening. It vividly demonstrates the value of hearing someone out, resisting the temptation to problem-solve too quickly, and being willing to always do what’s in your client’s best interests—even if that means letting go of the work assignment.

From the Front Lines: Listening to Recover Trust

Catherine Gregory, Senior Principal at SRA International in its Touchstone Consulting Group in Washington, DC, tells a story of the business value of listening.

“I had a team of four working on a long-term project with an important client who especially valued seeing the same faces year after year. In the course of three months, the entire team turned over. I had to deliver the bad news as each team member departed.

“After several turnovers, my client vented to me his frustration. I listened, and then listened some more, as he expressed his concerns and aggravation. He concluded with, ‘I know you are doing all you can. I just had to get that out.’ He was still unhappy and we were able to move forward together.

“Once things were stable with the team, I brought up the possibility of phasing out our support and letting him phase in a contractor who he felt would be more reliable. He didn’t want anyone else; he wanted our team.

“This experience proved to me without a doubt that listening is a critical business skill, and a way to recover trust in the face of challenging circumstances.”

—Catherine Gregory (Senior Principal, SRA International, Touchstone Consulting Group, Washington, DC)

Who in your life is waiting for you to give them a good listening to?

How to Recover from Trust Lost: Part II

Two days ago I wrote in Part I how trust is not necessarily as slow to be gained, or as quick to be lost, as we think.  Part 2 is about how you recover lost trust.

Sometimes trust recovery is confused with reputation management; or with apologies; or with legal maneuvers. Any or of all of those may be appropriate in a given case, but only one is critical to all—acknowledgment.

At root, trust betrayal is a fundamental lie about intentions. When umpire Jim Joyce made a bad call to rob Andre Gallaraga of a perfect game, he told an “untruth,” but his act was clearly out of sync with his intentions. It is not hard to clarify intentions, if they were in fact clean all along.

By contrast, when a preacher or politician fulminates against moral turpitude and is then caught in a compromising position with a prostitute, he has lied about his intentions. In his case, the fact proves his bad intentions. 

In the first case, acknowledgement means stating exactly what happened, and taking full responsibility. Umpire Joyce saw the replay, and immediately stated he was wrong. Of the opposing players, he said, “I don’t blame them a bit, I would’ve said it myself.” He went directly to Galarraga to acknowledge and apologize. 

In Joyce’s case, an apology was clearly warranted. That’s not always the case; it may not be appropriate to apologize for something someone else did (unless in a the chain of command); it can come off as insincere, or patronizing. But what is required—always—is a full acknowledgement of precisely what happened, and a statement of accountability where that is clear.

The same rule applies in the case of an errant preacher or politician, or to BP for that matter regarding the oil spill. Leaving aside apologies and reparations, what is absolutely necessary for trust recovery is a full accounting of what happened, and to the best of one’s ability, why. 

Until our motives are re-aligned with our actions, we are stuck in a state of un-trust. Acknowledgement is what re-establishes the linkage. 

Name It and Claim It: The Language of Trust Recovery

The reason trust recovery is hard is that it requires soul-searching of our motives. We hate to admit we might have had bad motives, that  and: that we acted from bad faith. Yet that is what is required.

If you name it, you can claim it. What I mean by that simple phrase is that acknowledging the truth (“naming it”) is a necessary condition for recovering trust (“claiming it”).

There is a simple grammatical rule for successfully doing Name It and Claim It, and it looks like this:

List as many caveats as are necessary to slightly overcompensate for what you’re about to say—then say it.

Caveats, in this case, are made up the things both of you are afraid to say.

Let’s take a simple example first, then build up to the situation facing Joseph and Suzanne (see Part 1). (More examples can be found in another article, A Tool for Emotional Risk Management—Name It and Claim It.

Let’s say you are going to mention price for the first time in a sales meeting, and you’re a little nervous about it: You might say:

“I realize this is a little early to talk price, we haven’t mentioned value yet, and you haven’t asked about it, but in my experience sometimes one of us might feel embarrassed if it turned out later that our expectations were mis-aligned; so at the risk of putting something out there, I’m thinking this is a low 6-digit project. Does that feel wildly at odds with what you were thinking? Are we off by an order of magnitude?”

What you have done in such a case is to state all your inner fears (and the client’s too) out loud, in a way that recognizes each of you feel a little risky here, together. The effect, oddly, is to neutralize the risk. Because having said these words, the worst thing the client will do is say, ‘Well, that is a little embarrassing, and we didn’t ask about it, and I don’t want to tip our hand just now by talking about it, so, no thanks.” That may feel harsh, but it’s far better than not saying anything, and finding out two meetings later that one of you was thinking one million and the other 75,000. 

It’s also rare; almost always, the other person is grateful for the mention. The much more likely response is, “Well, glad you mentioned that actually, it takes a bit of pressure off. And we’re not conceding anything, but yes, I think we’re in a range where we can comfortably keep talking. Thanks for making sure.”

What Name It and Claim It does is to take a risky situation and not only defuse it, but actually create trust by doing so. Because the shared experience of taking a risk creates a track record of trust. The next risky overture will be more welcomed because of the risk taken in the first instance.

Name It and Claim It and Trust Recovery

What would it sound like for Joseph and Suzanne to use Name It and Claim It to recover trust in their respective situations (see beginning of case)?

Joseph can set up a conversation with a key client individual in his client organization; probably off-line, one-on-one, after-hours, over drinks or a meal. Not too far into the conversation, Joseph might say something like this:

Look, Bob, I appreciate your coming to dinner tonight; you might have guessed I had something specific to talk about. I feel a little risky raising a delicate issue with you, an issue that has some history, and I suspect it’s not all comfortable for you either.

I want talk about what happened between my predecessor Bill and your organization. I don’t fully know what happened, and if you wouldn’t mind, I’d really like to. I have no axe to grind, no horse in this race; I have no requests, hopes or expectations; I look for no promises. I simply want to fully understand where you are coming from, from your perspective alone. 

I fear that if I don’t understand that, then we’ll never have a basis for working together again. I apologize in advance for any discomfort this causes you, and hope you will see my intent simply to learn. Maybe we can’t put this behind this, but maybe we can; I would feel remiss if I didn’t try.   

Suzanne’s is a different case; in her situation, mistakes were made, and made by her organization and by her. She might say:

Melinda, thanks for taking this meeting. I realize it’s the first time in 18 months, and our last interactions weren’t happy. I’m not sure if you had resistance to even having this meeting, or whether you even felt comfortable telling people we were meeting.

I want to acknowledge the difficulty in our relationship 18 months ago, and my role in it. In retrospect, I was focused on assessing blame, rather than on focusing your needs as my client. The more time passes, the more I realize what a fundamental error in perspective that was. 

It may not be easy for you to talk about without emotion—I’m not sure I could do so easily—but I would respectfully like to ask you to do so. I cannot fully say that I have understood your situation until I hear it from you. And I know that I can’t move along myself unless I feel I’ve understood things.

I’m not looking for re-admission here; that’s up to you. What I need to do regardless is to fully understand what things looked like from your perspective 18 months ago. Would you be willing to take some time with me now to fully understand our history?  

Sometimes Trust Recovery is Beyond Language

A firm like BP that has incurred numerous safety violations is not going to recover trust until it convinces others that it has changed its ways. That means processes, procedures, standards, incentives, vocabulary and culture. Yet the role of acknowledgement still stands at center. Employees will not believe their own leadership if leadership does not stand and speak the new truth to the public. 

Some companies fear that if they change, but don’t advertise the fact, then they will lose “credit” in the public’s mind. Thinking this way re-invites the same risky behavior that got them in trouble in the first place.   The risk of being seen as good while doing not-so-good is far greater than the risk of doing good and being seeing as doing not-so-good. Time will take care of the second strategy, but events will undermine the first. 

And twice-fallen, trust recovery is far more than twice as hard.

How To Recover from Trust Lost: Part I

Joseph says:

“When I took this account over 10 months ago, I didn’t understand why the client seemed so distant. We had been cut back 2 years ago and never really recovered; I figured I could turn it around. 

"Come to find out, the reason was bad blood between my predecessor and the client organization. No one really talked about it; but there it was. So now what? How can I recover trust lost?”

Suzanne says:

“We made some mistakes. They weren’t critical, but we were partly at fault. We tried to show the client had a lot to do with it too—refusing to take accountability for changes in specs, delayed decisions, contradictory information—but it just made things worse. When the renewal finally came up, we didn’t get it. Surprise. That was 18 months ago. I don’t know when we can go back.”

If you recognize a little of your situation in Joe’s or Suzanne’s, then you’ve wondered about trust recovery. 

If trust is lost, can you ever get it back? Or are you doomed to just slink away in defeat?

In this first part, I’ll describe how trust gets lost.  In the second part, two days from now, I’ll describe the key to getting it back.

Trust: a Long Time to Build, a Moment to Destroy? NOT

You’ve heard the usual platitude: trust takes a long time to establish, but only a moment to destroy. In truth, that’s a mis-statement; two mis-statements, actually. 

First, trust does not necessarily take a long time to create.  We form strong impressions of trustworthiness of others in nano-seconds, based on all kinds of information and biases.

Second, trust isn’t necessarily destroyed in an instant; it took nearly a decade to destroy trust in Bernie Madoff–and he was a mega-crook!

The better formulation is this: shallow trust can be destroyed quickly; deep trust takes a long time to die.  Basically, what determines the time it takes to destroy trust is a function of quality–not of time itself.

How Trust Gets Lost

There are two ways in which trust gets lost.  The first is an illusion.

Suppose your ‘trust’ consists simply of the absence of mistrust.  Perhaps it even consists of untrustworthy practices garbed in clever PR, good advertising and an aggressive marketing campaign that provides the appearance of trust.. If suddenly the curtain is drawn back and the public sees the ugly reality behind the machine, it may appear trust was lost. But all that was really lost was the fig-leaf of appearance. 

This was what happened to BP, whose safety record was obscured by a green advertising campaign until its comparative record was revealed by a horrible accident. This was Eliot Spitzer’s story too, when he lost the governorship of New York by using public money to secure prostitutes, while proselytizing against them. He didn’t lose trust–he lost plausible deniability.  The trust was gone long ago.

To recover from this kind of trust is possible, but it amounts to undergoing a conversion. The untrustworthy party cannot insist it was an accident—because it was the exact opposite of an accident. This kind of trust ‘loss’ is as good as planned.  Trust recovery here requires massive underlying change. 

The second case is easier. Consider umpire Jim Joyce, who egregiously blew a call that cost a young pitcher the ultimate rare honor of a perfect game. 

"It was the biggest call of my career, and I kicked the [stuff] out of it," Joyce said, looking and sounding distraught as he paced in the umpires’ locker room. "I just cost that kid a perfect game."

Did he recover trust? Before the very next day, Joyce had recovered the trust of the fans, the opposing team’s manager, and even pitcher Andre Galarraga. Note the error was egregious; and the recovery of trust took less than 24 hours.

These examples point out a few myths that need addressing:

1.    Trust recovery doesn’t necessarily take time

2.    Trust recovery is not (solely) a communications job

Check back in two days for Part II:  the How To part of trust recovery–acknowledgment.

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