Why Trust Improves Your Bottom Line
Let’s just face it head on. Many of you think all the recent hoo-ra about trust is lefty-liberal, softy, wishful thinking. Nice to have, but not the stuff of serious bottom line impact.
If only the world could be freed of terrorists and Madoffs and Wall Street’s relentless pressure for quarterly performance, then maybe we could afford some trust; but right now, with this economy? Gwanwidja, Charlie, it ain’t happening.
Or, the most common variation: Hey Charlie, I’m down with the program, but the problem is my boss. Or the Executive Committee. Fix them first, then come talk to me.
Well, this is the blog to forward to your boss and the Executive Committee. Because whoever doesn’t “get” the raw economic power of trust isn’t acting in the best economic interests of the organization.
Let’s break it down into the economic benefits of
• being trusted (not the same thing)
• building an organization along trust principles.
How Trusting Adds to the Bottom Line
If you trust someone, you greatly increase the odds of their behaving reciprocally—that is, they become trustworthy. Don’t trust me on that, read Robert Cialdini, who posits reciprocity as the number one factor driving influence.
If you trust, and the other party behaves reciprocally, all kinds of time and cost can be cut out—mostly time and cost that was engineered in to protect against untrustworthy people.
Trust your suppliers: with advance order information, with cost information, with pricing, with materials requirements, with new design information. (Don’t, by contrast, create enemies of them by using purchasing as a blunt instrument).
Trust your customers: develop price and product quotes together with them, share your advance product information, make a point of listening to them, allow them to spend time with you at your offices, get your people to theirs. (Don’t, by contrast, create enemies of them by surprising them or trying to squeeze the last nickel out of each contract).
What you gain by trusting: Less due diligence time and cost, shorter elapsed time-to-market, better design quality, higher sales hit rates, lower sales investment cost, more forgiveness of errors, better pricing, higher customer retention. (Steven HR Covey Jr.in Speed of Trust focuses heavily on the trusting part of trust).
That all adds up to real money.
How Being Trustworthy Adds to the Bottom Line
Take a look at the Trust Equation; take the Trust Quotient self-assessment test yourself. Being trustworthy means being credible, reliable, safe to be with, and focused more on others than yourself.
Trusting people may be the fastest route to being trusted, though it’s also higher risk. Being trustworthy also produces reciprocal trustworthiness—it may take a little longer, but it’s lower risk.
Tell the whole truth, don’t just don’t lie. Don’t over-perform, or under-perform—just do what you said. Be prepared to recommend a competitor if it’s the right thing. Don’t manage your earnings, just be transparent about your accounting policies. Don’t try to control others. Comment on feelings—yours and others’. Do your level best to actually care—don’t fake it. Don’t Always Be Closing. If you don’t know something, say so. (There are a raft of specific things to do in response to your Trust Quotient, free).
What you gain by being trustworthy: Higher sales closing rates; shorter sales time, more repeat business. Higher employee retention. Customer loyalty. Fewer lawsuits. More honesty from others. Fewer competitive bids, more likelihood of your advice being taken. Higher confidence in your quarterly earnings statements. Higher customer sat ratings.
That all adds up to real money too.
How Building a Trust-Fostering Company Adds to the Bottom Line
I have suggested four Trust Principles: these work at the individual as well as the organizational level. The principles are:
1. Other-focus for the sake of the other
3. Relationship, not transaction, focus
These are not new concepts. If your company conducts all its affairs with these principles in mind, then you live in an organization that creates trusting and trustworthy people, processes and relationships. And makes a ton of money.
Unless you have brute monopoly pricing power, and don’t care about your reputation or your legacy in the world, then trusting and being trusted at the personal and institutional level is about the best profit guarantee you can get.
It may sound like a Buddhist mantra or a Beatle song, but it’s also an economic model. Trust pays—as long as you treat profit as a byproduct, not the goal itself.