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Why We Don’t Trust Companies, Part III – Risk

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Take the RiskThis is the third in a four-part series about why we don’t trust companies. The final post will offer solutions.

In the first and second posts, I said trust in companies is so low because companies don’t understand the personal nature of trust, and because they hold various beliefs that seem at odds with trust.  Call those drivers “ignorance” and “ideology.”

[Note: ignorance and ideology are not the reasons commonly cited for low corporate trust. The usual suspects include lack of regulation, conflict of interest, perverse incentives, lax enforcement, and greed].

There is one more big issue that affects our distrust of companies – the issue of risk. Risk is fundamental to both corporations and to human trust, but their views on the subject are diametrically opposed.

Trust absolutely requires risk, while corporations abhor it. The conflict between these two views explains quite a bit.

Risk and Trust

There simply is no trust without risk, almost by definition. To trust another is to willfully put oneself in harm’s way. The act of trusting lies somewhere between one extreme of cold calculation of odds, and the other extreme of blind faith.

Contrary to what Ronald Reagan was fond of saying, “trust but verify” is an oxymoron. If you have to verify, it isn’t trust; and the act of verification tends to negate trust.

Risk plays a critical role between the two parties of a trust relationship. The trustor is the one taking the risk, the one who puts himself in harm’s way. The trustee is the one who is granted the power by virtue of the trustor’s risk. How he responds is critical to the establishment of trust.

This dance of risk-taking is the essence of human relationships. I extend my hand, and you either extend yours back to me, or turn on your heel and spurn me. Romantic relationships are established by an elaborate ritual of progressive risk-taking and positive responses. So it is with trust.

Trust is a bilateral, asymmetric relationship – risk is the medium of exchange. A trusting relationship can mitigate larger risks, but it almost always begins with a small risk taken.

Risk and Companies

By contrast, corporations abhor risk. In a zero-sum, Hobbesian, sustainable-competitive-advantage world (see part II of this series), to put oneself in harm’s way of another is simply irrational, if not suicidal.

[Note: I’m not talking here about risk in financial markets – alpha and beta, hedging, risk appetite – those are design features of a product being sold.]

This negative attitude toward risk is pervasive. It’s at the root of business insurance contracts, legal reviews, communications approval processes, and a great many policies and procedures.

I recently heard of someone in the reputation management business who said they’d gotten inquiries from people and from companies alike in times of crisis. But, when they heard that his recommendations included an apology, all the corporate inquiries dropped off. Only individuals were willing to consider reputation repair that included  apologies.

The reason is clear: to apologize looks like an admission of guilt. An admission of guilt opens up a corporation to civil lawsuits. Almost all companies will view such a situation in strictly legal terms, and the “right” answer is the one that limits risks. Ergo, no apology.

This dichotomy makes sense because humans relate to apologies – to apologize is a form of risk-taking that can help restore trust. Corporations, not being human (see Part I), see apologizing in strictly legal, non-human terms. For people, apologies are about character and reputation; for corporations, they’re about threats and survival.

We as humans want truth-telling and accountability in order to trust. But companies tend to resist telling the truth or taking accountability if it puts them legally at risk.

When you have different perspectives on truth and accountability, you have a very wide divide. One more reason we don’t trust companies – they don’t usually behave by the “rules” of trust, which is (see Part I) predominantly human.

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The final part in this series will move from the negative to the positive, and offer solutions.

 

 

 

 

 

Three Things You Need to Know About Trust: 1 of 3

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There really are only three things you need to know about trust. You can pretty much deduce the rest.

I’m going to write about each of them in a separate blogpost, but here’s the one-liner version of each:

  1. Trust is a Two-player Game
  2. Trust Requires Risk
  3. Trust is Reciprocal

If you understand those three points, you can figure out things like trust recovery, rapid trust creation, and trust-enhancing cultures.

Trust is a Two-Player Game

For trust to exist, one party must do the trusting, and the other party must be trusted. That sounds dirt-simple, until you pick up the paper and realize how much talk about trust simply doesn’t mention it.

How many articles and surveys have you read that talk about “trust” as if it were some simple, unitary phenomenon?  Answer: most.

Those articles that say “trust is down,” “trust in banks has declined,” “people I know are more trusted–” all suffer one great defect: they don’t tell you why the trust is up or down.

It’s simple, if you ask the question correctly. If surveys show that trust in banking is down, is that because banks have become less trustworthy? Or because people have become less inclined to trust? One is a problem of ethics and trustworthiness; the other is a problem of risk-taking, education and fear.

You can’t design policies or laws or actions if you don’t know which problem you’re trying to solve.

If you can’t directly address trusting and trustworthiness, then measures of “trust” alone can’t be trusted – they could be influenced by exogenous factors like GDP growth.  And they are.

Trusting and Being Trusted

Trusting is about intelligent risk-taking.  Being trusted is about trustworthiness.

When someone says trust is really an issue of character or integrity, they’re talking about being trusted, not about trusting.

And when someone says, “trust but verify,” they’re talking about trusting, not about being trusted. (Though notice: if you have to verify – it’s not really trusting).

When you talk about trust in your organization, or with your clients or customers, you would probably prefer that others get better at trusting – to save you the trouble of getting more trustworthy!

We don’t have a lot of control over others’ propensity to trust, though we can certainly influence it.  But we have a lot of control over being trusted. And by far the best way to be trusted is to simply be trustworthy. One way to think about that is through the Trust Equation.

Trust is a Relationship

Trust is a relationship? Well, that’s what being a “2-player game” means. Before you think this is another “Doh” moment, note what it implies. It means the absence of trust is the absence of a relationship. It means when we think about business outside the framework of relationship, we are not thinking about trust.

What do market share, competitive advantage, markets, cost reduction, and value chains have to do with relationships? Not much. And therefore they have little to do with trust.

One driver of the level of trust is, simply, how we view business. Our view of business for the last several decades has been about competition, not about collaboration; about opposition, not about relationship.

A big reason those articles show that “trust is down” is because we have stopped thinking about relationships, and focused instead on competitive marketplaces.

Wanna know why trust is down? Start with the absence of relationships.

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Next post: Trust Requires Risk

Story Time: Innovation, Trust, and the Freedom to Fail

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Our Story Time series brings you real, personal examples from business life that shed light on specific ways to lead with trust. Our last story proved that he who eats with chopsticks wins. Today’s shows how trust can impact innovation, productivity, and staff retention.

A New Anthology

When it comes to trust-building, stories are a powerful tool for both learning and change. Our new 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.

Today’s story is excerpted from our chapter on making the case for trust. It vividly demonstrates how providing the freedom to fail, take risks, and build on others’ ideas increases a team’s ability to innovate.

From the Front Lines: A Trust-Based Business Unit

In 2005, Ross Smith became Director of an 85-person software test team within Microsoft. His team had great technical skills, passion, and excitement, but felt underutilized and unchallenged. Ross set out to improve innovation and productivity. Exploring options, they ran across a University of British Columbia study by John F. Helliwell and Haifang Huang that equated the impact of high organizational trust to significant pay raises in terms of creating job satisfaction.

The team suddenly realized that innovation required freedom to fail, risk taking, building on others’ ideas—all behaviors grounded in high trust. That cognitive snap, that a high-trust organization would address underutilization and latent talent, was the beginning of the solution.

In a high-trust organization, individuals could apply their skills, education, and experience at their own discretion. They could take risks and change processes themselves because managers would trust them. The question was this: how to do it?

Ross asked the team to identify behaviors they felt influenced trust, positively or negatively. They realized that trust was subjective, situational, and very individual, and there was no single behavioral answer. As a result, the team put together a detailed playbook describing simple principles with discussion about how to implement.

They also modeled risk-taking and trust-building by using games to approach problems; everyone was allowed to play, experiment, and fail.

Microsoft is a heavy user of metrics, for Ross’s team as well as throughout the company. The first noticeable difference was a higher-than-normal level of retention. After two and a half years, other things started to change dramatically—new test tools and new techniques were developed, and a high level of collaboration and partnership was working. Productivity numbers started to rise. As the project finished, the team was rated at or near the top across virtually every Microsoft productivity metric.

When Ross and several others from the original team moved to another division, they set out to introduce the trust-building ideas and practices which had worked so well before. Once again, they saw a high retention rate, a broader application of talent, and higher productivity numbers.

The metrics followed the changes in mind-set and behavior—not the other way around.

—Ross Smith (Microsoft), as told to Charles H. Green

Find out more about Ross’s experiments in management innovation and trust, or read his blog on productivity games.

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Read more stories about trust:

Story Time: It’s Trust, Therefore It’s Personal

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Our Story Time series brings you real, personal examples from business life that shed light on ways to lead with trust. Our last story illustrated how one conversation changed everything. Today’s selection highlights  the value of making a personal connection.

A New Anthology

When it comes to trust-building, stories are a powerful tool for both learning and change. Our new 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.

Today’s story is excerpted from our chapter on selling to the C-suite. It vividly demonstrates the value of paying attention to more than just the task-at-hand, and taking the risk to put personal before business.

From the Front Lines: Taking a Chance on Connection

Gary Celli tells a story of the business value of building trust quickly with a C-level client.

“I was working in California for a multi-national high-tech company. I was a project manager at the time, and the project I was leading was rife with difficulties—nothing atypical, just the usual stuff. We were also trying to position additional work with the customer.

“One day, the CIO asked specifically to meet with me. Until that point I had been dealing with his directors, so he and I hadn’t spent any time together beyond a brief interaction at the big project kickoff meeting. You can imagine I was a little on edge about the meeting.

“The first thing I noticed when I arrived at his office was what a mess it was. There were papers all over the place. One chair was so stacked with stuff it wasn’t usable. I glanced around and noticed a copy of the Scranton Journal on the floor—the magazine for my alma mater, the University of Scranton, a small Jesuit university in Pennsylvania. I looked around for a diploma on the wall, but didn’t see anything. So I asked about the magazine.

“It turns out that we were both graduates, now living nearly 3,000 miles away in California. Talking about that really helped break the ice and took the edge off. We spent 30 minutes reminiscing about the school, the campus, the local hang-out bar that all the kids went to. Then we spent about 15 minutes talking about project issues.

“It was a very successful meeting. The bond we had established made it possible for me to glean more information from him and he seemed very open to hearing my perspectives on the project. We got to the heart of the matter in no time. My company also got the follow-on work, and the CIO was a loyal client for years to come.”

—Gary Celli

What’s your next opportunity to make it personal?

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Read more stories about trust:

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Many Trusted Advisor programs now offer CPE credits.  Please call Tracey DelCamp for more information at 856-981-5268–or drop us a note @ [email protected].

Six Risks You Should Take to Build Trust

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We’re pleased to announce the release of our latest eBook: Six Risks You Should Take to Build Trust.

It’s the third in the new Trusted Advisor Fieldbook series by Charles H. Green and Andrea P. Howe.

Each eBook provides a snapshot of content from The Trusted Advisor Fieldbook, which is jam-packed with practical, hands-on strategies to dramatically improve your results in sales, relationship management, and organizational performance.

Six Risks You Should Take to Build Trust reveals:

  • How taking risks actually reduces risk
  • A powerful tool for making difficult conversations easier
  • Six ways to build your risk-taking muscle

P.S. Did you miss out on Volume 1 or 2 of The Fieldbook eBook series? Get them while they’re still available:

Take a look and let us know what you think.

When Arrogance Feigns Humility

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At my seminars, one of the actions I suggest to increase perceived trustworthiness is to speak truthfully.

Sounds great in principle, until you get into just which truths you discuss.

Speaking conventional, obvious truths (“how ‘bout them Bulls”)  doesn’t do much to create either distinction or deeper trust. Hence the usefulness of talking about things that don’t get said by others (“Joe, I’m sensing some hesitation here—is that right?”).

At this point, attendees often raise the issue of propriety, as in, “Some things should best be left unsaid—you don’t want to embarrass people or make them uncomfortable.  And if people feel uncomfortable or embarrassed, they’re not likely to trust you anyway.”

I tell them my experience is that most businesspeople don’t suffer from telling too much truth, but from telling too little. And so on. We generally have good discussions about the issue.

But occasionally that discussion goes to a higher plane. So it was recently, when an attendee and I talked at a break:

“I buy what you’re saying about our general hesitation to take personal risks in the workplace,” she said, “and you’re right—we’re making the client take the hit for our own insecurities.”

“But what about those cases where it’s actually true? Where to hear something really would be upsetting to the client, even if it’s true, and potentially important for them. Maybe it’s an issue I’m not totally sure of.  Maybe it’s a situation where I can get by with just saying most of the truth; or maybe the risk of embarrassment to me truly does exceed the benefit of truth-telling to the client. Aren’t you really helping the client by taking into account what you know of their reactions and ability to hear tough truths, and packaging them accordingly?”

I thought to myself, “Those are good questions: and we do have an obligation to our clients to say important things in ways they can hear them. But we have another obligation, to figure out how to say those tough truths, rather than deep-six them.”

Yet, how to say that to this thoughtful and insightful person?

I suddenly remembered a wonderful quote from Martha Graham: 

“There is a vitality, a life force, a quickening that is translated through you into action, and there is only one of you in all time, this expression is unique, and if you block it, it will never exist through any other medium; and be lost. The world will not have it. It is not your business to determine how good it is, not how it compares with other expression. It is your business to keep it yours clearly and directly, to keep the channel open. You do not even have to believe in yourself or your work. You have to keep open and aware directly to the urges that motivate you. Keep the channel open."

I said to the participant, “I’m sure you don’t think of it this way, but is it conceivable that your genuinely good intentions and insights are nonetheless making you behave arrogantly? In the sense that you are depriving your client of the right to make this decision for him- or herself? And if you don’t trust your client to handle the truth–doesn’t that ultimately degrade their trust in you as well?”

I didn’t need to elaborate.  She reacted immediately with shock at the suggestion that she, a most pleasant person, could conceivably be thought arrogant; but in half a second I saw quickly saw in her eyes that she ‘got’ it, and understood the meaning, and the truth, of the question.

Then, I think, she smiled a bit. Which, I suspect, Martha Graham would have appreciated.
 

Show Me the Elephant

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Why is that leaders and the teams they lead often ignore their issues until they have no choice but to take action? This despite the fact that, more often than not, waiting longer limits their universe of available responses.

I work with a practice group in a professional services firm. They have regular meetings of timekeepers and staff. Lately at those meetings there was an elephant in the room – anxiety about how the economy was going to affect them. Rather than talk about what was really on their minds, they discussed administrative matters and client issues.

In a recent discussion with the practice group leader, I asked – “so what are you and your group going to to do to address the downturn?” My client hadn’t really thought about it. Like many, the leader hoped the team could ride it out. I suggested “name it and claim it." It was simple – raise the issue for the group and talk about it. Some questions to ask:

· How busy are we?
· If we keep doing things the way we are now, what will happen?
· What do we need to do differently?

In such discussions, keep nothing off the table. On the cost side, address reductions – staffing, salary and other expenses. On the revenue side, consider new business activities, think about rates and fixed fee alternatives, figure out how to get paid sooner. Address the issues that have to be addressed. Get cveryone to take ownership of the problem. Put the elephant front and center, and deal with it as a group.

What happened? People got to share their anxieties in an appropriate way, own the problem and develop a solution together. They appreciated the opportunity to think out loud with each other.

Does it really matter why we procrastinate on such issues? Fear is probably at the heart of it. But the origin doesn’t necessarily alter the action. What needs to be done is to name it, so we can claim it.

Do you have an elephant in the room that needs to be called out?