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Managing For Trust

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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!

Building Trust By Design

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Pat’s story…

This past Memorial Day at our family picnic, neighbor Pat Pannone shared a story. An architect who often gives away his professional expertise as a volunteer on projects, Pat at times is asked by fellow volunteers to do architectural work for them. About a year ago, one of them invited Pat to design a home renovation. It was a big job. The main reason for the renovation was to build a master suite. Pat was excited. A job this size was something he enjoyed doing, and the fees would more than address some expenses that came with his newborn son.

Pat looked at the house and asked to see the attic. It had a large vaulted ceiling and was used for storage. He said he’d be happy to design what they wanted, but, perhaps they should consider having the attic converted into the master suite, and save themselves a lot of money. He suggested that they move their bedroom furniture there for a couple of weeks just to test it out.

The result – they loved it. No need for major work. No need for an architect. No fee for Pat. I asked what he thought about that. His response? He felt great about it! He could have done what the client originally asked and designed the addition. Instead, he was creative and thoughtful.

How Fear Chases Out Creativity

Some people are afraid of losing fees, especially when the fee will put food on the table. Pat had other work, so maybe fear is too strong a word. But he definitely wanted that new project. Letting go of that desire for the sake of the client is a great example of low self-orientation.

Wally Bock’s blog “Drive out Fear” talks about fear from a team perspective. He says: “When people are scared, what they think about is what they’re scared of. While they’re doing that, they can’t think of other things, like how to do a better job…”

If Pat had been worried about making sure he got that fee, he might not have seen the easy, low cost solution for his client.

Putting the Client First Pays Off

Pat smiled when he finished telling us about the big job that got away. The story wasn’t over, he said. 4-5 months later, that same couple called him again. This time, they were buying a new property, and needed an architect for a job that would not be solved by moving furniture into an existing room. And they wanted Pat because they knew he would put them first.

How about you? Have you met people like Pat? Have you ever managed to set aside your own fear and unleash your creative energy?

Warren Buffett and Managing Through Trust

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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.

Upcoming Events and Appearances: Trusted Advisor Associates

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Join us at one or more upcoming Trusted Advisor Associates events. This Summer, we’ll be hosting and participating in events in Washington DC and through globally accessed webinars.

And a word about the Trusted Advisor Mastery Program.

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Wed. July 20th Washington, DC Andrea Howe
(Rescheduled) Andrea will be speaking at the Washington DC Chapter of the Project Management Institute (Reston Luncheon) on “Trust and Influence: What Every Successful Project Manager Needs to Know.” 11:30am. To register or for more information, click here. PDUs will be available for Project Management Professionals (PMPs).

 

Wed. Aug. 24th Washington, DC Andrea Howe
Andrea will be speaking at the Washington DC Chapter of the Project Management Institute (Washington Circle Luncheon) on “Trust and Influence: What Every Successful Project Manager Needs to Know.” 2101 L Street NW, Suite 200, Washington, DC. 11:30am. To register or for more information, click here. PDUs will be available for Project Management Professionals (PMPs).

 

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The Trusted Advisor Mastery Program is about to begin its next group. One seat remains open for this 90 day program that includes 19 e-learning modules, 4 one-on-one coaching calls, 4 group coaching calls, a lively interactive discussion forum readings, tips and exercises.

Here’s what one participant in the last tranche had to say about the Program:

 

“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 in both 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 Danneman Siemsen Bigler & Ipanema Moreira, Rio de Janeiro, Brazil)

For more information on the next available program, email us at: [email protected].

A #TrustTip Highlight Reel

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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

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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.

The Limits of Rational Trust: Part 2

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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.”

Showdown at the Used Car Corral

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They wanted to sell a used truck. My son wanted to buy one for his business. He asked me to come along to help negotiate.

An enticing ad had gotten us onto their lot. At this point, the truck was pretty much pre-sold. All that was left was to agree on a price that worked for my son, and to pass our mechanic’s inspection. Done deal.

That is…until they decided they had to sell us.

My son was an eager buyer. But instead of asking my son about his business, or even why he wanted the truck, the salesman was all about getting the sale.

The Negotiation

It started with a little lie: “There’s another customer looking at that truck now”

This annoyed my son. Claiming scarcity only works when it’s true. The only other folks on the lot were looking at cars, not trucks.

Then the salesman began to negotiate price. It turns out that the trade-in value was within my son’s range, but my son wanted a lower final price. After some discussion, the price went down a little and then I gave our bottom line number. It was ok. The salesman then stuck out his hand and said: “This is our final price. Deal?”

The “presumptive close,” accompanied by a smug smile. It just didn’t work.

He was all about trying to sell a truck; he couldn’t see this was about my son buying one.

Despite his eagerness, my son ignored the salesman’s attempt to close. We said he’d buy if the price was really final, with no additional document prep fee–and, we still needed our mechanic to look at the truck.

“EVERYONE pays the documentation fee,” said the salesman.

Funny; after more discussion, the price was reduced by the amount of the fee. Then came the final issue – our mechanic’s approval.

“Our policy is that we don’t let cars leave the lot for mechanic’s inspections. Very few of our customers even ask to have cars looked at by their own mechanics,” said the salesman.

My son called our mechanic from the lot. The mechanic said he’d never heard of a dealer taking that position.

My son got more doubtful by the minute.

The salesman explained that the reason customers aren’t concerned with having used cars seen by their own mechanic is because they buy the dealer’s extended warranty which protects them. Another follow-on service for us to buy, in other words.

We said no, and got up to leave, whereupon the salesman made another offer: “We’ll give you another $500 off.”

I said my son would pay the price without the additional $500 off, as long as the mechanic could OK the truck, but he couldn’t buy without that inspection. The response: “Do you want to put down a deposit? There’s another customer interested, and the deposit will hold it for you.”

They just weren’t listening. At this we gave up and left, disappointed and discouraged. My son really wanted to buy the truck. But we understood they had a policy, and we accepted that was endgame.

But Wait There’s More…

Then, two minutes after driving out, my son’s cell phone rang. Now the dealer was willing to bring the truck to our mechanic–a request we never even made. This last sale attempt convinced my son: “I wouldn’t buy a truck from them at all. I don’t trust them.”

A Few Simple Guidelines

How did this seller permanently lose such an eager customer? What are the lessons this dealer can learn?

  1. Just stop with the lying. Just stop it. Why do dealers lie so much?. Lying loses trust, and trust loses sales.
  2. Don’t fake scarcity. Yes it’s used a lot as a sales tactic. That doesn’t make it right.
  3. Make sure policies are grounded in some principle that is important. “You can’t take the truck to your mechanic” was a policy. And if you’re going to claim you have a policy, at least have the good sense to stick to it.
  4. Stop with the closing. Good closing happens when the buyer is ready to buy. It doesn’t happen because the seller says “deal!”
  5. Listen to your customers. Should it really be that hard?

I guess it’s not all bad. My son got to see how trusting (or not trusting) the salesman can affect a decision to buy even more than the object itself. I’m pretty glad about that.

Beyond Work-Life Balance: Bedtime Stories

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The other night I met Kevin. Kevin is a late forty-something career consultant; for all but a few years of his career, he spent his work-weeks in various cities away from his wife and son.

Yet he and his son are very close. Kevin consciously developed rituals for the two of them and faithfully followed them.

For years, Kevin read books to his son. Every night. Long distance. As he put it:

Every book I’d buy, I’d buy two copies. We went through all the Harry Potter series together, and a ton more.

We had a standing routine. Every night at 7:30PM his time, I’d call him, we’d each open up our copies of the book, and I’d read.

If I was in a hotel, no problem. If I was driving, I’d pull over. If I was driving with a colleague, I’d ask the colleague to drive for half an hour while I read to my son.

It was great. It was a regular thing, a routine; I knew I had his attention, and he had mine. I really enjoyed that time.

How did that work out? Kevin says he has a rich, warm relationship with his son, now 17. I look at the glow in his eyes and his smile when he tells me about it, and I believe him.

Trust Primer Volume 11

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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.