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Leaving Butter on the Bread

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I grew up in country Ireland with the saying ‘leave butter on the bread.’

I have been living in Melbourne for the last 16 years and try and get back to Ireland every year. I visited my parents in the old country a few weeks ago and continually felt a sense of community that gives without expecting anything in return: a neighbour dropping in with a gift of some freshly picked vegetables from her garden; another neighbour dropping in a big pot of homemade vegetable soup; my mother making 12 jars of raspberry jam and giving away 11 jars to neighbours.

All done without any fanfare just with a giving heart.

On this trip I had the great pleasure of dropping into New York to visit the TAA merry gang on my way back to Australia.

I encountered two experiences with big corporate institutions where one left ‘plenty of butter on the bread’ and the other left ‘dry bread’. These incidents have been playing on my mind.

I was walking down 6th Avenue between 17th and 19th West and went into a major bank to withdraw cash from the automatic teller machine (ATM). There were two smartly dressed bank officials standing at the entrance to the ATMs. One enquired if I wanted to withdraw cash and on saying yes I was told they were giving out cash prizes today and to be sure to look out for a flashing message. I thought this is wonderful how lucky am I that I walk into a bank that is giving out cash prizes. I proceeded to insert my card into the machine and at the end of the transaction a flash of $125 came on the screen. The lady who had obviously been watching my machine shouted out, “we have a winner!" I immediately thought how wonderful this bank is, New York is AND I was envisioning a new pair of shoes and said to the bank official "the luck of the Irish." The gentleman asked me to follow him into the main bank so that I could receive my prize and escorted me to a formal office. The first question he asked was “do you make many withdrawals”…"yes"  “which bank do you bank with?” “Westpac (Australian Bank) I am just visiting!”  “Oh we have a problem. You need to open a bank account here in order to receive your prize, which needs to be deposited into an account, and this will not work, as you are from overseas. I immediately said "so when anyone inserts a bankcard from another bank the machine says that they are a winner?" He could not look me in the eye and said "No, that is not the case." My trust of this financial giant was suddenly Zero. In my opinion this was misleading and deceptive conduct. He walked me out to the front door probably so that I would not tell others waiting to take cash out. I had been left without ‘butter on the bread.’

Fortunately there is a heart-warming story to tell. I spent my first day shopping at many stores including Macy’s.  I bought 3 pairs of shoes and was pleased that I received 25% off in their sale. By the end of the week I had to buy  an extra suitcase (large) to accommodate all my shopping!  I made another journey to Macy’s and found that the store had a 50% off sale. I chose a quality suitcase and was surprised at the counter to learn that as well as the 50% off I would get an extra 10% off as this was the last suitcase of its kind and had been on the floor. How wonderful.

On my way out of the store I could not resist popping once more into the shoe department. I found that the shoes I had purchased 5 days earlier were now at 50% off. Just as a throw away line I said to the assistant that if I had waited and bought the shoes today I could have saved money. She enquired if I had my receipt and if so I could take it to the counter and get the extra 25% off.  I did and am happy to report I got the refund. Both transactions within Macy’s went way beyond my expectations. Macy’s left butter on the bread and I will tell many, many people this wonderful story.

The bank, however, I never want to set foot in again.

The Revolution Will Not Be Twitterized

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Arguably the inventor of rap music—and undeniably a unique voice of our time—Gil Scott-Heron is today most famous for an April 1971 track called “The Revolution Will Not be Televised.” 

“…the revolution will not be brought to you by Xerox in four parts without commercial interruption…will not give you sex appeal, nor make you look five pounds lighter…will not go better with Coke…”. 

The message—as I hear it—making change is not a casual, part-time activity. Done seriously, it can be hazardous to your being.

Here’s a short video of Scott-Heron:

The Revolution Will Not Be Televised
Uploaded by mallox. – Music videos, artist interviews, concerts and more.

Decades later, Malcolm Gladwell nods to Scott-Heron to say something similar about the television of our age—New Social Media (New Yorker, October 4, 2010: "Small Change: Why the Revolution Will Not be Tweeted.")

In his inimitable style, Gladwell first digs deep into the early days of the Civil Rights movement in the US—February 1960, to be precise—to show how a 4-person sitdown strike morphed into sitdown strikes across the south involving 70,000 students. All done, as he notes, without Twitter.

Then—as usual—Gladwell brings in the counterpoint. In this case, new social media. With an undertone of annoyance, Gladwell quotes State Department officials, old media reporters, and new media darling Clay Shirky. They all gush about the power of Twitter and Facebook to affect global political events, and to mobilize masses of people behind crucial movements.

Bahh, says Gladwell. Don’t confuse getting people to contribute thirty-five cents from the comfort of their armchair with a willingness to go get your head broken in support of a cause. And, suggests Gladwell, it is the latter—not the former—that turns out to be at the heart of social change.

Change requires risk. Serious change is done in numbers; but in small numbers, with real ‘friends’ beside you. The ‘friends’ you have on Facebook don’t deliver that kind of support.

Personal and Impersonal Trust

The debate Gladwell is raising is nominally about social media. It does raise a related trust issue, however. To what extent does our extended connectivity and interdependence increase trust?

Let me go back to the Trust Equation to suggest an answer. The Trust Equation (actually an equation for trustworthiness) is

(C + R + I)

          S

Where:

C = credibility

R = reliability

I = intimacy

S = self-orientation

 When people talk about new technologies allowing for the creation of greater trust, they are often talking about the first two elements of credibility and reliability—especially the latter.

·    We ‘trust’ that the sun will rise in the east;

·    We ‘trust’ Amazon’s suggestions for us because they are hugely data-based;

·    We ‘trust’ eBay’s ratings of sellers because they are aggregated and mediated;

At the same time, that kind of trust doesn’t mean I’d introduce my daughter to anyone at Amazon or eBay, or even lend anyone there ten dollars. Because that’s not the kind of trust you get from knowing people. 

A site like Match.com is a more interesting case, because it uses large impersonal aggregation to go after the kinds of interpersonal trust that are missing in a low-dollar commercial purchase. Scale alone is a huge attraction; but the impersonality of the medium, applied to a relationship game, means the dating sites have had to evolve various ways of mimicking the very personal process we have of getting to ‘really’ know other people. Winking, poking, are a few; they mimic the range of halting gestures people make toward each other in early stages; profiles and the ‘just lunch’ concept are others.

Gladwell’s specific point about revolutionary politics is an instance of a more general point about trust: Trust Is Personal. I’m talking about the Intimacy and the Self-Orientation kinds of trust mainly. I mean the kind of trust we need if we’re to do serious interactions, one on one, or movement-on-establishment.

If I don’t ‘trust’ my Toyota, I may go find a Ford. If I don’t ‘trust’ my ‘friend’ on Facebook, I may complain about him to my other ‘friends.’

But if I’m a civil rights activist in the 1960s, or an Iranian dissident today—I’m not going to risk my behind if the only one who’s got my back is a Twitter friend. 

Said Scott-Heron, “You will not be able to plug in, turn on and cop out…the revolution will not be on instant replay…there will be no highlights on the 11:00 news…the revolution will not be…” twitterized.

The Real Stuff is still pretty Personal.

Trust based Leadership

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With all the trust surveys proliferating out there, I’m sure one of them includes questions that rhyme with “do you trust leadership of __?” And if so, I’m pretty sure the numbers have declined over recent years.

And I think most C-suites would agree that leadership—at corporate and institutional levels—would benefit greatly from being more trusted. In other words, the times scream out for a clear approach to trust-based leadership.

So—here are the headlines. 

Trust-based Leadership: the Top Ten List

1.    Don’t Fake It. The best way to be trusted—by far–is simply to be trustworthy. Reputation follows trustworthiness—not the reverse. The best PR comes from publicizing good things, not from spinning them. Don’t put your marketing, PR, or communications in charge of trust; you are in charge of trust, 24-7, by your own thoughts and actions. Don’t confuse the metrics with what they are supposed to measure.

2.    Your Ego is Not Your Amigo. Being driven can be OK. So too can being impatient, customer-obsessed, product-obsessed, design-obsessed, or people-obsessed. What cannot be OK is being obsessed with yourself. If you can’t check your ego at the door, seek professional help; stop taking it out on others. It is Not About You. If you think it is About You–you might be a bad leader.  

3.    Collaborate, Don’t Compete. No one is the enemy. Not your customer, not your supply chain, your employees, the union, not even your competitors. If you think you are competing with anyone, you are focused on gaining advantage over others; you are making yourself the center of things. (See Rule 2 above). Let others obsess with competing. You be the one to go think about what you can do for [customers, employees, your supply chain, even your competitor]. She who adds the most value lives best. And longest, at least in terms of client loyalty.

4.    Leading is Emotional. Choose your own leader; not one of the Usual Suspects. Now ask: were they passionate? My guess is they were, and their moments of passion were the source of much of their influence. Leaders lead, which means others follow them, and emotional passion is a big driver. Very few people follow the numbers-only guy or gal.

5.    Integrity Means Wholeness. You can’t be all things to all people. The more you try, the less integrity you appear to have. What you can do is to be the same person, at all times, to all people. That makes you whole, entire, integral—one who has integrity. A leader is unafraid to show his whole self.

6.    Be Transparent. A trust-based leader welcomes reality. The goal is to change reality, not to spin it. To see things as they are and to change them is noble. To see things as they aren’t and talk about them as you think you would wish others to see you as talking—well, that’s just BS. Don’t go there.   A leader knows that reality is her friend.

7.    Play Long Ball. You can’t be transactional and be trusted. Transactions can only be trusted in packages. Time is the key. Never cut a deal with someone—cut the 27th deal in a chain of 132 deals you intend to cut with them. That way you build a relationship—reliability, connection, mutual obligations, and the business vocabulary to express them. A leader is always thinking and acting in the long term.

8.    It’s Personal. The Godfather line, “It’s not personal; it’s business” was precisely wrong. It is both. Leadership can’t be trusted unless leaders are trustworthy. Companies aren’t trusted (except for the narrow case of reliability); people are. Trust can be engineered; but at the end of the day, all trust is experienced as personal.  A leader exemplifies it.

9.    Trust is Relationship. Robinson Crusoe didn’t need trust (before Friday, anyway). Trust is like ballroom dancing—you need two to tango. One trusts, the other is trusted. One by itself isn’t even the sound of one hand clapping. It’s non-trust. You can’t be trusted if you don’t trust back.  There is no trust without both parties in relationship. A leader knows how to play both roles; by trusting, he becomes trusted. By being trustworthy, he invites trust.

10.There is no Trust without Risk. Trust mitigates risk, but only by taking another risk. Ronald Reagan’s ‘trust but verify’ was good politics, but bad trust. Verification destroys trust. Trust is risk freely-taken, for the greater advantage of both. It is paradoxical, which is why risk-mitigation techniques end up destroying it. A leader knows that sometimes, she’s just gotta take a leap.

Robert J. Kueppers on Trust and Regulation (Trust Quotes #14)

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For most of you, Bob Kueppers is someone whose influence (high) is inversely related to the likelihood you’ve heard of him.

As Deputy CEO of Deloitte LLP, Bob Kueppers has responsibility for regulatory and public policy affairs. That means he rubs shoulders with government and industry leaders who determine regulatory and public policy matters in this country and the world. Bob Kueppers was recognized in 2009 by Directorship Magazine as one of the top 100 most influential professionals in corporate governance and the boardroom. 

Bob is refreshingly direct and candid in his interactions; combined with a mastery of a field both wide and deep, he’s a fascinating interview.

Bob has a number of other additional roles at Deloitte, but we’ll focus mainly on his perspective on trust and regulation.

CHG: Bob, I’m delighted to have you join this series. I hope you’ll forgive us delving into just two subsets of your expertise: trust and regulation. Let’s start with regulation. Regulators aren’t getting great press these days. Is it a necessary evil? Or does regulation play a more constructive role in our business and society?

RJK: Regulation in a free enterprise system is one of the essential checks and balances in three different scenarios:

1) When parties in the market may not be equals;

2) When the nature of the market activity is susceptible to fraud or abuse; and

3) When public health and safety are involved.

Even true believers in free markets must acknowledge that a certain amount of regulation actually helps to preserve the credibility of the markets, which helps the market to operate and thrive. 

The debate over regulation often has to do with striking the right balance—finding the right degree of regulation. Like with “Goldilocks and the Three Bears,” it’s hard to get it “just right.” The appropriate degree of regulation often varies depending on the times, current events, and lessons learned.

The formation of the Securities and Exchange Commission in the 1930s, following the crash and market abuses of the late 1920s, is often viewed as a regulatory success. The orderly functioning of the capital markets provided the financial fuel to fund the post World War II expansion that redefined America in the 1950s and 60s.

When things go wrong, the natural reaction is to call for more regulation. But how can you tell when you’ve gone too far? For instance, critics say the recently enacted financial regulatory reform legislation, informally known as the Dodd-Frank Act, goes too far. Others claim it doesn’t go far enough. The truth is that we still don’t know the answer and likely won’t for several years—until the hundreds of regulations needed to make the reforms operational are written and implemented.

 CHG: What should be the role of regulation in the mixed economies we have today in the US and Western Europe? 

 RJK: It depends on the priorities of the country in which that regulation operates.

For instance, the US is often viewed as having a more litigious environment than other countries; as a result, our regulatory environment can be quite different than that of other countries.

Leaving such differences aside, I see the role of regulation as twofold:

1) Help to protect the interests of stakeholders, or, said another way, help to build and maintain trust in the markets that make up the economy; and

 2) Help to improve or maximize the quality and efficiency of the product or service through the establishment of standards and the related enforcement of those standards, such as through consequences for certain instances of non-compliance.

Regarding regulation beyond our domestic borders: because there is no global government system, a truly global regulatory structure is unlikely in the foreseeable future. Differences among geographies in this increasingly global economy are inevitable. It’s natural for countries to want to reserve the right to do what they believe is in their best interest given the unique circumstances of their nation.

Nonetheless, it’s important to recognize the inter-connectedness of our global markets—reinforced by the recent financial crisis. It’s helpful for regulators around the world to collaborate and work together—through forums, organizations, or otherwise—to achieve consistency in approach. We see such coordination in my profession through IFIAR, the International Forum of Independent Audit Regulators.

Again, my own view is that regulation should serve to assist fair markets to operate because regulation helps foster trust in such markets by the market participants and the related stakeholders.

CHG: Are there several key types or roles of regulation, which vary perhaps by industry? Or is the role of regulation universal and essentially the same, whether it’s the SEC, the FDA, the EPA, or the NHTSA?

RJK:  In theory, while the consequences of failures in regulation and poor execution by the regulated vary (ranging from mere inconvenience to potential loss of money, physical suffering, and health and safety consequences), the role of regulators is similar: to help to protect consumers and stakeholders and maximize quality and efficiency.

In practice, there are differences. Think about regulation of an industry which produces goods or provides a goods-based service—like the airline or pharmaceutical industries, compared to the regulation of a profession, which generally covers standards of behavior or performance.

What these disparate forms of regulation have in common, however, is that stakeholders operate with a level of confidence that compliance with regulation—whether by an airline adhering to safety standards or a public company audit firm following professional standards—builds confidence in the markets.

CHG: Let’s hop over now to trust. What’s the relationship of trust to regulation? How does regulation help trust? Or is it a substitute for trust? Does the presence of one reduce, or enhance, the other?

RJK:   Regulation isn’t a substitute for trust, but the existence of regulation plays a key role in helping to build and maintain trust, particularly in times of crisis. Examples include the creation of the Public Company Accounting Oversight Board to directly regulate my profession following the Enron and Worldcom scandals, as well as what we are seeing now with financial services regulatory reform in response to the recent financial crisis.

This suggests we could view a regulatory failure as one that doesn’t garner trust from the intended beneficiaries of the regulation. Such an outcome may indicate that there is a cost to society, without the concomitant benefit.

Unfortunately, this seems to happen more often than we may realize. Our society goes through cycles of regulation and deregulation. But, regulation tends to be cumulative over time, and the result can be layers of regulation, not all of which may be effective. In some instances, conscious decisions are made to forgo regulation. Is that because a significant level of trust already exists or is it a perception about cost and benefit? Or, is it a combination of both?

Having said that, regulation is a large part of what makes our markets the best in the world. It helped our markets recover well from the loss of investor confidence that followed the scandals that gave rise to Sarbanes-Oxley and is aiding in the recovery from the most recent financial crisis, though we still have a long way to go.

Unfortunately, it’s really in times of crisis when the issues of regulation and trust are considered together the most. That’s when there’s pressure to act quickly, and hopefully strategically, to learn lessons and act on them. The answers under these circumstances may be different than what you’d get outside of a crisis environment.

CHG: What do you find are the biggest misconceptions that businesspeople hold about regulators? Conversely, what misconceptions do regulators typically have about business?

RJK:  Businesses may perceive that the regulator has different objectives than the regulated. They may lose sight of the fact that as a regulated entity, they generally have shared objectives with the regulator.

It is not implausible that regulated businesses may see compliance with regulation as an impediment to success in terms of competitive advantage or speed to market. Businesspeople are largely quite ethical and certainly want their products to be safe for consumers, for example. But at the same time, as a general matter, if you lose sight of the shared objectives and focus more on short-term success, rather than long-term sustainability of the business, you can become frustrated with regulations.

Regarding the regulators, it’s important that they understand the trends and developments affecting the markets or industries they regulate. It can be counterproductive to develop changes in regulation without staying in close touch with the regulated entities and other stakeholders.

This communication helps to inform issues like the cost of implementation, the need to modify proposed rules to make them more understandable, and unintended consequences of changes in the regulatory regime. There needs to be a level of trust between the regulator and the regulated to help prevent the regulator from implementing proposals that are unlikely to work in practice.

CHG: The regulation model for the public company auditing profession is interesting in that there is government oversight, but the PCAOB is a private sector body. Why does this model work?

RJK: The government, through the SEC, oversees the PCAOB, but in the Sarbanes-Oxley Act, Congress explicitly established the PCAOB as a private-sector body. The SEC’s oversight role was effectively reinforced by a recent Supreme Court decision in a case about the constitutionality of the PCAOB.

The SEC oversees the PCAOB through the appointment of PCAOB members and supervision of the Board’s activities.  This makes sense, given the public company auditing profession’s role in the capital marketsand the SEC’s overall mission to maintain fair, orderly, and efficient markets, as well as to facilitate capital formation while protecting the interests of the investing public. The main reason the model works is the alignment of the PCAOB’s mission with the regulatory mandate and statutory authority of the SEC. If there were substantive differences, it probably wouldn’t work as well as it does. 

This private-sector regulation working side by side with government regulation isn’t unique to the accounting profession. The Financial Industry Regulatory Authority is another example of a private-sector regulator that works closely with the SEC on issues important to the markets.

CHG:  Let’s forget about regulation for a moment and talk about another realm of trust—trust between professionals and their clients. It’s something you know a great deal about within your business. What’s the role of trust in client relationships?

RJK: In general, trust and mutual respect form the foundation of the most effective client relationships. Those clients who understand our role and respect it are the clients with the best relationships.

For example, clients who identify issues early in the audit, and auditors who are upfront with clients when they are not comfortable with an issue, tend to have the most effective relationships. A good client relationship doesn’t mean there are never any issues to resolve; to the contrary, it means that issues get resolved on a timely basis because they are identified early and there’s a mutual understanding of the need to work through a resolution process.

Over time, greater trust fosters a stronger and more successful business relationship. When you’re a trusted professional advisor, you can be more effective in your own responsibilities. Let me be clear, this doesn’t mean we always agree with the client. 

To the contrary, we draw the line when necessary.   Sophisticated clients—I don’t mean in terms of size and scale, but in terms of thinking and attitude—not only understand this, but appreciate it, even if it’s stressful at times. In the end, investors benefit from credible information.

Auditing is unique, though; to do our job and fulfill our professional responsibilities, we strive to thoroughly understand the client’s industry, business, and current circumstances. This requires management and the audit committee to trust us.

Yet we cannot take things at face value or trust without support; we must be professionally skeptical. Our independence and objectivity, coupled with our knowledge and experience, are key to the value that we bring as auditors and we don’t put those at jeopardy for any client relationship.

CHG: Are there a few key things that people in business can do to improve trust with their clients?  

RJK:  Here are some lessons that come from my audit background, but which I think hold true in many business relationships:

·      This one is obvious, but first and foremost, deliver high-quality services and bring the right resources to the assignment.

·      Facilitate open dialogue—the earlier, the better—if a problem looms.

·      Don’t be afraid to deliver the difficult news; in my experience, handling that candidly and proactively goes much further in building trust than delivering the good news or raising a problem at the last minute when deadlines loom.

·      Finally, stick to your guns when the going gets tough; clients respect the fact that we have to do that. They may not like it, but they will come to value it when you are clear as to the “why.”

 CHG: What about clients—not just in your service lines, but more broadly. What should they expect in terms of trust—and what should they be bringing to the party as well?

 RJK:  I think it’s the same on both sides of the equation. Both service providers and clients should bring integrity, forthrightness, and strong ethical values to the table. This is especially true when it comes to auditing, but it holds true more broadly in other instances as well. 

Finally, it comes down to people. You could have a company with a great brand and corporate reputation, but if the management team lacks integrity, you do not want them as a client.

I have worked in a partnership for over thirty years. One way I gauge people is to consider whether I would want them to be my partner. Would I trust them with our brand and our reputation? That’s the acid test for me.

CHG: Bob, thank you so much for the gift of your time. Yours is a valuable and unusual perspective, and we appreciate your sharing it with us so forthrightly.

Robert J. Kueppers on Trust and Regulation

is number 14 in the

Trust Quotes: Interviews with Experts in Trust

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Are You as Credible as You Think? Probably Not.

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There are lots of ways to build trust with others (four, by our count) and Credibility is a big one. In our Trust Quotient research, Credibility shows up as second only to Reliability as the most favored way to build trust. (‘Most favored’ doesn’t mean ‘most effective,’ but that’s another blog, another day.) 

This makes sense, given the emphasis that most business people naturally place on increasing trustworthiness by demonstrating credentials, experience, and know-how.

The risk is that we stop there or—even worse—spend too much time there. Picture the March of 1,000 Slides.

There’s more to Credibility than meets the eye.

Three Dimensions of Credibility

When thinking Credibility, we mostly think words, as in what you say and how you say it. That means that having information, perspectives, opinions, and recommendations are all important—especially for people in professional services whose very existence depends on high quality advice-giving.

But there’s more. Speaking the truth matters too. A lot. As does delivering your message in a way that makes it easy for others to understand and relate to.

Top Ten List of Ways to Build Credibility

Here’s a Top 10 list of tried-and-true Credibility builders, categorized by Credibility’s three main dimensions.

Feature your expertise and credentials:

1.    Be diligent about researching your customer;

2.    Know about industry trends and information, as well as business news;

3.    Write about your areas of expertise—articles, blogs, white papers;

4.    Host events that bring key stakeholders together.

Improve your delivery:

5.    Use metaphors and stories to illustrate your point;

6.    Practice your delivery so you are clear … and clearly relaxed;

7.    Combine your words with presence—a firm handshake, eye contact (when culturally appropriate), a confident air.

Demonstrate your truthfulness:

8.    Offer your point of view when you have one;

9.    Respond to direct questions with direct answers;

10.   Be willing to tell a hard truth when it’s the right thing to do—including “I don’t know.”

 And as a bonus:

11.   Never ever lie. (This includes tiny little white lies and lies by omission.)

This last category, truthfulness, gets at one of the paradoxes of trustworthiness: The thing we’re most afraid to say is often what will build the most trust.

By the way, our clients tell us the truth-telling part pretty much applies to all cultures. Even in Asian countries, where saving face is paramount, the Trusted Advisor’s dilemma is generally less about whether to tell the truth and more about how to deliver the truth in a respectful and culturally-appropriate way.  

Credibility-Building Can Happen Lightning Fast

This expanded view of Credibility is good news for anyone new to a profession or new to a relationship. This part of trust–building your Credibility–doesn’t have to take time; being refreshingly honest can build trust in an instant.

Most clients and customers are so used to spin they will immediately take note. So you can actually leave the PowerPoint deck back at the office (or bring it as a leave-behind) and focus on engaging in a genuine, transparent, and honest conversation. Heck, you might even build some Intimacy in the process.

Take Stock and Take Action

Feeling stuck in a particular relationship? Do a credibility check. Start with the honesty dimension—it’s the least comfortable and highest payback. Ask yourself what you’re thinking and not saying, or saying to some but not to all.

 Then do something about it. You’ll be glad you did.

When Should Your Clients Take a Back Seat?

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I was coaching Bob, a busy lawyer.  One of his key goals was business development – obtaining new clients. He told me that he just didn’t have time to work on business development –too busy.  So I asked him a question (that’s what coaches do). 

What are your priorities?

“Who is your most important client?” Bob responded with the typical answer. He started naming some large companies. “And what’s on your “to do” list?”,   Bob started listing specific tasks including depositions, client meetings, briefs…well, you know the rest. 

“What’s not on your list?”  He struggled to answer for a bit. Finally, he got it. His business development tasks were nowhere on the list. He didn’t mention himself as an important client, and didn’t think of those tasks – the ones where he was investing in his own future – as being enough of a priority to even make it to his list.  So, I asked the obvious question. “How will you accomplish your own marketing tasks if they don’t get on the list?”   Of course, he said: “I can’t”. 

One of my own long-time coaching clients, Peter Vogel, a prominent Dallas attorney, shared the wisdom of the “who is your most important client” with me several years ago. He got it from his father, a well-respected Dallas accountant.  We are our most important client. Once we get that clear, we can create the right balance between our work, our clients and our lives.  

Put yourself on the list.

Some of us have a fear that if we put ourselves on the list, we’re no longer client focused, that it’s wrong to address our own needs if there’s a client need to be attended to. But that simply is not true. If we don’t take care of ourselves, we’re not as valuable to our clients. 

Examples we can all relate to: exercise, eating right, getting enough sleep. If we don’t do these things for ourselves, we won’t be able to function well eventually. 

Examples we don’t like to relate to: taking a vacation, spending time with family, reading. These help us function at a higher level. Doing these activities clears our head, gives us valuable input, and can be emotionally stabilizing.

Examples professional services providers often fail to acknowledge: networking, social media activities, writing, speaking, building relationships – are all part of the job. Most of us have to do these and other activities so that we can obtain paid work.   

Is it self-orientation to care about yourself?

Yes, of course it is. So what? There is nothing wrong with having things you have to do for yourself on your list. The type of self-orientation we talk about in Trusted Advisor Associates, reducing our Trust Quotient, is not about taking care of you. It’s about being self-absorbed, and unable to get out of your own way. When you take care of yourself, you are better equipped to focus on others. 

Professionals who truly care about their clients often forget that they need to address their own needs as well. This includes the exercise and family time I noted above. It also includes taking steps to develop business in the future. Just because you have work on your desk today, doesn’t always mean that the work must trump a networking or business development activity. 

Treat yourself as if you are a client.

Imagine that you are one of your clients. When there is a conflict between an activity you need to do for you, and one you need to do for another client, analyze the conflict and priorities the same way you would if you had two clients competing for your time. You decide which client has the more immediate priority, and you let the other client know when you will address that client’s needs. When you use this process, sometimes your needs will trump the client work. So if you have a referral-source lunch and work that needs to be done by 5, and you believe you can get it done when you get back, don’t blow off the lunch. Take care of yourself, and then take care of the client. The work will still be on your desk when you get back, and you’ll get it done in time. 

So – what will you do?

Are you ready to put yourself first sometimes? Here are three easy rules to follow: 

  1. When you create your work task list, put your marketing, and personal tasks on the same list.
  2. When you prioritize your task list, include all your tasks, not just your work tasks.
  3. When there is a conflict with your time, don’t exclude your needs when you make your decision on set priorities. You may have to take a back seat some of the time, but not all of the time.

Putting yourself first isn’t easy, and sometimes may feel selfish. Just remember that we do respect people who take care of themselves along with caring about others.

Rich Sternhell on the Evolution of Trust in Business (Trust Quotes #13)

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Rich Sternhell was a Managing Principal at Towers Perrin, now Towers Watson, until his retirement last year. He was a Towers Perrin Board member, and chaired Board committees including client relationships, technology and quality; he not only consulted, he managed. He ‘sat in many chairs,’ as he puts it.

His career, post-MBA, covered four decades that saw radical shifts in employee compensation, consulting, and the role of management. Now free to indulge the thoughtful side of what he has seen, he agreed to share some insights with us.

CHG: Rich, thank you for sharing your thoughts with the Trust Matters audience. You’ve got some big-picture perspectives for us, so let’s dive right in. You started work post-MBA at New York Life in 1970. What are the biggest changes in business you’ve seen since then?

RS: Almost all the changes in business can be related to technology and the resultant increase in what I’ll call the velocity of business. Perspectives are shorter. What is often seen as “quarter to quarter” management, I would describe as management of metrics, rather than of the business. Whether it’s stock price, market cap, EBITDA or cash flow, the focus on metrics that are market-visible has monopolized management attention. We have moved from management that is passionate about products to management that is passionate about the numbers they report.

The focus on acquisitions, divestitures, etc., that can increase price multiples has created a loss of shared understanding between employees and management as to the source of value for the organization. This has also created a generation of management that is focused on management of their careers rather than their companies.

There is also a loss of organizational connectedness. Fellows in their 50’s and 60’s who would take the time to coach a young newcomer. They told stories about the past and made people who were long gone part of that newcomer’s memory bank and connection to the organization. I see very little of that today.

That newcomer is planning career moves through moving around rather than moving up. The few old-timers left have lost interest in mentoring young’uns who will be moving on to more fertile fields.

CHG: Let’s take that first one, management by career, not company. Say a little more about that?

RS:Those who have made it to the C Suite often have spent their energies making sure their resume gets them there. It becomes hard to change perspective to become passionate about a business you didn’t grow up in, have limited long-term relationships within and compensation highly leveraged to stock performance that has the potential of creating generational wealth.

CHG: Let me be devil’s advocate a bit here; isn’t it also a good thing that we’ve developed an ethos of mobile, project-oriented work, that fits very well with a fluid, collaborative kind of organization of work for the future?

RS: A mobile workforce is absolutely essential in an economy as technology driven as ours is. At the same time, company cultures have become fragile. But the bond that existed between management and the workforce doesn’t have the strength of shared experiences over long periods of time.

My favorite set of questions on employee engagement surveys has to do with leadership. There are always questions like, “Does leadership care about the associates?” “Does company leadership act in the long-term best interest of the organization?” Inevitably, scores on these questions come in significantly lower than questions that relate to the individual employee’s location or sphere of responsibility.

Managements fret about these results a great deal but then take comfort in the normative data that says that other companies score equally poorly. Almost inevitably a corporate communications campaign begins with messages from leadership about how much they really care.

I think these campaigns are self-defeating. Employees want to know that the management they see has “signed on” and take ownership of the messages. The direct communication from senior leadership has allowed middle management to abdicate their role in communication. When middle managers snicker at senior management messages the result is worse than if no communication had been made at all.

CHG: Many Trust Matters readers have little perspective on another major shift you’ve seen—the decline of the defined benefit plan. It can sound awfully arcane, but I’ve heard you say it was one of the tragedies of our time. Explain?

RS: The defined benefit plan was a bet by the workforce and a commitment by the company to the long-term health of the business. It was an obligation taken on by company ownership in return for the loyalty of the workforce. It provided a degree of security to employees at all levels that allowed them to think about the long term.

While our culture places a high value on individual responsibility we are asking employees to make decisions on matters for which they are woefully unprepared. The 401k has been sold as a replacement for pensions while it is clear that the numbers simply don’t work that way. In my early days as a pension consultant we talked about defined benefit plans as a company tool that enabled employees to be retired from a company with the security that they wouldn’t embarrass the company they worked for by being out on the street.

Companies no longer feel that embarrassment, and employees have been led to believe that somehow the DC plan will provide for their retirement. It can’t provide the same level of income replacement. Management looks to stock options to fund their retirement…employees don’t have the same opportunity.

Employees don’t trust the security of their job, their health insurance or even social security. In the absence of tools to manage for the long-term they act for the short term. It has become all about self-preservation.

CHG: Given those perspectives, what do you have to say about trust as it has evolved in business? Let’s start with headlines: what do the Goldman and BP headlines have to tell us about trust?

RS: Trust in business has many different components, all of which link to each other. There is trust between co-workers, trust between employee and supervisors, trust between salesman and customer, trust between salesman and production. BP is a great example of the disconnect that can grow.

Let’s start from the premise that for a business to survive and thrive it must create value for customers, and a return for its investors. It also must function within the framework of legitimacy established by societal norms. To the extent it enhances the communities within which it operates, goodwill is created which can be turned to competitive advantage.

On the other hand, damage to the community results in a destruction of the trust essential to maintaining not only a customer base, but the relationship with all the constituencies on which a business depends. This isn’t just a business case issue, justified internally by the needs of the business–it is about the underlying linkage of communities in a free market society.

Trust is fundamental to the achievement of all business objectives and its absence is the greatest threat to our business community as well as our broader society. Unfortunately, there are strong forces at work that have the effect of weakening our society’s trust in our business community and its leaders.

The village blacksmith was well aware that each implement he fashioned was critical to future orders. The quality and timeliness of his product determined his position in the community. To the extent he failed to meet his customers’ expectations, he created the opportunity for competition. To the extent he failed to manage his costs, his family starved. He didn’t manage his business for quarterly results, but for the well-being of his family, i.e., “long term selfish”. The community he served also knew that their well-being depended on his success.

Common approaches to this problem are often mistaken. Accountants tend to quantify risk, giving equal weighting to probability and severity providing a reasonable estimate of quarter to quarter financial impact. Actuaries, on the other hand, give significantly greater weight to severity, recognizing the long term economic impact of the high-severity risk. Not surprisingly, the accounting perspective has gained precedence in recent years.

The re-establishment of trust among all stakeholders at every level is central to rebuilding business legitimacy. The risk of breaking trust, whether through cutting costs on deep water drilling platforms or breaking faith with customers, needs to be seen as a fundamental attack on business legitimacy, not just a cost-benefit analytic.

It’s been said that for an organization to claim a value, it must be non-negotiable….without exceptions. What does this look like? Examples include:

· A firmwide commitment to operate on principles rather than incentives

· A commitment to honor values over strategies, even successful ones

· An instinct to forgive the mistake….but to terminate for the cover-up

· A culture that commitments are sacred, whether to a colleague or a client

· A shared understanding that the long-term success of the organization must override the short-term benefit to an individual or unit

Building a trust-based organization from the bottom up and the top down is a serious commitment, but well worth the investment.

CHG: How about trust between employer and employee?

RS: John Bogle, the founder of Vanguard, has spoken often about the shift from ownership capitalism to management capitalism. My sense is that an employee’s understanding of the interest of a business owner was intuitive. The employee may not have liked the owner but intuitively he/she knew that they had an interest in the preservation of the business.

This is not true about the employee’s relationship to management, particularly when they see a revolving door in the C Suite of people from other businesses and industries who do not share the same long-term interest in the organization’s well-being. The increasing gap in pay between senior management and the average employee has exacerbated that gap in trust.

CHG: You’ve told me before you take a somewhat dark, pessimistic view of people, but it often comes out pretty optimistic. What is it that you think motivates people in business, and what does that mean for management?

RS:I truly believe most people want to find fulfillment in their work. In today’s world, concern about security—job, health, wealth–is an enormous distraction to engagement. It is an enormous challenge for management to overcome and often creates an internal conflict for the employee. Should I take the risk of doing “the right thing” or should I “keep my head down”? The more clearly management articulates “the employment deal”, the greater the opportunity for increased engagement and the creation of long-term value. I have seen values based management at work and have little doubt that there are organizations out there making it work today.

CHG: What does that suggest for management-by-numbers?

RS: The numbers are critical. Management won’t stay in place very long if they can’t deliver results. But management only by the numbers isn’t enough. Values will trump strategy over time.

The real challenge is the friction cost that loss of trust has on a business, our economy and our society. Loss of trust means an increase in a myriad of costs through due diligence requirements, procurement processes, government regulation and litigation. Sales take longer to close. Contracts take longer to negotiate. The legal aspects of operating a business have exploded.

None of these areas have anything to do with increased value of the product or service a business produces but the costs imposed are a direct result of decreased trust. Thus we have an ever-increasing number of workers who don’t contribute to creating value, but are essential elements in today’s business environment.

CHG: What can an individual TrustMatters reader do to enhance his or her ability to trust, their personal trustworthiness, or the level of trust in the business world of today?

RS: The need and desire for trust is universal. The challenge comes when we believe that it is important to act in a trustworthy manner in some situations and not in others. Understanding our interdependence with vendors, customers, employees and other stakeholders is essential. To the extent we employ situational ethics and call a violation of trust a business judgment we weaken the trust framework of an organization. Each individual has the capacity to ask themselves the critical question in every business judgment they make as to whether they are acting in a principled manner.

CHG: What do you think of the MBA Oath movement that began last year?

RS: It is certainly a worthy aspiration…much like any approach to ethical behavior. It is discouraging that such an oath would be perceived as necessary. The implication of the MBA Oath movement is that there is some degree of career sacrifice entailed with living up to the oath. That in itself is demeaning to business people.

CHG: What’s the best business book you ever read? The best advice you ever got? And what’s the one thing you’d recommend to a new MBA today?

RS: I can’t give you just one Charlie, but I’d put your book Trusted Advisor up with the best. It is the first book I recommend to anyone entering sales, consulting or professional services. My daughter is a doctor and my son an attorney. I have made sure that both of them have copies and have read it.

Another is by your co-author, David Maister. David’s writing has been formative in my thinking as a consultant and manager for almost 30 years. I’d pick True Professionalism as my favorite. A recent read has been General Eisenhower’s Report on Operation Torch. I only wish I had read it 30 years ago. Anyone who has to manage a merger or a large project with a multidisciplinary team should be required to read it.

Finally, a new book by a professor at Columbia, Sheena Iyengar, The Art of Choosing. The Art of Choosing is a fascinating book from a pure marketing perspective, but even more interesting as probably the most helpful thing I’ve ever read in understanding cultural differences.

For the new MBA I would say that business is an honorable profession as long as you practice it honorably. Every decision is a choice and knowing that the choices you make have earned you the trust of your colleagues and your clients is the greatest reward you can hope to receive.

CHG: I’m blushing, but I know you’re serious, so I’ll leave it in. And many thanks to you for spending time and sharing wisdom with us, we greatly appreciate it.

——–

This is number 13 in the Trust Quotes series.

The entire series can be found in our Trust Quotes section on TrustedAdvisor.com

Recent posts in this series include:

Trust Quotes #12: Martha Rogers and Don Peppers Interview
Trust Quotes #11: Jim Peterson
Trust Quotes #10: David Gebler

The Interests of Buyer and Seller are Never Aligned? Never Is a Long Time.

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I have a lot of regard for Jane Bryant Quinn, and I’m hardly alone. She strikes me as sober, educated, and generally wise. Of course, no one’s exactly perfect. 

And in those rare cases where sober, educated, wise people don’t get it right, it’s worth asking oneself: how can that be? There are usually instructive answers.

Case in point: her recent column titled, “Should You Trust Your Broker? No, and Here’s Why.” The title says it all. And since she’s talking about brokers—a business few people would argue is a hotbed of trust—she’s not going to get much argument from me or anyone else.

Except when she went uncharacteristically for an absolute statement. In response to a comment, she included this line:

The interests of buyer and seller are never aligned.   

Now, I’m not trying to pick on Ms. Quinn. Maybe she meant it to apply only to brokers (though even then, an absolute statement is an absolute statement).

What’s interesting is, she’s not alone. She speaks for a lot of people in that belief: that the interests of buyer and seller are inalterably, fundamentally, and essentially opposed to each other. So let’s just dissect the belief, and leave Ms. Quinn out of it.

Zero-Sum Sales Thinking

To believe that the interests of buyer and seller are never aligned is equivalent, I think, to believing that they’re always opposed. That is, all sales amount to zero-sum games; one party wins, the other loses (except at some theoretical point in the middle discernable only by medieval philosophers and classical economists.)

When you put it this way, it’s an appalling belief. It suggests that:

There’s no basis for negotiation. It suggests all sales are isolated transactional events, with no connection to past or future transactions. And forget about relationships.

Buying and selling must constantly be regulated; that the proper model for commerce is the example of Las Vegas casinos and the Nevada Gaming Commission. It suggests that commerce is the root of most immoral and antisocial behavior.       

The only sensible model for corporate buying is through arms-length RFPs, unless you’re lucky enough to be able to use online reverse Dutch auctions. 1+1 must always add up to only 2, and not in a balanced way.

Sales is a venal profession, one in which success is driven by Madoff-like sociopaths and their ability to coldly con decent, aka stupid, people. That to be employed as a salesperson requires the advance sale of your soul.

That’s what I think it means to seriously believe that “the interests of buyer and seller are never aligned.” And a lot of people out there do indeed believe those statements.   Some of you reading this may not even note the intended irony in the paragraphs above. 

Which I find scary.

Sales and Commerce Are Not the Root of All Evil

Obviously (I hope, anyway) I don’t believe that. Let me get equally hyperbolic about what I do believe. I believe that the relationship between buyer and seller lies at the heart of human development.

When you think the relationship between buyer and seller is positive, it suggests a number of corollaries. It suggests that:

The relationship between buyer and seller is the foundation of all human economic development. It allows division of labor, lower costs, and human interaction.

The economic relationship between peoples is the single biggest driver for human interaction, collaboration, and social development. The alternative is a world of solitary, frightened and impoverished loners, reduced to the kind of clannish societies that only an anthropologist could find fascinating.

Buyers and sellers are the architects of creative relationships, and creative economic solutions at the same time. 1+1 is always greater than two if the commercial parties are doing their job.

Only in an isolated, abstract moment in time are the interests of buyer and seller inalterably opposed. Add one more day, one more transaction, one more referral, one more cross-sale, one more conversation—and you have the possibility of a relationship. Time is the single biggest counter-argument to the ‘can never be aligned’ naysayers. 

Back to Ms. Quinn for a moment. How can a sober, educated, wise person make such a sweeping, and bogus, claim? A brief slip in focus?

Unfortunately, I think she’s saying that the brokerage business is so close to untrustworthy that she honestly doesn’t see much difference between reality and the absolute statement she made. And you know what? I wouldn’t argue the point with her.  I’ve heard tons of horror stories too.

But don’t let that drag you down. Don’t let the predominantly flawed belief system of one industry drag you down into believing that buyer-seller opposition is a law of nature. 

It’s not.  But belief in the impossibility of alignment can be a self-fulfilling prophecy.  Don’t believe your way into impoverishment.

The Trust Matters Review: Inaugural Edition

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In August, we announced the end of the Carnival of Trust, the monthly round-up of articles on trust launched here at Trust Matters and subsequently compiled by an all-star cast of guest hosts on their own blogs. Since then, we’ve been working on how to highlight some of the best online writing about trust for you in a brand new way. (Think of it as the Carnival of Trust 2.0.)

The Trust Matters blog team reads extensively through the latest writings on trust every month.  Many of the articles that aren’t discussed on the blog wind up in Charlie Green’s Twitter feed, and sometimes there are still great articles left over.

So we’re spotlighting our top picks every month from our current trust research here in the Trust Matters Review, starting today. Trust plays a critical role in so many areas of business: leadership, sales, branding, performance–look closely and you’ll see how much trust matters. No matter why you’re interested in trust, we hope you’ll find something useful here.

The Trust Matters Review: Inaugural Edition (September 2010)

Mark Schnurman of the New Jersey Star-Ledger discusses current trends in employee loyalty and trust–and it’s scary stuff.

Digital Analyst Brian Solis explores the interplay of trust and online privacy concerns with Facebook and Twitter.

In an opinion piece for the Philadelphia Tribune, Millennium 3 Management president A. Bruce Crawley wonders if African Americans trust too much.

James L. Heskett, Harvard Business School professor emeritus, asks: Is profit as a ‘direct goal’ overrated?

Chris Brogan, president of New Marketing Labs and co-author of Trust Agents, asks Aaron Smith how he convinced people to trust him enough to buy cars from him online.

Don Peppers (pdf) of Peppers and Rogers Group discusses Amazon, Google and Apple as models of trustworthy business.

Dov Seidmen, Founder/CEO of LRN, explains why apologies can’t be anonymous.

Maraia’s Rainmaking Blog  divulges The Maraia Rule for Relationships (and what to do if you can’t follow the rule).

Columbia Business School professors Paul Ingram and Michael Morris discuss why business relationships take longer to establish in China than in the United States.

Martha Mangelsdorf, senior editor at MIT Sloan Management Review, notes a study which reveals the secret of customer service rep effectiveness.

Edelman president and CEO Richard Edelman weighs in on social responsibility vs profits.

Brooke Harrington, Associate Professor of Economic Sociology at the Copenhagen Business School, shines a light on the high self-orientation off corporate elites.

Thus ends the inaugural Trust Matters Review.  Let us know what you think, and if you’ve read an article that deserves inclusion in next month’s Trust Matters Review, leave us a comment here, or through the Trust Matters Review submission form.

The Trust Buzz of 2010: The Summer of Trust?

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There’s a lot of buzz about "trust" this year.

Just look at the headlines: BP, Goldman Sachs, Toyota, Tylenol . . . . But the question remains, is all this talk going any where? Have we figured out how to make business more trustworthy? (And while we’re all talking, is anybody listening?)

At BusinessWeek.com this week, I explore what 2010’s trust buzz is all about:

2010: The Summer of Trust
Love was the buzzword in 1967, but that year’s legacy was justthe opposite. Trust is this summer’s "love." What will the legacy be this time?

Do you think the "summer of trust" will have any real effect? Do you believe that trust and trustworthiness will improve going forward or get worse?

Read 2010: The Summer of Trust  and let me know what you think–in the BusinessWeek.com comments section this time.

(I’m listening!)