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The Power of I’m Sorry: the Four R’s of a Trustworthy Apology

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Do you remember the last time you felt like you deserved an apology but didn’t get one?  Maybe…

  • The waiter forgot about your table
  • They shipped you the wrong product
  • Your significant other embarrassed you in a group setting

Fill in your own blank.   What impact did that have on your level of trust?

As sure as death and taxes, we will mess up.  How we respond, regardless of fault, can have a monumental effect on our relationships, yet apologizing is rarely discussed in business development circles.  

I recall an audience member asking a sales trainer, “What do we do when we make a mistake”?  The trainer responded, “Be careful about apologizing.   If you admit to the mistake, you could have legal liabilities”.  While technically correct, that advice somehow didn’t feel right to me.

Shifts in thinking on this topic appear hopeful.  Even state governments, hospitals and insurance companies have abandoned legal posturing in favor of an apology approach.  “I’m sorry” legislation has been approved in 29 states and is gaining momentum.  To reduce the risk of litigation, New Jersey recently started the Sorry Works! Coalition.

Gaffes, slip-ups, and blunders present a fork in the road to relationship depth.  The proper apology, even in the most egregious circumstances, has the ability to strengthen relationships.   Even seemingly insignificant faux pas like arriving late for a meeting, mispronouncing someone’s name, or failing to include someone, present a moment of truth to building trust. 

We’re a “fix it” society.   Somehow, we convince ourselves that if we just correct the problem – without an apology – we’re back to our original balance in the trust bank account.  That’s a myth. 

So how do we build a worthy apology?

Experts like Aaron Lazare and Nick Smith, in their book On Apology, point to four essential parts of the apology, and we can remember them as the 4 R’s: Recognition, Responsibility, Remorse, and Reparation.

1.    Recognize – First, the offender must show they recognize their misbehavior by restating the offense as objectively and specifically as possible.   Repeating what happened and why will show that the offender understands not only where and how they went wrong, but why the offended is hurt.  Be direct, i.e., "I apologize for whatever I did to hurt you" won’t cut it!

2.    Responsibility – Second, the offender must accept responsibility for the action that caused offense.   No excuses here!  He can’t blame the beer or the bad mood.   The apology is all about THEM and how they feel.   It doesn’t matter if the actions were intentional or not, the end result is the same.

3.    Remorse – Third, the apology must show, sincerely, remorse for the misbehavior. Sincerity can’t be faked: we know it when we hear it.  We’ve all heard non-apology apologies.   Include a statement of apology along with a promise not to repeat the behavior.  Remember Don Imus (see  Imussed Up: Anatomy of a Failed Apology)?

4.    Reparation -The fourth essential component may be the trickiest: reparation. The offender has to give something back, atone in some way for his offense. This is easily said, but hard to do. How, indeed, do we mend a broken heart?

“The apology represents a common frailty –we are all human, we all make mistakes, perhaps even hurt someone, intentionally or not, then face the dilemma of where to go from there?” states Susan Morrison Hebble.  “For starters, the offender needs to listen, openly and earnestly.  They need to hear what the person has to say; let them talk; let them suggest what might be done to restore harmony to the relationship”. 

As Martha Beck writes, "The knowledge that one is heard and valued has incredible healing power; it can mend even seemingly irreparable wounds."

Here’s a hard truth: we must first admit that our own pride poses the biggest obstacle to apologizing.   I would propose, then, that the apology requires us to shift our focus from ourselves–our own discomfort, our own embarrassment, our own sense of guilt–to the person or people we’ve offended–his hurt, his sense of betrayal.   It requires us to act selflessly rather than selfishly. 

It is a daunting task, one that forces us to look at ourselves, at our own flaws, and then look beyond them to the person we’ve hurt.  But anyone who has offered up a real, solid, true apology will attest that in doing so they released themselves from the very pain, discomfort, and shame they’d been avoiding all along!

The 4 R’s aren’t rocket science, yet like most risk – reward propositions, they take practice.

Who do you need to apologize to? 
 

Can Trust Be Taught?

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Let’s not mince words. The answer, pretty much, is yes.

The exception is what the academics call social trust—a generalized inclination to think well or ill of the intentions of strangers in the aggregate. That kind of trust ends up being inherited from your Scandinavian grandparents (or not, from your Italian grandparents).

The rest, let’s break it down. First, enough talk about “trust.” Trust takes two to tango. One to trust, another to be trusted. They are not the same thing.

So let’s start by asking which we want to teach: to trust, or to be trustworthy?

Trusting someone is, paradoxically, often the fastest way to make that other person trustworthy—thereby creating a relationship of trust.  People tend to live up, or down, to others’ expectations. So if you can muster the ability to trust another, you’re both likely to reap big returns quickly from the resultant trust.

However: trusting can also be a high risk proposition. The vast majority of business people, on hearing “trust,” will say “that’s too risky.” In other words, they hear “trust” as meaning “trusting,” and they turn off.

On the other hand, there is being trustworthy. If you consistently behave in a trustworthy manner, others will come to trust you, and voila, you have that trusting relationship. Being trustworthy tends to take longer than trusting, but the results are just as good. And, it’s very low risk.

Let me say that again: becoming trustworthy is a low risk, high payoff proposition. This is not a hard concept for people to get, if explained right.

What does it mean to be trustworthy? The trust equation explains it: it’s a combination of credibility, reliability, intimacy, and a low level of self-orientation. You can take a self-assessment test of your own TQ, or Trust Quotient, based on the trust equation.

So the question is: can people be taught to become more credible? More reliable? More capable of emotional connectedness? More other-oriented and less self-oriented?

The answer is yes. Big picture, there are two ways to teach these things. One is to recall Aristotle’s maxim: "We are what we repeatedly do. Excellence, therefore, is not an act, but a habit."

People can be taught truth-telling, reliability, even other-orientation to some extent by showing them the behaviors—particularly the language–of trustworthy people.

But the deeper, more powerful approach to building trustworthy people starts the other way around: by working on thoughts to drive action. As the Burnham Rosen group articulates this point  "thought drives actions which result in outcomes."

Many disciplines outside of business know the truth and power of this approach: psychology, acting, public speaking, to name a few. Business doesn’t appreciate it enough. But commonsense does.

Trust can be taught: either by teaching trusting, or trustworthiness. The latter is lower risk, hence the most attractive approach for many in business.  And trustworthiness can be taught via a mix of skillsets and mindsets

It makes sense.

 

 

 

Have We Learned from the Financial Crisis?

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Most people would agree that something went awry with large parts of the global financial system.  Most would also agree with some broad-brush characterizations of just what went wrong.  A bit too much greed, self-orientation, short-termism.  A bit too little customer focus, ethics, regulation.

Hopefully some of the overheated sectors learned something, or were at least chastened.  Then again: don’t hold your breath.  Here are some anecdotal samplings from the home lending and the financial advisory segments.

Ethical Improvements in the Home Appraisal Business

In an April story the Center for Public Integrity reports:

In a 2007 study by October Research, a real estate news provider, 90 percent of more than 1,200 appraisers polled reported feeling pressure to change property values, usually from lenders, mortgage brokers or real estate agents.

How much pressure?  All too often, if appraisers didn’t come up with numbers that fit what lenders wanted, they found themselves blacklisted.  How overtly?

Amerisave, one of the largest online mortgage lenders, has close to 12,000 appraisers on its “ineligible appraiser list,” which was removed from the Atlanta-based company’s website after the Center made inquiries about it.

Actions taken?  NY Attorney General Cuomo did some vigorous investigation; one results was a Freddie Mac new “Home Valuation Code of Conduct” to go into effect May 1. 

Who opposed it?  Why, the National Association of Mortgage Brokers, of course. 

The same people who, when JPMorgan Chase’s Jamie Dimon said his failure to terminate the company’s mortgage broker business was the “biggest mistake of his career” responded by saying Dimon’s remarks “clearly reflected his poor understanding of the mortgage industry.” 

Uh, NAMB vs. Jamie Dimon? Tthat’s one you lose on credibility alone, NAMB.

NAMB’s excuse for its role in the mortgage debacles?  Others did it too.  So much for ethical learnings.

Ethical Improvements in the Financial Planning Business

There are principled, ethical, customer-focused financial planners; I’ve met many, and know a few well.  At the same time, I think few would argue that the sector is a hotbed of high ethical behavior.  RegisteredRep.com reports:

According to a recent study by Prince & Associates…15 percent of the wealthy left their financial advisors in 20087 and 70 percent took at least some of their assets out of the advisor’s hands.

Why?  False advertising, says Cerulli Associates in the same article: what an advisor says he offers and what he really does aren’t in sync.   Bill Bachrach, a respected (by me as well as by the industry) consultant in this space says:   

“It’s been way too easy for former stockbrokers to gather assets and dump them somewhere and call themselves wealth managers…If asset management is all you do and you can’t point to some other way you make money, you have nowhere to hide when performance goes south.”

What’s the industry response?  Here’s Ken Fisher, a mega-marketer of financial services, responding to two former sets of clients who are suing him for failing in his fiduciary responsibilities:

The lawyers who are representing the clients in both matters are “similarly incompetent."  Both cases “will run into a concrete wall.  The person who will be sorry in the end is the client, who will wind up spending money on lawyers and getting nothing.”  [Fisher said he wanted to teach one lawyer] “a lesson he won’t forget.” 

Now there’s a client-focused kind of guy.  The kind you’d want out front promoting responsible behavior on behalf of your industry. Customer satisfaction?  Let them sue for it, then endear them to you through public insults and threats.  Great strategy, Kenny boy. 

Then there’s the case of Jeffrey Forrest,  fired by his broker dealer, sued by the SEC to keep him from working as an investment advisor.  He continues to run an RIA firm in California, and is licensed to sell insurance there.  In March, he and Associated Securities, for whom he was a top producer, were found guilty by a FINRA panel. 

Associated Securities—surprise surprise—is appealing.  Another great customer lesson: never admit you’re wrong.  Especially when you are.  Goebbels had that one down pat. 

Last but not least.  Finally, after all the Madoff hoopla—some concrete action:

SEC commissioners on May 14 voted 5 to 0 in favor of a proposal that would require the roughly 6,000 federally registered investment advisory firms that deduct their fees from client accounts to undergo surprise audits. The move is part of a wider effort by the regulator to crack down on advisers with direct custody over client holdings.

Exactly.  Bernie made off with all the money by skulking in the gray spaces between regulators: for example, he custodied his own investments and no one checked on them. 

So, surprise audits?  You betcha, right on, about time. The industry should applaud this effort to help improve its reputation.  Thank you SEC!

But, wait.  The proposal is opposed by the FPA, NAPFA  and the IAA. 

Why the resistance?  Here’s a taste:

A surprise audit would likely cost his firm about $3,000 a year, said Ben Baldwin…That fee would likely be passed on to clients, he said.

“There should be an uproar because it’s going to hurt a lot of consumers,” Mr. Baldwin said.

Others contend that the proposal would force smaller firms to stop deducting fees from their clients’ accounts — a move that would require them to wait for clients to reimburse them for their services.

A National Board member of NAPFA elaborates further:

“When you deduct your fee from the client’s account, you have no cash-flow problems.”

And that, I guess, would be why NAPFA opposes the SEC’s proposal.  Because it would force advisors to send invoices instead of directly deducting fees.  Thus slowing cash flow.

More Madoffs?  An occasional small price to pay if it helps protect advisors’ cash flow.

There are simply too many players like the ones quoted in this post who still see regulation as a hateful intrusion on their god-given right to extract cash from customers’ wallets unless expressly forbidden by federal law.

And there are simply not enough players who see regulation as the regrettable consequence of the presence of the former group of players.  They do business based on the simple idea that you should treat people, and most certainly customers, decently.  It can’t be easy for you to watch the first group so demean your industry’s reputation.

Many from that first group must have read a blogpost of mine from two and a half years ago: How to Get Your Industry Regulated in 6 Easy Lessons.  They’re executing the six lessons marvelously, and I have no doubt they’ll succeed beyond their wildest dreams very soon now.
 

Ethics and Compliance: What’s Trust Got to Do With It?

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I believe words matter.  They affect the way we think, therefore the way we perceive, therefore the way we act.  Words are not passive things, acted upon by our blind behaviors; they are cultural repositories of memory.  Ontogeny recapitulates phylogeny in language as well as in biology.

So it has always bothered me to hear “ethics” and “compliance” in the same phrase.

I’m aware I’m in the minority; it is casual usage to combine the two. 

  • There is the Society of Corporate Compliance and Ethics and their Institute. 
  • Back in 2005, a speech by the SEC talked about the decline in ethics and compliance.
  • Corpedia Corporation “offers a wide variety of innovative and user-friendly compliance and ethics solutions.” 

So, it’s commonly used.  Then again, we also live in a world that obsesses over Britney Spears.

Defining "Ethics" and "Compliance"

Let’s try the dictionary.  First, ethics:

1. (used with a singular or plural verb) a system of moral principles: the ethics of a culture.
2. the rules of conduct recognized in respect to a particular class of human actions or a particular group, culture, etc.: medical ethics; Christian ethics.

Now, compliance:

1. the act of conforming, acquiescing, or yielding.
2. a tendency to yield readily to others, esp. in a weak and subservient way.

These two words don’t live together easily.  In fact, if we try to substitute “Wall Street” for “medical” or “Christian” in the ethics definition, we get what most people would call an oxymoron: Wall Street ethics. 

I would argue this is a serious issue.  Entire industries—financial and pharmaceutical come to mind—have come to conflate the two words, and we are all the worse for it. 

When “ethics” becomes a soul-less matter of ticking the boxes, when we substitute acquiescence for a conscience and subservience for principles, we have lost a great deal.  In particular, any meaningful sense of the word “trust.”

How can a financial planner aspire to being a fiduciary through procedures alone?  How can a company achieve client focus through quarterly behavioral competencies alone?  How can we create trusted regulatory agencies if all they do is enforce processes and paperwork?  How can you give multiple choice ‘tests’ that ‘certify’ people as being ‘ethical?’  But that is generally how "compliance" programs are executed. 

That way lies Bernie Madoff, and a thousand other example of people who have lost track of simple guidelines like be transparent, tell the truth, serve your clients, and work for the long run. 

You Can’t Comply Your Way into Ethical, or Trustworthy, Behavior

A focus on compliance alone can never create ethical behavior.  Perversely, all it does is incent slightly bent people to become more bent by focusing on exploiting the inevitable gray areas that crop up in any set of behavioral rules.   There are plenty of professionals who are 100% compliant with their industries’ lax standards, and are, by many customers’ judgment, highly untrustworthy, selfish sleazeballs.

Law schools can take some blame here; law is the only profession in which the notion of ‘truth’ is non-existent, replaced by ‘evidence.’ 

MBAs are hardly blameless; their mindless pursuit of markets, transactions, and micro-measurements have fueled the replacement of “character” with “observable behaviors that achieve sustainable competitive advantage.”

But that’s too easy.  We’ve all gone along with it.  We’re all infatuated with “science,” neuro-proof, lawsuits and fix-it drugs. Ethics?  Get with it, dude.  

I know this sounds like an old-fart rant, and in part it is.  But there are plenty of businesspeople who behave well, and even prosper because of it.  And they’re also to blame for tolerating the shades of gray. 

We don’t have a crisis of trust and ethics so much as we have moral sloppiness–a willingness to tolerate mediocrity.  Most of us have remarkably similar instincts about what’s right and what isn’t.

What we’ve all got to do is get mad about how far we’ve strayed.

And compliance is not an excuse.
 

The Trust Roadmap

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While trust is an issue that never goes away, the last couple years have been seen a collapse in the trust that the public, employees and even companies have for corporations and many other organizations. Many organizations recognize that without trust from their key stakeholders, they can’t operate properly.

However, once the leadership recognizes a problem, the next step is often to measure it. And trust is notoriously difficult to measure.

So, here at Trusted Advisor Associates, we’ve been analyzing, well, how to analyze trust. Today we’d like to talk about what we’ve come up with and are planning to introduce in the next few weeks: The Trust Roadmap.

Trustworthiness at the Organizational Level

I’ve been writing recently about a comprehensive approach to thinking about trust. Think of it as a two by three matrix.

On one axis, we have those who trust and those who are trusted; trusting, and being trustworthy. See for example Trust, Trusting and Trustworthiness.

On the other axis is “where” we find trust: interpersonal, organizational/institutional, and social.

We’ve talked a lot about being trustworthiness interpersonally. For example, if you haven’t done so already, click to find your Trust Quotient™, your TQ™.

But how can we trust a business? What can an organization do to be trusted? To regain trust? And so forth. What’s needed is the organizational equivalent of the TQ quiz: what’s needed is a Trust Roadmap. And it’s finally just about here.

For some time, Trusted Advisor Associates have been developing a tool aimed at assessing trustworthiness at the organizational level. We’re announcing it now, even though it’ll be a few weeks before it’s website-deployed and open for business.

Introducing the Trust Roadmap

The purpose of the Trust Audit is to allow a company to take a systematic, high level look at its trustworthiness. More organizationally savvy than a financial audit; more market-focused than an employee engagement survey; and more culture-focused than a reputation survey.

The Trust Roadmap is not:
a. a longitudinal survey purporting to track trust over time
b. a public database
c. a best practices database

It is none of those things because we believe trust is situational, for organizations as well as for individuals. We are interested not in academic research per se, but in teeing up meaningful issues in a meaningful way for our clients.

What is the Trust Roadmap? The Trust Roadmap is private; results are known only to the company contracting for it. The Trust Roadmap is aimed at leadership teams, top management teams and Boards who are interested in taking a serious, objective look at how trustworthy they are seen to be, and at what they can do to improve.

The end result “deliverable” of the Trust Roadmap is a survey-based discussion around a Heat Map—a map of where the organization’s biggest trust threats and trust opportunities lie.

Conceptually, The Trust Roadmap is built from the four Trust Principles (client focus, transparency, medium-to-long term focus, and collaboration), and from a modification of Weisbord’s model of organizations – external relationships, leadership, structure, rewards, processes. Think a 4×5 matrix (come on you, you knew we’re ex-consultants, you knew what to expect).

Mechanically, the Trust Roadmap starts with an online survey—20 questions, just like the TQ, one for each cell in the matrix. Respondents will come from external (customers, suppliers) and from internal (employees, leaders). There is no set number of respondents.

From the survey, the Heat Map is generated, and richer discussions (we have up to five areas to explore in each of the 20 cells) are held around the opportunities indicated.

If you’re interested in learning more, stay tuned to this station, and/or contact Sandy Styer at [email protected]

Collection Agents: Trusted Advisors, or Creepy Hustlers?

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Good salespeople, psychologists and counselors know one basic truth: people are influenced by (and buy from, and take advice from) those who listen empathetically to them before selling, advising, etc.  (This beats approaches like value propositions, for example.)

So what happens when these techniques are used by credit card collection agents seeking repayment from people who are seriously underwater with their credit card? See What Does Your Credit Card Company Know About You?

First, it works. Second, it’s hard to avoid feeling creeped out.

My question: how do we reconcile these two observations? Can you use “good” trust-building techniques for “bad” ends? Does it mean these techniques are manipulative? Or does it mean collection agents are getting a bad rap, and actually raising positive karma in the world?

I mean the question more seriously than you might think.  It has implications for how we try to restore trust by regulation in the financial sector. 

Therapist, or Credit Collections Agent?

Consider Donna Tiff, a 49-year-old Missouri woman who owned $40,000 on multiple cards. Tiff became adept at countering aggressive collection agents by threatening suicide.

And then Tracey came along. She worked for a company that today is a subsidiary of Bank of America. Tracey had talked to Tiff several times and noticed that there was a mistake on her account — an automatic payment was going to be deducted twice from her checking account. If that happened, Tiff’s other checks would bounce.

“I told her, thank you so much for catching that,” Tiff recalled. “And then we talked for over an hour about my problems and raising kids. She was amazing. She was so similar to me. She gave me her direct number and said that I should call her directly anytime I had any questions or just needed to talk about what was going on.”

Over the next three years, Tiff paid off the entire $28,000 she owed Bank of America and spoke regularly with Tracey, she said. And the $12,000 she owed on other cards? Well, those companies didn’t have a Tracey. They never got fully repaid.

It’s a heartwarming story. Unless you’ve seen how people like Tracey are schooled in the art of bonding. What are the odds that the random customer assistant who dealt with Tiff would have so much in common with her and manage to strike such a close bond? I tried to call Tracey myself, using the information Tiff provided. But I was told she didn’t work there anymore.

I asked Tiff if she ever asked Tracey to write off the late fees and the interest charges.

“Oh, no,” she told me. “She was so kind to me. How could I ask her for something like that?”

I remember when Bill Clinton was first running for president in New Hampshire, and his nickname “slick Willy” was brought up. He reportedly asked a friend, with all the sincerity he could muster, ‘am I really a slick Willy?’

I took that story to mean that someone as smart and as good at empathy as he was ultimately had to wonder about his own motives, and whether he himself could tell the difference.

Or, take Bernie Madoff. He flawlessly imitated nearly every aspect of the trust equation. Does that mean that being credible, reliable, intimate and other-oriented are bad things?

Take the classic Turing test.  If you communicate, via a computer keyboard and screen, with two closed boxes—one with a real person inside, and one with a computer—just how do you tell the difference?

And if you can’t, does that mean the computer is human? We want to say of course not—but try explaining just why.

Trusted Behaviors Without Intentions are Empty

In this case, most of us would say the difference has to do with motives.  Does Bank of America intend to help raise the psychic health of credit-battered Americans, and get paid in the process? Or is it in the business of extracting wealth from people to whom BofA sold their credit cards in the first place, cynically using Maslow’s hierarchy as a tool to get there?

It isn’t just hypothetically relevant. It goes to how we regulate trust in society. It shows the bankruptcy of ever and ever-greater reliance on purely behavioral and metrics-based approaches to trust.  Trust without motives is the computer in the box.

If legislators and regulators cannot figure out a way to put integrity into regulation instead of dealing solely with procedural “compliance,” there will always be a Madoff who figures out how to mimic acceptable behavior.  (See Harry Markopolis’ congressional testimony for a far more workable approach).

You can’t strip trust down to behaviors alone without squeezing the soul out of it. When it comes to trust, intent is relevant.

Realms of Trust and Manifestations of Trust

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Most would agree that trust is a hot topic just now.  That’s about the only thing agreed upon about trust, however.  We can’t even decide what it means.

I wrote a post last week called Trust, Trusting and Trustworthiness.  I suggested that much writing about trust confuses these three manifestations.

Think of that post as Managing Trust Part I — Trust Manifestations. Think of this as Managing Trust Part II — Trust Realms.

There are three trust realms in all: interpersonal trust, organizational/institutional trust, and social trust.

The realms of trust are well known to academic trust researchers, not so much to business people. They do make simple common sense, however.

1. Interpersonal trust

Interpersonal trust deals with one-on-one dynamics. Most of my work has focused in this area. It’s the stuff of relationships, selling, advisory businesses, and personal risk-taking.

2. Organizational and institutional trust

This form of trust covers a wide range of issues: the organizational environment conditioning interpersonal trust relationships, the trust of individuals in their organizations and institutions, and the nature of trust relationships between organizations themselves.

Surveys that measure “trust in government” can shift dramatically and quickly, with the election of an Obama, or the humbling of an SEC, for example. In these respects—speed and personalization—organizational trust resembles personal trust. But it also deals with organizational cultures and values—undeniably group phenomena.

3. Social trust

Social trust deals with the generalized beliefs individuals hold about “other people."  Think under what conditions you’re likely to lock your car doors. Unlike the other two realms, this trust doesn’t deal with people as individuals; also, it tends to change only glacially, perhaps across generations.

If we array the realms of trust against the manifestations of trust, as shown below, we can begin to have a structured conversation about trust.

Trust Realms and Trust Manifestations

Manifestation/Realm

 Trusting

Being trusted

State of Trust
Personal      
Organizational      
Social      

 Until then, we are going to have vague, or circular, or meaningless discussions about trust.

When Steven H.R. Covey talks about how trust affects speed and cost, he is largely talking about the manifestion dimension—the presence or absence of a state of trust. But is he talking about the state of personal trust? Or organizational? Or cultural/social?

Gatehouse, a UK communications consultancy, says “business is facing a massive and global crisis of trust right now.”  But what are they talking about?  Which manifestation?  Which realm?  Or are we descending into an inevitable and inescapable downward spiral of rampant anarchy? 

Do they mean that individuals are less trusting of business? Or that more businesses are untrustworthy? Or that the state of economic uncertainty has rendered the state of trust lower?

Paul Seaman’s review of the Edelman Trust Surveys (Would you trust a trust survey?) does a nice job of taking apart the apparent meaning of trust survey data.  A small example: trust in banks is down, trust in government is up: does that mean we want the government to take over banks?

These are not word games.  Intelligent policy formulation depends on being able to clearly define problems. For example:

• When is structural regulation preferable to greater enforcement?
• For what trust issues is transparency an appropriate remedy?
• Do we have any institutions that teach the personal manifestation of trusting?
• If you change personal and organizational trustworthiness, do you have to worry about social trust?

We’re entering a period where trust has gone viral; it’s got buzz. We’re about to see more survey data, telling us with greater and greater precision whether doctors are gaining on nurses in trust ratings, who has the most trusted brand name, and whether trust in Romanian economists went up or down in October. 

Watch out for conflicts of interest: who’s paying for a ranking of trustworthy companies?   What problem is being solved?  What issues are being addressed?

Get ready for many tales, full of sound and fury, signifying—well, just what? That is the question.

 

Day Trader Management

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The NYTimes’ Joseph Nocera  wrote Saturday about the closing of Neil Barsky’s hedge fund, Alston Capital.  Barsky, it seems, is one of the good guys. (The same issue has an article titled “Hedge Fund Manager Accused of Fraud,” just so we keep things in perspective).

One of the reasons Barsky left the hedge fund biz after seven years was:

[he was] “tired of the ways the business had changed. “When I first started in 1998, we used to send out quarterly numbers. Now investors want weekly numbers. Professor Louis Lowenstein” — the iconoclastic and recently deceased Columbia University business law professor — “has a great line in one of his books: ‘You manage what you measure.’ ”

I for one wouldn’t call it a ‘great line,’ but the practice has certainly become widespread—and we are generally the worse for it. Let me explain.

If Measurement is Good, How Much More Measurement is Better?

Nocera provides another example of change, in his fascinating book Good Guys and Bad Guys.  In the mid-1970s (not that long ago for some of us) investors couldn’t be dragged out of bank savings accounts into new-fangled money market funds. Too risky, doncha know.

Fast forward to 1987, the go-go ga-ga days when everyone was focused on—daily mutual fund prices. Awfully risque.

But it’s not just finance. MBA programs and systems consulting firms have been pushing a hot product for some years now. It’s sold as efficiency, liquidity, process outsourcing–but at its heart is Lowenstein’s ubiquitous link between measurement and management.  More measures, more frequent, more detailed: equals better management.

If you can measure it, you can manage it; if you can’t measure it, you can’t manage it; if you can’t manage it, it’s because you can’t measure it; and if you managed it, it’s because you measured it.

Every one of those statements is wrong. But business eats it up. And it’s easy to see why.

I just got an iPhone app that lets me check my QuickBooks account. Now, of course, I crave my receivables data updated instantly, constantly, 24-7. Because I can. And because more is better. Isn’t it?

A consultant friend was about to be hired to help improve engagement survey scores for an executive’s team.  He tells me::

“In no time, you heard middle management’s attitude evolve; ‘OK, this group is going to meet its goals; we are not going to be the ones lagging behind on these numbers. We will be able to show measurable improvement in engagement.’ And so they were about to turn ‘engagement’ into another meaningless exercise in meeting the numbers.”

The ubiquity of measurement inexorably leads people to mistake the measures themselves for the things they were intended to measure. It doesn’t have to be this way–but it too-often is.

Even Malcolm Gladwell feeds the measurement frenzy. In his current New Yorker article How David Beats Goliath, he cites Vitek Ranadive. Ranadive has made a career of turning un-integrated batch processes into aggregated real-time processes—faster, more data-rich, integrated. He suggests the problem with national economic policy is that the Fed has to wait weeks for data.  Presumably if the Fed worked with real-time data, we’d have better economic decisions. Call it day-trading national interest rate policy.

If Barsky thinks weekly investment numbers for his hedge fund are too short-term, let’s hook him up with Ranadive. Set up the databases right, and we could all be day-trading hedge funds! And of course, there’d be an app for that.

Management by Measurement Isn’t Just a Financial Disease

If MBMM—management by massive measurement—actually worked, day-traders would outperform Warren Buffett. I think they don’t.

The US mortgage industry morphed from a web of relationships (banks, bankers, home-owners) into a global impersonal market of short-term transactions. More liquid? Yes. More efficient? Yes. Lower cost of funds? Yes again.

But today’s meltdown arose precisely because replacing lengthy relationships with multiple transactions, substituting markets for relationships, and metrics for management leaves nothing but short term, impersonal money at the heart of business.  The saying on Wall Street became, "I’ll be gone, you’ll be gone–do the deal."  On Main Street, it translates as, "just tell me you’re going to meet next month’s metrics."  It’s seductive, and it’s addictive.  And not good for business.

When hooked up to its kissing cousin incentives, MBMM is a powerful drug.  As incentives critic Alfie Kohn says, "Incentives work.  They incent people to get more incentives."  Like I said, addictive.

There’s nothing inherently wrong with measuring. Or transactions. Or markets. They’re fine things.

But undiluted and without moderating influences, they become not just a bad deal; they can be a prime cause of ruining the whole deal.

 

 

How Can I Get Them to Trust Me?

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The trust equationHow can I get them to trust me? 

It’s an important question for lots of people: financial planners, TV news anchors, IT help desk people in companies, HR folks who want a seat at the table, pharma company management, and parents and teenagers.

There are three broad approaches to getting others to trust you.  They are not mutually exclusive, and are probably not exhaustive—but they come close.

Of course, you can’t control another human being.  Trying to do so will paradoxically destroy their trust in you.  Which is why all three approaches involve full acceptance of the one whose trust you seek.

Trust Creation Strategy 1: Trust Them. 

We are powerfully wired as part of our social instincts to engage in reciprocal exchanges with each other.  These acts of reciprocity create networks of cumulative obligation—or of enmity. 

If someone behaves well toward me, I “owe” that person parallel behavior.  This simple fact underlies the social role of etiquette, as well as things like gifts, Don Corleone’s power, or ritualistic forms of greeting like secret handshakes.

We are powerfully motivated to return in kind what we are given.  If you want to be trusted—first seek to trust.

Trust Creation Strategy 2: Be Trustworthy. 

It sounds trite, but it’s not.  It is a strategy of attraction, not promotion.  To be trusted, try to be worthy of that trust.  All else equal, people trust those who are worthy of trust.  And people have finely honed capabilities of discrimination that far exceed our abilities to articulate them.

Which begs the question: what constitutes trustworthiness?  Steven M. R. Covey,  following consistently in his father’s Seven Habits behavioral pattern, identifies 13 behaviors—phrased as imperative-form verbs like ‘get better,’ or ‘confront reality.’ 

Much though we may like verbs–they suggest definitive actions we can take–they are misleading.  You don’t make people trust you, they choose to do so.   You attract trust by being who you are, not by acting upon others. 

I prefer the Trust Equation: it is couched in the ways people see us—as attributes.  Four of them pretty much sum it up: credibility, reliability, intimacy—and whether we are seen as self-oriented, or other-oriented.

This definition of trustworthiness underpins the Trust QuotientTM self assessment test—take it here and find out how trustworthy you are.

Trust Creation Strategy 3: Listen.  

The single most powerful trust-creating action we can take is to give to another the fine gift of our own attention.  To listen—intently, to the exclusion of all other thoughts, without simultaneous cogitation, and devoid of judgment. 

This has nothing to do with the content of what is being heard.  It is simply about the act of offering attention.  It translates, to the one being listened to, as an act of respect.  As such, it triggers the reciprocity reaction: we are willing to listen to those who have listened to us. 

All three strategies, to work, must be done cleanly.  While we can all become more trustworthy, or better listeners, or better trustors ourselves, we have to keep our motives intact.

If we want others to trust us solely as means to our own ends—they won’t.  The concepts of giving freely, and without attachment, are key. The paradox is: if you do these things, you become trusted.  But if you set out to do them in order to be trusted, so that you can etc. etc. etc.—you don’t.  
 

Trust, Trusting and Trustworthiness

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The word ‘trust’ gets used in many ways.  Consider the simple joke, “I’d trust Bill Clinton with the economy—just not with my daughter.  On the other hand, I’d trust George W. Bush with my daughter.  The economy, not so much.” 

Considering that we tend to use one word to cover so many duties, it’s surprising we ‘get’ the meanings as well as we do.

The Word ‘Trust’ Gets Used Imprecisely

Let’s break it down.

There are three ways we talk about ‘trust.’ 

1.    There is trust, the verb: to trust.  The one who trusts, the act of trusting. 

2.    There is trustworthiness, a noun.  A characteristic or trait of the one who is trusted.

3.    There is trust, the noun: a quality of the relationship between people, the level of trust that exists between them.

Here is Steven Covey, a well known writer on trust, using the same word to describe all three situations: 

•    “Trust is a competency…There is a risk in trusting people, but there is a greater risk in not trusting them.”  (Meaning 1, the verb: to trust)

•    “Trust is a form of both character and competence….Investors invest in and customers buy from brands they trust.”  (Meaning 2, the noun: trustworthiness).

•    “Low-trust, low-performance organizations typically exhibit [certain] cultural behaviors” (Meaning 3, the noun: the state of trust).

We usually infer the intended meaning well.  Still, it creates confusion about trust itself when we are not clear. 

I hear all the time, “Trust is nice to have, but this is a tough environment, and you can’t take that kind of risk around here.”  When someone says that, I know they are confusing trust and trustworthiness. 

To trust someone is to take a risk.  There is no trusting without risking, in fact.  (As long as we’re talking Presidents, Ronald Reagan’s “trust but verify” was a bit of political rhetoric: if you have to verify, it ain’t trust.)   

Yet to be trustworthy is the opposite of risky.  Others strongly trust those who are honest, believable, candid, unselfish, high integrity, direct, and so forth.   It’s a lot less risky to be trusted than it is to have people suspicious of you. 

The confusion grows when people focus on trusting or being trusted to the exclusion of noticing high-trust environments (where people both trust and are trustworthy). 

You Can’t Manage Trust if You Can’t Define It

To accurately assess, describe, measure and manage trust, we have to get clear on the concepts, the language. Trusting creates trustworthy people, who then attract more trusting from others; pretty soon, you’ve got a whole lot of trust going on.

You can’t build trust if you don’t know which meaning you’re playing with.  Try figuring which meaning of trust is intended in this typical quote from the Edelman Trust Survey: 

Trust in business around the world is, generally, lower today than it was a year ago, according to the Edelman report. And, generally, CEOs and other leaders aren’t held in especially high esteem.

Does this mean buyers are less willing to trust these days?  Or that businessmen are less trustworthy?  Or that the state of trust in the world has declined? Is there causality here or not?  If so, what drives what?

And therefore what are we to do with such data?  Educate people about risk-taking?  Step up regulatory enforcement?  Or increase engagement between business and customers? 

Asking “do you trust XYZ” over time offers the appearance of precision—“it’s up X%, it’s down Y%”—but without any context, it’s hard to say what it all really means.  

It’s no surprise that “trust” has such a “soft” image; casual use of words creates the impression that trust itself is soft and fuzzy, hardly the stuff managers should busy themselves with.

The fact is, all three meanings can be defined, measured, taught and managed—but only if we’re clear just which meaning is being measured and managed.

For examples of metrics that deal strictly with trustworthiness, see The Trust Equation – in its online self-assessment form, the Trust Quotient (go on, it’s free!).

For an example of how to teach and manage trusting, see this on the risk management tool of  Name It and Claim It.

For a good example of the state-of-trust, see a sampling of economists’ and social scientists’ views earlier this year at Trust Trust Trust.

I trust you’ll find me trustworthy enough to help increase our mutual trust.