Trust: More Valuable Than Ever
November 27, 2012 /Forbes/ – I’ve been surprised to find that the smart, idealistic business school students I teach at Stanford are more wary now than ever before. And perhaps they’re right to be.
Trust is a scarce commodity these days. Government leaders seem to prefer name-calling, spinning, and playing political “chicken” to actually getting things done. The near collapse of our financial system brought about “Occupy Wall Street”, a movement that embodied the skepticism some feel about private enterprise in the U.S. As more people feel alienated from each other over perceived differences in class, race, religion, gender, sexual orientation or political philosophy, problems become magnified until they start to appear intractable.
This observation contains a lesson for entrepreneurs: If you’re building a business, pay attention to the rules of trust-building, or you might end up in a pretty big mess.
In 1993, I wrote an article entitled “Trust” describing the value of building trust in business. In it, I pointed out that when employees trust each other and the institutions for which they work, finding solutions costs less, agreements last longer, and nasty problems can be minimized. Employees are less likely to strike, and less apt to feel stymied by ten-pound policy manuals that try to make rules for every situation.
While most of that article’s lessons still hold up 20 years later, I’ve since gained a few insights about building a high-trust business in a low-trust culture. For one thing, if you’re going to trust someone in business, trust smartly, not blindly. Here are a few ways to do that:
1) Insist on full disclosure. In my experience, outright lying is rare in business and personal relationships, but people will try to get away with leaving out critical information. In today’s spin-rich environment, you have to probe more than you used to, and dig into the fine print. By the same token, if you’re building a high-performance, high-impact business, be doubly vigilant about letting half-truths seep into your culture. Sniff out and eliminate any information that may be misleading, even if it’s “technically” correct.
2) Verify. As Ronald Reagan famously said when negotiating with Mikael Gorbachev, “Trust, but verify.” My first mentor, Trammell Crow, used to say, “We owe it to our accountants to audit them — it’s not fair to put anyone in a position of temptation that an otherwise good person may not be able to resist.” While this may not feel like trust, it’s far more likely to create a high-trust culture than the naïve belief that everyone is correct — or honest — all the time.
3) Don’t make professional advisors your business partners, especially if you’re going to rely on them for evenhanded judgments, legal documentation or financial advice. If you do join forces, hire another lawyer or CPA to check their work.
4) Do your reference checks for character as well as competence. Trust competence without character, and you may find you’ve put your trust in the next Hitler. Conversely, character without competence means you could be trusting your mother to fly a 747.
Trust can’t be built in a day. But, with care and vigilance, it can be built. If the next generation of leaders adds to its natural wariness a belief in the value of strong, open, and dependable communications, perhaps trust will become the backdrop for how to address the business of the nation.
By Joel Peterson