Every day, it seems, we read about further declines in levels of trust. As a result, business leaders increasingly pontificate about the need to restore trust, and they’re right to be worried.
Trust is money. It delivers improved cashflow, higher valuations, faster times to market, competitive edge. Without it, everything takes longer, is more complex and often, vastly more costly.
Most leaders now regard trust as the hidden asset on their balance sheets, worth – in some cases – billions.
Paul Zak, director of the Centre for Neuroeconomic Studies at Claremont Graduate University in California, says that personal trust is a strong predictor of a country’s wealth and prosperity. “High-trust countries tend to grow much more rapidly than low-trust countries. Trust really is a kind of economic lubricant, resulting in a government sector that works well, a social sector that works well and an economy that also works well,” he says.
So, trust matters, and is essential to progress.
Restoring trust though is misleading as a concept. It is very hard to think about what to do with that concept. The thing we forget about trust, is that it only occurs in relationships. A better concept is that relationships are the engines of success, and we need to focus on the health of our key relationships. We can do something about that.
Building a climate of trust in relationships requires emotional intelligence. Knowing how to create a positive relationship with employees, customers, suppliers, the local community, society and shareholders is becoming the fundamental element for long-term success.
At the heart of what leaders need to worry about is the idea that their very future is pegged to the strength of the relationships they have with all the people upon whom their success depends. Those relationships are not only precious, but also increasingly fragile. The reason is because relationships change, and in a world transforming at the speed of thought, power has spilled out of the corridors of government and big business and onto the street. Here, people have become less deferential and much more demanding. Why? It is because they have greater access to information and to each other. That means they have much more choice – and they’re getting smarter. Not only are they smarter, but they are also faster than most companies are able to respond. To them, trust is as critical as delivery, and they sit in judgement of every act and every utterance of leaders. If they don’t like what they see or hear, if they lose trust in a company or brand, they can walk out of this relationship and into another, just like that.
The worst risk is therefore not in the loss of reputation, but rather in the consequences of a bad reputation – the destruction of relationships. So you could argue that managing reputation is actually about managing the risks around the intangible asset of relationships – for it is upon these relationships that the future of the company depends.
And if it is all about relationships, we need to spend more time fundamentally understanding those relationships, and the drivers of trust within them. That means a great deal more time measuring and monitoring (The Science). With that understanding, we can put more positive emotion in to how we relate to these people, and how we communicate with them (The Art).
Trust is an emotion, and essential to our future economic wellbeing. We won’t restore it unless we remember that we need to put more emotionally intelligent thinking into our decision making.
If leaders are to be successful in restoring trust, it will take both heart and science to do so.