It’s a Matter of Trust: Part Two
This is the second installment of a seven part series exploring the concept of trust, including how it pertains to the workplace. Read Part One now.
What Happens When Trust is Present?
By Doug Turner
In his book The Speed of Trust,1 Stephen M. R. Covey states that when trust is present, the speed of transactions increases dramatically and the cost decreases accordingly. When there is a lack of trust, transactions slow down and the cost goes up. He cites an example in which Warren Buffet acquired a business unit from Wal-Mart in a deal worth $23 billion and the transaction completed in 30 days with no legal due diligence.
Trust Changes Everything
Warren Buffet said this was possible because everything Wal-Mart had ever said to him previously was true. There was an established relationship of trust. Imagine the impact on Warren Buffet’s company, not only from a cost avoidance perspective, but from the fact they got an operating unit “up and running” much faster than they would have otherwise. The effects are stunning.
There are many other examples. Consider the airline industry pre- and post-911. Before the disaster, people flew without thinking about it very much. Safety and getting to their destination were taken for granted by travelers, and security screening of passengers and luggage was routine and relatively unobtrusive. Long line-ups were only due to peaks in traffic at particularly busy times or a weather phenomenon that temporarily closed the runways, and the like. Generally speaking, things ran smoothly with minimal delays.
For Better or Worse
In the months and years since 9/11 we have seen phenomenal increases in security procedures, lists of restricted articles, longer check-in times, massive spending on sensors and personnel at airports, and of course long line-ups are now expected all of the time and the costs of operation have skyrocketed. What we have here is a dramatic shift in trust level. The passengers no longer trust the airlines to get them safely to their destination, so they fly less. Passenger volumes took years to recover. More importantly, the airlines don’t trust their own customers. The speed of the transaction (getting a passenger on to an airplane) has decreased and the cost increased.2
Having a trusting relationship with your business partners and customers has a dramatic effect on success in the marketplace. In a recent case involving the sale of NHL hockey team the Vancouver Canucks, a three-party consortium had been unsuccessful, over a period of 18 months, in buying the team from its owner at the time. One party broke away from the consortium and approached the owner on its own. A deal was concluded in three weeks or so on terms that were not significantly different from what had been proposed before.
Setting aside the issue of betrayal in the consortium (a judge ruled that nothing improper or unlawful happened), the important feature of this case for our purposes is that there was apparently a higher level of trust between the owner and the single party than there was between the owner and the three-party consortium, allowing the deal to proceed quickly.
Of Character and Competence
Obviously, we all should endeavour to have a foundation of trust underlying any interaction. There are two fundamental components of trust: character and competence.3 Character is a combination of integrity and intent.4 Competence is made up of capabilities and results.5 Both character and competence have to be present in order for trust to happen.6
Consider the example of needing some electrical work to be done in your home. You may have a brother-in-law whom you like and know well and who has done some small electrical jobs in his spare time. You may also consider an established electrical contractor who is appropriately certified that you have never dealt with before. Whom do you trust to do the important work in your house where the safety of your family is at stake?
In the first case, your brother-in-law has the character but his competence is suspect. In the second, the contractor has the competence (as evidenced by certification) but you have no knowledge of how “honest” or “reputable” they are. You will of course do more homework before you decide, but the issues remain the same. Whom, ultimately, will you trust to do the work? Which one has the greater aggregate of character and competence?
Read Part Three—The Bank Account of Trust—now.
Doug Turner is a leadership and executive coach at True Balance Coaching.
1. Stephen M.R. Covey with Rebecca R. Merrill, The Speed of Trust: The One Thing That Changes Everything (2006).
2. See id., at 14
3. Character and competence comprise what Covey terms the tour “cores of trust.” Id., at 30-31; 42; 54-57; 123-24.
4. Id., at 55-57.
5. Id., at 55-57.
6. Id., at 30.