How much do you trust business to do what is right?

The US answered that question  a full 8 points lower than even last year while China, India and Brazil either increased trust in business or in the case of China stayed the same.  More significantly trust in business ranged from 62% to 82% compared to only 46% for US.  Clearly US business suffers from a trust tax that requires attention.  Check out this years global trust study at Edelman.

Trust perception varies from country to country throughout the world.  Paul Zak and other researches have even correlated trust levels with GDP.  Countries dealing with similar global conditions have markedly different outcomes.   Transparency International publishes an annual report on the perceived levels of trust in various countries based on 13 surveys and various other criteria.  What is clear is that trust levels are different in different countries.  The 2009 most trusted country was New Zealand, followed by Denmark, Singapore and Sweden.  The US ranked 19th and Japan 17th.  Go to the link above for the complete ranking.  As we have said, trust more that Euros, Yen or Dollars is the currency of the new global economy.  By learning the components and behaviors that make up trust we can all learn to raise the levels of trust in our families, our organizations and even our countries.

The International Anti-Corruption Conference will be held 10 to 13 this November in Bangkok.  The theme is Restoring trust: Global action for transparency. The conference will offer innovative perspectives on the role of anti-corruption in restoring trust.

“Trust is the coin of the realm.” So said then Secretary of State George Shultz in his memorable testimony before the Congressional committee investigating the Iran-Contra scandal, on the importance of trust for credible and effective leadership. More recently, as President Obama dramatically declared in his State of the Union address, our nation’s well-being and security are hindered not only by a burdensome financial deficit, but also a crippling trust deficit.  Read this Harvard Blog post

These findings, encompassing more than 170,000 interviews from the first six months of 2009 reveal that nationwide, 70% of Americans express trust in their neighbors, but this varies within a range of 25 percentage points across states.

The Globe and Mail is considered Canada’s national paper with over 1 million readers.  Stephen was interviewed by Sarah Boesveld last week and his remarks appeared in today’s Globe and Mail in an article entitled Ambiguity Anxiety.   Stephen had this to say about the pressure on trust in the current crisis when managers are secretive: ”They tend to be done without very much openness, without very much transparency – people in rooms all day long behind closed doors. And when they emerge, managers dish out spin and don’t give employees the straight goods,” he says.

Our friend Matt Hutcheson, a global authority on 401k regulation who regularly testifies for congress, sent us this link today to a blog entry on Brightscope showing trust in organizations is only 12% as of December 2008.  They call 2009 the year of Transparency in an articulate call for more light in financial regulation.

” . . . something important was destroyed in the last few months. It is an asset crucial to production, even if it is not made of bricks and mortar. This asset is TRUST. While trust is fundamental to all trade and investment, it is particularly important in financial markets, where people depart with their money in exchange for promises. To study how recent events have undermined Americans’ trust in the stock markets and institutions in general, we have launched the Chicago Booth/Kellogg School Financial Trust Index.”

The Kellogg Financial Trust Index called trust:

The Missing Link 

“Something important was destroyed in the last few months. It is an asset crucial to production, even if it is not made of bricks and mortar. While this asset does not enter standard national account statistics or standard economic models, it is so crucial to development that its absence — according to Nobel laureate Kenneth Arrow — is the cause of much of the economic backwardness in the world. This asset is TRUST. As stressed by Arrow: “Virtually every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time.” Without trust, cooperation breaks down, financing breaks down and investment stops. One can bomb a country back to the Stone Age, destroy much of its human capital, and eliminate its political institution. But, if trust persists, the country may be able to right itself in just a few years, as in Germany and Japan after World War II. Conversely, you can endow a country with all the greatest natural resources but, if there is no trust, there is no progress.”

We could not agree more.  We must all step up and behave in ways that inspire trust if we are to hope to turn the tide any time soon.  The tide will turn and this dramatic correction will shock us into taking trust more seriously much like 9/11 sparked a national sense of patriotism.  Let’s hope our paradigm shift of awareness sparks a behavior shift that is sustainable.

Emile Durkheim once said, “when mores are sufficient laws are unnecessary,  when mores are insufficient laws are unenforceable.” Our financial regulators could learn from this premise. The transparency of the web creates the possibility of self regulation Durkheim envisioned.  Ebay pioneered this self regualation that enabled as, founder Peter Omidyar said “that the miracle of Ebay was that 135 million strangers could trust each other”. A brilliant article in Wired Magazine Road Map for Financial Recovery: Radical Transparency Now! By Daniel Roth 02.23.09 lays out a very doable solution for our financial train wreck:

“That’s why it’s not enough to simply give the SEC—or any of its sister regulators—more authority; we need to rethink our entire philosophy of regulation. Instead of assigning oversight responsibility to a finite group of bureaucrats, we should enable every investor to act as a citizen-regulator. We should tap into the massive parallel processing power of people around the world by giving everyone the tools to track, analyze, and publicize financial machinations. The result would be a wave of decentralized innovation that can keep pace with Wall Street and allow the market to regulate itself—naturally punishing companies and investments that don’t measure up—more efficiently than the regulators ever could.

The revolution will be powered by data, which should be unshackled from the pages of regulatory filings and made more flexible and useful. We must require public companies and all financial firms to report more granular data online—and in real time, not just quarterly—uniformly tagged and exportable into any spreadsheet, database, widget, or Web page. The era of sunlight has to give way to the era of pixelization; only when we give everyone the tools to see each point of data will the picture become clear. Just as epidemiologists crunch massive data sets to predict disease outbreaks, so will investors parse the trove of publicly available financial information to foresee the next economic disasters and opportunities.”

This is an idea whose time has come.  The sunlight of transparency is the ultimate accountability.  What information in your team or organization would improve accountability?

“Politics” – the antithesis of trust and standard operating procedure for many industries, governments, organizations, and relationships. In today’s world, everyone is a politician, trying to get ahead, but it is an illusion, spin. Add to that the very real consequences of stop-loss measures like bailouts, leaving what many media outlets call a “crisis of confidence.”  We call this a crisis of trust.  

A recent BBB-Gallop poll indicates a 24% decrease in trust of business during the past year.  This was before the current financial crisis. Steven Cole, President and CEO, National Council of Better Business Bureaus, asserts, “The continuing decline of consumer trust is just not sustainable for businesses, but, interestingly, the issue highlights a clear opportunity for competitive advantage among businesses that embrace consumer demand for trust in the marketplace.”

The fastest way to get the US economy back on track: rebuild and restore trust, in every industry, every organization, every government, and every relationship. Seventy-two percent (72%) of those surveyed in the BBB-Gallop poll say it’s as simple as businesses “doing a better job delivering on their promises.”

The numerous endorsements by CEOs in The Speed of Trust obviously indicate the appeal to executives, but the real proof is that organizations around the world are embracing The Speed of Trust by having it presented to their most important audiences.

 Proving the economic case for trust and demonstrating that it can be measured AND that the needle can be moved is what engages the executives.  This topic resonates! 

 Trust is a mission-critical competitive advantage in the new global economy, and the good news is that it can be dramatically increased by learning 13 behaviors common to all high trust leaders around the world. 

Trust is being spotlighted on the global stage; Stephen and I are currently en route for him to present The Speed of Trust to 1,500 leaders from over 60 countries at the World Economic Forum. in Tianjin, People’s Republic of China, September 27-29, 2008.  The China forum is a meeting for what are termed “Global Growth Companies.” This second “Summer Davos” will bring together the emerging multinational companies – the New Champions – that have the potential to reshape the global economic landscape. Under the theme “The Next Wave of Growth,” CEOs of the New Champions will engage with a diverse group of the most important players shaping the future of business and the global agenda.

Leading-edge companies are asking one important question in employee evaluations:  Do you trust your boss?  These companies have learned that the answer to this one question is more predictive of team and organizational performance than any other they might ask.  The number one reason for costly employee turnover is the relationship they have with their immediate supervisor.  We are facing a crisis of trust and business ethics.  In the U.S., only 51% of employees have trust and confidence in senior management.

Come visit us at SHRM! The Society for Human Resource Management’s

60th Annual International Conference

June 22-25, 2008 in Chicago, Illinois

Preview our new Speed of Trust DVDs, 

and meet Stephen at booth # 5320.

New York Times Bestseller

CEO Read recently named The Speed of Trust as the #1 most read business book by CEO’s and executives for 2007.  We are honored and feel this speaks to the ever growing relevance of Trust in todays Global Marketplace.

91% of work groups are “taxed” by low trust without knowing it—how about yours?

Low trust can rob your team of results and personally cost you a promotion.  As a boss, it can cost you talent.  The number one reason for talent quitting is low trust in their relationship with their immediate supervisor. 

The Oklahoman newspaper recently asked Stephen, “What makes one company successful while another company flounders?”  “Why are some employees rock stars while others become disgruntled and irrelevant?”  And, why does William G. Parrett, CEO, Deloitte Touche Tohmatsu, state, “The SPEED of Trust is red-hot relevant”?  

High trust companies outperform their low trust competitors by 286% according to Watson Wyatt research. 

June 2007

Chief Exeuctive Magazine this month has an article entitled The Business Case for Trust by Stephen M. R. Covey

Almost everywhere we turn, trust is on the decline. We find low trust in our society at large, in our institutions and in our companies. Research shows that only 51 percent of employees trust senior management, and only 28 percent believe CEOs are a credible source of information. This compels us to ask two questions. First, is there a measurable cost to low trust? Second, is there a tangible benefit to high trust?

Few argue with the notion of trust.

Everybody is in favor of it and nobody is against it. But at the end of the day, many CEOs don’t really believe that internal organizational trust is directly connected to their company’s bottom line. Instead, they believe that trust is merely a soft, nice-to-have, “social virtue.”