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#Post#: 25--------------------------------------------------
How the Best Leaders Build Trust by Stephen M.R. Covey
By: IMPACT360 Date: November 28, 2014, 4:24 am
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Almost everywhere we turn, trust is on the decline.
Trust in our culture at large, in our institutions, and
in our companies is significantly lower than a
generation ago. Research shows that only 49% of
employees trust senior management, and only 28%
believe CEOs are a credible source of information.
Consider the loss of trust and confidence in the
financial markets today. Indeed, "trust makes the
world go 'round," and right now we're experiencing
a crisis of trust. This crisis compels us to ask
three questions. First, is there a measurable cost
to low trust? Second, is there a tangible benefit to
high trust? Third, how can the best leaders build
trust in and within their organizations to reap the
benefits of high trust?
Most people don't know how to think about the
organizational and societal consequences of low
trust because they don't know how to quantify or
measure the costs of such a so-called "soft" factor
as trust. For many, trust is intangible, ethereal,
unquantifiable. If it remains that way, then people
don't know how to get their arms around it or how
to improve it. But the fact is, the costs of low trust
are very real, they are quantifiable, and they are
staggering.
In 2004, one estimate put the cost of complying
with federal rules and regulations alone in the
United States -- put in place essentially due to lack
of trust -- at $1.1 trillion, which is more than 10%
of the gross domestic product. A recent study
conducted by the Association of Certified Fraud
Examiners estimated that the average American
company lost 6% of its annual revenue to some
sort of fraudulent activity. Research shows similar
effects for the other disguised low-trust taxes as
well.
Think about it this way: When trust is low, in a
company or in a relationship, it places a hidden
"tax" on every transaction: every communication,
every interaction, every strategy, every decision is
taxed, bringing speed down and sending costs up.
My experience is that significant distrust doubles
the cost of doing business and triples the time it
takes to get things done.
By contrast, individuals and organizations that
have earned and operate with high trust experience
the opposite of a tax -- a "dividend" that is like a
performance multiplier, enabling them to succeed
in their communications, interactions, and
decisions, and to move with incredible speed. A
recent Watson Wyatt study showed that high trust
companies outperform low trust companies by
nearly 300%!
I contend that the ability to establish, grow, extend,
and (where needed) restore trust among
stakeholders is the critical competency of
leadership needed today. It is needed more than
any other competency. Engendering trust is, in
fact, a competency that can be learned, applied,
and understood. It is something that you can get
good at, something you can measure and improve,
something for which you can "move the needle."
You cannot be an effective leader without trust. As
Warren Bennis put it, "Leadership without mutual
trust is a contradiction in terms."
How do the best leaders build trust?
The first job of any leader is to inspire trust. Trust
is confidence born of two dimensions: character
and competence. Character includes your integrity,
motive, and intent with people. Competence
includes your capabilities, skills, results, and track
record. Both dimensions are vital.
With the increasing focus on ethics in our society,
the character side of trust is fast becoming the
price of entry in the new global economy. However,
the differentiating and often ignored side of trust --
competence -- is equally essential. You might
think a person is sincere, even honest, but you
won't trust that person fully if he or she doesn't
get results. And the opposite is true. A person
might have great skills and talents and a good
track record, but if he or she is not honest, you're
not going to trust that person either.
The best leaders begin by framing trust in
economic terms for their companies. When an
organization recognizes that it has low trust, huge
economic consequences can be expected.
Everything will take longer and everything will cost
more because of the steps organizations will need
to take to compensate for their lack of trust. These
costs can be quantified and, when they are,
suddenly leaders recognize how low trust is not
merely a social issue, but that it is an economic
matter. The dividends of high trust can be similarly
quantified, enabling leaders to make a compelling
business case for trust.
The best leaders then focus on making the creation
of trust an explicit objective. It must become like
any other goal that is focused on, measured, and
improved. It must be communicated that trust
matters to management and leadership. It must be
expressed that it is the right thing to do and it is
the economic thing to do. One of the best ways to
do this is to make an initial baseline measurement
of organizational trust and then to track
improvements over time.
The true transformation starts with building
credibility at the personal level. The foundation of
trust is your own credibility, and it can be a real
differentiator for any leader. A person's reputation
is a direct reflection of their credibility, and it
precedes them in any interactions or negotiations
they might have. When a leader's credibility and
reputation are high, it enables them to establish
trust fast -- speed goes up, cost goes down.
There are 4 Cores of Credibility, and it's about all 4
Cores working in tandem—Integrity, Intent,
Capabilities, and Results. Part of building trust is
understanding -- clarifying -- what the
organization wants and what you can offer them.
Be the one that does that best. Then add to your
credibility the kind of behavior that builds trust.
(see the 13 high trust behaviors below). Next, take
it beyond just you as the leader and extend it to
your entire organization. The combination of that
type of credibility and behavior and organizational
alignment results in a culture of high trust.
Consider the example of Warren Buffett -- CEO of
Berkshire Hathaway (and generally considered one
of the most trusted leaders in the world) -- who
completed a major acquisition of McLane
Distribution (a $23 billion company) from Wal-
Mart. As public companies, both Berkshire
Hathaway and Wal-Mart are subject to all kinds of
market and regulatory scrutiny. Typically, a merger
of this size would take several months to complete
and cost several million dollars to pay for
accountants, auditors, and attorneys to verify and
validate all kinds of information. But in this
instance, because both parties operated with high
trust, the deal was made with one two-hour
meeting and a handshake. In less than a month, it
was completed. High trust, high speed, low cost.
13 Behaviors of High-Trust Leaders
Worldwide
I approach this strategy primarily as a practitioner,
both in my own experience and in my extensive
work with other organizations. Throughout this
learning process, have identified 13 common
behaviors of trusted leaders around the world that
build -- and allow you to maintain -- trust. When
you adopt these ways of behaving, it's like making
deposits into a "trust account" of another party.
1. Talk Straight
2. Demonstrate Respect
3. Create Transparency
4. Right Wrongs
5. Show Loyalty
6. Deliver Results
7. Get Better
8. Confront Reality
9. Clarify Expectation
10. Practice Accountability
11. Listen First
12. Keep Commitments
13. Extend Trust
Remember that the 13 Behaviors always need to
be balanced by each other (e.g., Talk Straight
needs to be balanced by Demonstrate Respect)
and that any behavior pushed to the extreme can
become a weakness.
Depending on your roles and responsibilities, you
may have more or less influence on others.
However, you can always have extraordinary
influence on your starting points: Self-Trust (the
confidence you have in yourself -- in your ability
to set and achieve goals, to keep commitments, to
walk your talk, and also with your ability to inspire
trust in others) and Relationship Trust (how to
establish and increase the trust accounts we have
with others).
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