By Stephen MR Covey

Finley Peter Dunne, the American writer and author once said, “Trust everybody, but cut the cards”. Trust happens to be at the core center of everything we do. If you think about it, would you interact or do business with anyone that you do not trust? Your doctor, your dentist, your accountant… but how would know if a person or a company is a trustworthy or not. Because trust is a perception, it is often a hidden variable that is difficult to understand, measure and improve.

It does not have to be that way—particularly when we understand the economics of trust. The economics of trust simply state that trust always affects two measurable outcomes: speed and cost. When trust goes down, speed will also go down while cost will go up. This is a tax. When trust goes up, speed will also go up while cost will come down. This is a dividend.

Every interaction, every work project, every initiative, every communication, every strategic or tactical imperative we are trying to accomplish is affected positively or negatively by trust. If our organisation enjoys a trust dividend, then trust becomes the great ‘performance multiplier’. If, on the other hand, we are paying a trust tax, then everything we do takes more time, costs more money and the outcome in terms of quality and effectiveness goes down—which ultimately impacts the customer. As Columbia Business School Professor John Whitney says, “Mistrust doubles the cost of doing business.” Because trust is the one thing that affects everything, it is, without question, the most important strategic lever we can focus on. Since this is the case, it is critical to understand the impact that trust is having on our organisations so that we can do something about it.

We can quantify and measure organisational trust in three specific domains or categories:
• Trust Levels: the trust level inside an organisation
• Trust Components: the observable behaviors that create or destroy trust
• Trust Effects: the economic impact of the trust level inside an organisation

I will start by explaining the trust levels. Most organisations do not formally measure trust. Those that do, tend to measure it inside their organisation and then stop there. Measuring trust can be helpful in that it creates awareness and a starting place. From my experience, I can say that the most effective question is to ask, “Do you trust your boss?” to employees at all levels of an organisation. Usually, most people already know when the trust is low and we do not need an employee survey to tell us that. What is valuable is for us to know why you do not trust your boss or colleague so that we can begin to behave ourselves out of a problem we may have behaved ourselves into!

As we all know, there are observable behaviors that create or destroy trust which I call them trust components. I found that there are 13 common behaviors of high trust leaders, which are: talk straight, demonstrate respect, create transparency, right wrongs, show loyalty, deliver results, get better, confront reality, clarify expectations, practice accountability, listen first, keep commitments and extend trust.

When individuals, teams and organisations live these 13 Behaviors of High Trust Leaders, trust is created and the “four cores of credibility” integrity, intent, capabilities and results will correspondingly increase. When the opposite of these behaviors or the more common ‘counterfeit’ behaviors are displayed, trust erodes and the “four cores” will decrease.

The third category I want to focus on is the Trust effects. Would not it be great if “trust” showed up on the financial statements as either a ‘tax’ or a ‘dividend’? Organisations would then use resources to eliminate the tax or create a larger dividend! Although a high trust or low trust culture does not literally show up on financial statements, it does show up in the following ways, which are measurable, observable and economically relevant (all of which make a strong “business case for trust”):

The 7 Low Trust Organisational Taxes The 7 High Trust Organisational Dividends

1. Redundancy
1. Increased value

2. Bureaucracy
2. Accelerated growth

3. Politics
3. Enhanced innovation

4. Disengagement
4. Improved collaboration

5. Turnover
5. Stronger partnering

6. Churn
6. Better execution

7. Fraud
7. Heightened loyalty

(The opposites of the 7 Organisational Taxes are also Dividends).

One of the low trust organisational taxes is office politics, which quantifiable indirect costs it are conservatively estimated at US$100 billion per year – many observers put it substantially higher.

Studies of customer defection or churn indicate the financial impact of having to acquire a new customer versus keeping an existing one is significant; some say by as much as 500 per cent!

Research clearly shows that customers buy more, buy more frequently, refer more, and stay longer with organizations and people they trust. Plus, these organisations actually outperform with less cost.

To move beyond a functional relationship between you and your client, boss or employee, you require a level of trust that exceeds the safeguards or proxies we have created for trust. Moving to a higher level of trust means each one needs to understand how to establish trust in the other party. They need to know what their measures are, whether they are using degrees of centigrade or ounces.

In conclusion, as we become better at measuring trust, we also become better at increasing trust. As we do this, we turn this so-called intangible into a hard-edged, economic driver, enabling us to increase the dividends in our companies while decreasing the taxes, validating the twin phrases, “Nothing is as fast as the speed of trust.” And, “Nothing is as profitable as the economics of trust.”