What a Lack of Trust Can Cost You

Trust “Taxes”, the Costs of a Lack of Trust

Trust taxes are costs that you incur when there is little or no trust. When trust goes down, speed also goes down and cost goes up.  This is a “tax” – and this tax can double the cost of doing business.

There are 7 types of “trust taxes”:

  1. Redundancy & duplication with smaller spans of control – if there is less trust, then you will find that tighter control develops over smaller areas, and that there is unnecessary duplication of resources to offset the increase in perceived risk.
  2. Bureaucracy – with less trust so procedures and systems become more cumbersome in order to bridge the perceived gap between what is needed and what is available in providing security and consistency in the work done.  In the US there is Nordstrom where its high levels of trust are reflected in its one card operating manual: on one side of the card it says – “We have one rule… – on the other side it says “use your best judgement in all situations“.
  3. Politics – more silos develop and turf wars become more prevalent.  Less trust results in individuals putting their agenda ahead of others and the business overall, it also creates a “fixed mindset” where people see the pie as fixed, so that they only way they can get a larger slice of the pie is at the expense of somebody else e.g. different departments negotiating for budget allocation will compete against each other for it.
  4. Disengagement – a lack of trust reduces staff engagement as they do not believe that their leaders have their interest at heart.  This is reflected in research which shows that 96% of engaged employees trust their leaders, whereas only 46% of employees who are disengaged.
  5. Turnover of Employees – as disengagement increases, so staff perceive roles and jobs elsewhere as more attractive which, previously, they might not have considered.
  6. Churn – low trust also extends to customers and other stakeholders who now see other businesses as more attractive and less risky.
  7. Fraud – with lowering levels of trust there is a lower level of integrity increasing the likelihood of fraud being committed within the company.

If you have a lack of trust, then you are likely to incur some or all of these taxes.  If you have a lack of trust then you need to address this. This is the subject of another blog.

To view or download a PDF version of this blog click here.

If you found this article of use or interest please don’t hesitate to share it with others.

Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

3 Steps to Building Trust

“Trust takes years to build, seconds to lose, and forever to repair” – Anon

There are three key steps involved in building trust. These include:

  1. Make – making public a clear, defined commitment that is specific, measurable and has a clear date set to it. This removes ambiguity and holds you to a commitment to which you can be held accountable.  Yes, you as the manager or leader are making yourself accountable to your reports or peers. Making a commitment builds hope.
  1. Keep – demonstrating the fact that you have met your clearly articulated commitment as previously defined. You need to actively publicize this.  People need to know that you have done this, you cannot assume that they will know because you have done it.  Furthermore, proving that you are keeping your commitments gives you right to expect them to reciprocate i.e. they will make, keep and repeat in terms of their own commitments.
  1. Repeat – this develops consistency, belief in you, and proof that your actions mirror your words. When people see a discrepancy between what you say and what you do, they will always follow what you do.  By repeating this process you are establishing and creating an avatar for others to model their behaviors on.

Demonstrate these three behaviors on a regular basis so that you can not only create trust, but you are seen to be more trustworthy.

To view or download a PDF version of this blog click here

Share your thoughts and ideas here, or email me at andrew.cooke@business-gps.com.au

If you found this article of use or interest please don’t hesitate to share it with others.

Click here to find out more about Andrew Cooke and Growth & Profit Solutions.