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ATD Blog

Why Is Trust Vital in Organizations?

Thursday, January 15, 2015
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Confucius once remarked that rulers need three resources: weapons, food, and trust. The ruler who cannot have all three should give up weapons first, then food, but should hold on to trust at all costs: “Without trust we cannot stand.”

Trust has become one of the most pervasive—and perhaps for that reason least noticed—aspects of social and business life. We need it in order to live at all. Think about how we conduct our daily lives: Would you go to a dentist or doctor with a suspicious reputation? Equally, when planning your annual vacation, do you go blindly on an overseas safari without checking the experiences of others and the reputation of the companies taking you?

Indeed, some companies have built a solid reputation based on trust. Take Trip Advisor, for example. What does it actually produce in itself? Arguably nothing. In reality, it is only a huge supermarket of the collated opinions of other travellers. As users, however, we have the opportunity to decide how confident we subsequently feel about booking certain aspects of our vacation or business trip based on the feedback and experience of others. And oddly, while doing nothing more than simply sharing these opinions, Trip Advisor has in itself become the source of trust and confidence for millions of travellers. This is even more remarkable considering that most of us who use services like Trip Advisor have probably never met the people providing the recommendations and actually have no idea whether or not they can be trusted at all!

So why is this? In effect, trust is like a bank account. You can make deposits and withdrawals. The higher the trust account, the more likely that the company (or person) will attract more business. We trust in the things in which we have confidence. And we tend to have confidence in big brands and mass feedback supported by the likes of Trip Advisor. Organisations like Trip Advisor have somehow tapped into a deeply embedded human need for trust and confidence to be present in our everyday transactions. We function better in packs and feel more comfortable making decisions based on the “psychological support” of millions, rather than being alone. We tend to feel better investing where others have invested, eating where others have eaten, and treading where others have trod.

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With this in mind, we know that trust does not just “appear.” Trust needs to be created, but once it is established, it can become both powerful and long-lasting. But how do individuals and companies put trust into the account? And what happens if they withdraw more than they have deposited?

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Consider Enron for a moment. Thousands of investors trusted it. More followed. And the millions flooded in. Until the trust account was overdrawn. And many suffered as the company collapsed.

It is clear that the trust in the person leading the company is inextricably linked to the company itself. Therefore, leaders must arguably deal and trade in trust. They should have an understanding of how trust is built, sustained, and—if necessary—recovered. This is one of the most critical skills that any leader should master.

Stay tuned next week for Part Two: Trust—The Role of Leaders.

About the Author

David Watkins, British born and Swiss married, has more than 20 years of business and leadership experience collected across the world in global blue chip organisations. He has worked in a variety of segments and countries, including the customer service and loyalty-focused travel industry, brand-driven automotive industry, and, more recently, the boom and bust construction industry. These huge variations have provided him with a unique insight on some of the very real leadership and business challenges around the world today. David holds a Bachelor’s Degree in Economics from the United Kingdom, an MBA from Switzerland and the United States, has received awards for his writing on customer loyalty, and is certified in various leadership assessment models. He recently published his first leadership book, “Where’s my dog? The search for Honest Leadership,” available on Amazon. You can contact David at [email protected]

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