The Economics of Trust
Trust plays an important role in interpersonal relationships but after reading Stephen Covey’s book — The Speed of Trust, I understood the economics of trust for a business organization and share with you some thoughts gleaned from this book.
In a business conversation we automatically start discounting what we hear by 20% or 30% depending on the trust score we have established with the other party. While most may have attributed personally to the trust-deficit some managers may have acquired by the position they occupy. On the other hand we give benefit of doubt to people that score high on the trust index letting them get away with tall claims.
Trust is the hidden variable in the formula for organization success and while a low value of trust may jeopardize the deal, a higher level may multiply the dividends. It therefore makes economic sense to increase the actual and perceived trust score.
In the book Covey outlines the five waves of building a higher trust level in an organization.
First Wave: Starts with yourself being perceived as a trustworthy person. This means establishing a high level of credibility.
Second Wave: Consistency in behaviour leads to building a relationship trust, where others feel that you will stay true.
Third Wave: Aligning structures, systems and trust symbols in the organization to make it institutional.
Fourth Wave: Creating a reputation in the market.
Fifth Wave: Participating and contributing outside the organization to create societal trust.
While growing E-Movers, we kept building our trust level and feel that we have succeeded till the fourth wave and are now at the brink of the last wave of societal trust. Our customers trust us to move them, and when we live up to their expectations, they trust us enough to refer their friends and colleagues resulting over 45% business by referrals.
Trust increases the speed of co-operation and collaboration as well in groups comprising businessmen from diverse domains. CorporateConnections™ is a global networking platform that I lead as National Director in UAE. Building trust is an important exercise instituted in the structure of our meetings, and member interactions. The platform progressively engages members to make and keep commitments, demonstrate accountability, and maintain transparency thus building a high level of trust within members resulting in a larger economic return.