Chief Learning Officer - January 2009 - (Page 58) IN CONCLUSION The Economics of Trust Reap the dividends • BY STEPHEN M. R. COVEY Stephen M. R. Covey is the CEO of CoveyLink and the author of the New York Times and Wall Street Journal best-selling book, The Speed of Trust: The One Thing That Changes Everything. He can be reached at editor@clomedia.com. rust makes the world go ’round! Take away trust, goes up and cost goes down. This creates a high-trust and everything grinds to a halt, comes to a stand- dividend. It’s that simple, that predictable. Once learning leaders understand the hard, still. The financial crisis, at its roots, constitutes a loss measurable economics of trust, it’s like putting on of trust and confidence. The credit markets collapse when almost everyone is afraid to loan money a new pair of glasses. Everywhere we look, we can because nobody knows who will be able to pay it see quantifiable impact. If we have a low-trust organization, we’re paying a tax. While these taxes may back. Credit is trust, and trust is credit. Mirroring this decline of trust in the market- not conveniently show up on the income statement place, it seems almost everywhere else we turn, we as “trust taxes,” they’re still there, disguised as other find trust is decreasing. This is particularly true problems. When we know where and what to look for, we in our companies. Findings from Watson Wyatt’s see low-trust taxes everywhere, including redundan“WorkUSA 2006/2007” study show only 49 percent of employees trust senior management, and only 36 cy, bureaucracy, office politics, employee disengagepercent believe top managers act with honesty and ment, employee turnover, churn of other stakeholdintegrity. While the consequences of low trust in the ers and fraud. For example, a recent study by the marketplace have become disastrously clear, we’re Association of Certified Fraud Examiners estimated left to wonder whether the consequences of low that U.S. employers lose almost $1 trillion to fraud annually. Add to that trust in organizations number the millions it are similarly painful. will cost in litigation and Few argue with the new regulations to clean notion of trust. EveryDATA POINT: up the mess. The lowbody is in favor of it, Only 36 percent of employees believe trust tax keeps rising. But and nobody is against top managers in their organizations it’s not impossible to stem it. But at the end of the act with honesty and integrity. the flow. day, many managers Source: Watson Wyatt “WorkUSA 2006/2007” Just as the taxes don’t really believe intercreated by low trust are nal organizational trust significant, the dividends is directly connected to of high trust also are incredibly high. When trust is their companies’ bottom lines. Instead, they believe high, the dividend we receive is a performance multitrust is merely a soft, nice-to-have “social virtue.” There are, however, an increasing number of plier, elevating and improving every dimension of the learning leaders who have become convinced that organization. High trust is like a rising tide that lifts this so-called “soft” trust factor is, in reality, a “hard- all boats. The Watson Wyatt study strongly validates edged economic driver.” Consider the 2002 study by this premise of increased value. Additional high-trust Watson Wyatt surveying 12,750 workers across all dividends include accelerated growth, enhanced industries that showed that high-trust organizations innovation, improved collaboration, stronger parthad a total return to shareholders — stock price plus nering, better execution and heightened loyalty. When you add up all the dividends of high trust dividends — that was 286 percent higher than lowand you put those on top of the fact that high trust trust organizations. What are the economics of trust that make this decreases or eliminates all the taxes, is there any remarkable return possible? Trust always affects two doubt that there is a significant, direct and indisputmeasurable outcomes: speed and cost. When trust able connection between high trust, high speed, low goes down, speed goes down and cost goes up. This cost and increased value? Bottom line: Nothing is as fast as the speed of creates a low-trust tax. My experience is that signifitrust. Nothing is as profitable as the economics of cant distrust doubles the cost of doing business and triples the time it takes to get things done. Thank- trust. It’s truly the one thing that changes everyfully, the inverse is true: When trust goes up, speed thing. CLO T 58 Chief Learning Officer • January 2009 • www.clomedia.com http://www.clomedia.com
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.