The Decision to Trust – Harvard Buisness Review

The Decision to Trust

Robert F. Hurley

FROM THE SEPTEMBER 2006 ISSUE

Roughly half of all managers don’t trust their leaders. That’s what I found when I recently surveyed 450 executives of 30 companies from around the world. Results from a GolinHarris survey of Americans back in 2002 were similarly bleak: 69% of respondents agreed with the statement “I just don’t know who to trust anymore.” In that same year the University of Chicago surveyed 800 Americans and discovered that more than four out of five had “only some” or “hardly any” confidence in the people running major corporations. Granted, trusting corporate leaders in the abstract is different from trusting your own CEO, and some companies and executives are almost universally considered trustworthy; but the general trend is troubling.

It’s troubling because a distrustful environment leads to expensive and sometimes terminal problems. We hardly need reminding of the recent wave of scandals that shattered the public’s faith in corporate leaders. And although you’ll never see a financial statement with a line item labeled “distrust,” the WorldCom fiasco underscores just how expensive broken trust can be. When I teach executive seminars on trust, I ask participants to describe how a working environment feels when it is characterized by low levels of trust. The most frequent responses include “stressful,” “threatening,” “divisive,” “unproductive,” and “tense.” When asked how a high-trust work environment feels, the participants most frequently say “fun,” “supportive,” “motivating,” “productive,” and “comfortable.” Clearly, companies that foster a trusting culture will have a competitive advantage in the war for talent: Who would choose to stay in a stressful, divisive atmosphere if offered a productive, supportive one?

Companies that foster a trusting culture will have an advantage in the war for talent: Who would choose to stay in a stressful, divisive atmosphere if offered a productive, supportive one?

It is crucial, then, for managers to develop a better understanding of trust and of how to manage it. I define trust as confident reliance on someone when you are in a position of vulnerability. Given the pace of change in organizations today—mergers, downsizing, new business models, globalization—it is not surprising that trust is an issue. Fortunately, 50 years of research in social psychology has shown that trust isn’t magically created. In fact, it’s not even that mysterious. When people choose to trust, they have gone through a decision-making process—one involving factors that can be identified, analyzed, and influenced.

This article presents a model that sheds light on how the decision to trust is made. (We will ignore the extremes of complete trust based on blind faith and total distrust based on paranoia, and focus instead on the familiar situation in which uncertainty, possible damage, and multiple other reasons to trust or distrust are combined.) By understanding the mental calculations behind the decision whether or not to trust, managers can create an environment in which trust flourishes.

A Model for Trust

Building on the social psychologist Morton Deutsch’s research on trust, suspicion, and the resolution of conflict, and on my own experience over the past 15 years consulting with organizations and executives on trust, I developed a model that can be used to predict whether an individual will choose to trust or distrust another in a given situation. (See the exhibit “To Trust or Not to Trust?”) I have tested this model, which identifies ten factors at play in the decision-making process, with hundreds of top executives. Using it, they were able to identify relationships that would benefit from greater trust and to diagnose the root causes of distrust. Armed with that knowledge, they took concrete steps that made it easier for others to place confidence in them.

via The Decision to Trust – HBR.

Trust and Trust Building | Beyond Intractability

Trust and Trust Building

 

By

Roy J. Lewicki

Edward C. Tomlinson

December 2003

 

Trust- Overview

“Trust is a peculiar resource; it is built rather than depleted by use.” — Unknown

The phenomenon of trust has been extensively explored by a variety of disciplines across the social sciences, including economics, social psychology, and political science. The breadth of this literature offers rich insight, and this is noted in the common elements that appear in the definition of trust.

For example, Rousseau and her colleagues offer the following definition: “Trust is a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of another.”[1] Similarly, Lewicki and his colleagues describe trust as “an individual’s belief in, and willingness to act on the basis of, the words, actions, and decisions of another.”[2]

Additional insights into trust building are offered by Beyond Intractability project participants.

The need for trust arises from our interdependence with others. We often depend on other people to help us obtain, or at least not to frustrate, the outcomes we value (and they on us). As our interests with others are intertwined, we also must recognize that there is an element of risk involved insofar as we often encounter situations in which we cannot compel the cooperation we seek. Therefore, trust can be very valuable in social interactions.

Trust has been identified as a key element of successful conflict resolution (including negotiation and mediation). This is not surprising insofar as trust is associated with enhanced cooperation, information sharing, and problem solving.

Origins and Development of Trust

Armed with a definition of trust and a description of the benefits it brings, we now turn to examine its origins and development. Theory on the origins of interpersonal trust has proceeded broadly along three fronts: (1) explaining differences in the individual propensity to trust, (2) understanding dimensions of trustworthy behavior, and (3) suggesting levels of trust development.

Individual propensity to trust

Personality theorists have developed one of the oldest theoretical perspectives on trust, and argued that some people are more likely to trust than others. Viewed as a fairly stable trait over time, trust is regarded as a generalized expectancy that other people can be relied on. This expectancy is a function of the degree to which trust has been honored in that individual’s history of prior social interactions, and may have its most pronounced effect in novel or ambiguous situations. While this expectancy shapes perceptions of the character of people in general, more recent work has identified the characteristics of trustees that allow for the formation of trust and its growth to higher levels.

via Trust and Trust Building | Beyond Intractability.

How the Best Leaders Build Trust by Stephen M. R. Covey @ LeadershipNow

WITHIN THIS ARTICLE:

How do the best leaders build trust?

13 Behaviors of High-Trust Leaders Worldwide

About the Author

By Stephen M. R. Covey

Almost everywhere we turn, trust is on the decline. Trust in our culture at large, in our institutions, and in our companies is significantly lower than a generation ago. Research shows that only 49% of employees trust senior management, and only 28% believe CEOs are a credible source of information. Consider the loss of trust and confidence in the financial markets today. Indeed, “trust makes the world go ’round,” and right now we’re experiencing a crisis of trust. This crisis compels us to ask three questions. First, is there a measurable cost to low trust? Second, is there a tangible benefit to high trust? Third, how can the best leaders build trust in and within their organizations to reap the benefits of high trust?

Most people don’t know how to think about the organizational and societal consequences of low trust because they don’t know how to quantify or measure the costs of such a so-called “soft” factor as trust. For many, trust is intangible, ethereal, unquantifiable. If it remains that way, then people don’t know how to get their arms around it or how to improve it. But the fact is, the costs of low trust are very real, they are quantifiable, and they are staggering.

In 2004, one estimate put the cost of complying with federal rules and regulations alone in the United States — put in place essentially due to lack of trust — at $1.1 trillion, which is more than 10% of the gross domestic product. A recent study conducted by the Association of Certified Fraud Examiners estimated that the average American company lost 6% of its annual revenue to some sort of fraudulent activity. Research shows similar effects for the other disguised low-trust taxes as well.

Think about it this way: When trust is low, in a company or in a relationship, it places a hidden “tax” on every transaction: every communication, every interaction, every strategy, every decision is taxed, bringing speed down and sending costs up. My experience is that significant distrust doubles the cost of doing business and triples the time it takes to get things done.

By contrast, individuals and organizations that have earned and operate with high trust experience the opposite of a tax — a “dividend” that is like a performance multiplier, enabling them to succeed in their communications, interactions, and decisions, and to move with incredible speed. A recent Watson Wyatt study showed that high trust companies outperform low trust companies by nearly 300%!

I contend that the ability to establish, grow, extend, and (where needed) restore trust among stakeholders is the critical competency of leadership needed today. It is needed more than any other competency. Engendering trust is, in fact, a competency that can be learned, applied, and understood. It is something that you can get good at, something you can measure and improve, something for which you can “move the needle.” You cannot be an effective leader without trust. As Warren Bennis put it, “Leadership without mutual trust is a contradiction in terms.”

via How the Best Leaders Build Trust by Stephen M. R. Covey @ LeadershipNow.

Building Trust Inside Your Team – Management Skills From MindTools.com

Building Trust Inside Your Team

Creating a Strong, Cohesive Group

Build trust between team members.

You may be deceived if you trust too much, but you will live in torment if you don’t trust enough.

– Frank Crane, American minister and author

Have you ever managed people who didn’t trust one another? If you have, then you’ll know how challenging and draining this can be.

A team without trust isn’t really a team: it’s just a group of individuals, working together, often making disappointing progress. They may not share information, they might battle over rights and responsibilities, and they may not cooperate with one another. It doesn’t matter how capable or talented your people are, they may never reach their full potential if trust isn’t present.

However, when trust is in place, each individual in the team becomes stronger, because he or she is part of an effective, cohesive group. When people trust one another, the group can achieve truly meaningful goals.

So how can you, as a leader, help your team build the trust that it needs to flourish? In this article we’ll look at the issue of trust within teams, why it’s important, and what you can do to build it.

The Importance of Trust

One definition describes trust as a “reliance on the character, ability, strength, or truth of someone or something.”

Think about that definition for a moment. Trust means that you rely on someone else to do the right thing. You believe in the person’s integrity and strength, to the extent that you’re able to put yourself on the line, at some risk to yourself.

Trust is essential to an effective team, because it provides a sense of safety. When your team members feel safe with each other, they feel comfortable to open up, take appropriate risks, and expose vulnerabilities.

Without trust there’s less innovation, collaboration, creative thinking, and productivity, and people spend their time protecting themselves and their interests – this is time that should be spent helping the group attain its goals.

Trust is also essential for knowledge sharing. A study published in the “Journal of Knowledge Management” found that trust was a key element in a team’s knowledge acquisition. Put simply, if your team members trust one another, they’re far more likely to share knowledge, and communicate openly.

Strategies for Building Trust

via Building Trust Inside Your Team – Management Skills From MindTools.com.

5 Ways to Build Trust – wikiHow

Trust is a major part in the foundation of successful interpersonal relationships. It is just as easy to build trust as it is to break it down, provided you are prepared to make the effort. If your interpersonal relationships are plagued by suspicion and fear, making a commitment to building trust rather than destroying it with cynicism can help you to better connect with everyone.

via 5 Ways to Build Trust – wikiHow.

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