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“The Trust Crisis: What Do Leaders Do Now?” 
- An Interview with Stephen M. R. Covey

“The Trust Crisis: What Do Leaders Do Now?” 
- An Interview with Stephen M. R. Covey

March 23, 2018

The Trust Crisis is real. The Economist’s cover story on Facebook illustrates a broader failure of businesses to engender public trust.

For reference, the 2018 Edelman Trust Barometer reveals that trust in the U.S. has suffered the largest-ever-recorded drop in the survey’s history among the general population. Trust among the general population fell nine points to 43, placing it in the lower quarter of the 28-market Trust Index. Trust among the informed public in the U.S. imploded, plunging 23 points to 45, making it now the lowest of the 28 markets surveyed, below Russia and South Africa. The collapse of trust in the U.S. is driven by a staggering lack of faith in government, which fell 14 points to 33 percent among the general population, and 30 points to 33 percent among the informed public. The remaining institutions of business, media and NGOs also experienced declines of 10 to 20 points. These decreases have all but eliminated last year’s 21-point trust gap between the general population and informed public in the U.S.

Companies headquartered in Canada (68 percent), Switzerland (66 percent), Sweden (65 percent) and Australia (63 percent) are most trusted. The least trusted country brands are Mexico (32 percent), India (32 percent), Brazil (34 percent) and China (36 percent). Trust in brand U.S. (50 percent) dropped five points, the biggest decline of the countries surveyed.

So, what must be done?  We sought out the world’s leading speaker and advisor on trust, Stephen M. R. Covey, the cofounder and Global Practice Leader of FranklinCovey’s Speed of Trust Practice www.speedoftrust.com. He is the author of The SPEED of Trust: The One Thing that Changes Everything, an eye-opening book which challenges age-old assumptions about trust. In this interview, Covey explains why the notion of trust as a soft, social virtue is a myth and instead demonstrates that trust is a hard-edged, economic driver—a learnable and measurable skill that can give your business a competitive edge. We asked him about Facebook and the broader societal implications of the trust-deficit.

How is “trust” a key leadership competency in this fast-pace world of ours? And what can we learn from the trust-crisis at Facebook?

For business, today’s global marketplace puts a premium on true collaboration, teaming, relationships, partnering, and all these interdependencies require trust. Partnerships based on trust outperform partnerships based on contracts. Compliance does not foster innovation, trust does. You can’t sustain long-term innovation, for example, in a climate of distrust.

It was Einstein who said that “every kind of peaceful cooperation among men is primarily based on mutual trust and only secondarily on institutions such as courts of justice and police.”

There’s a French proverb – “Fish discover water last” – which is a way of saying that fish take water for granted – they’re unaware of its existence, until it becomes polluted or it evaporates.

So it is with trust.

Trust is an integral part of society. We trust that people will follow traffic laws, that the water we drink and bathe in is safe, that our schools will teach our kids and prepare them for the future.  What happens without this public trust?  Without it, society closes down and ultimately self-destructs.

Trust is built from the inside out.  Whatever trust we are able to create in our organizations or in the marketplace is a result of the credibility we first create in ourselves, in our relationships, in our organizations, in our markets, and in society.

In issue after issue, the data is clear: high-trust organizations outperform low-trust organizations. Total return to shareholders in high-trust organizations is almost three times higher than the return in low-trust organizations.

So we assert that trust is a key competency. A competency or skill that can be learned, taught, and improved and one that talent can be screened for.

Trust is the one thing that affects everything else you’re doing. It’s a performance multiplier which takes your trajectory upwards, for every activity you engage in, from strategy to execution.

As the Economist article says, Facebook is not about to be banned or put out of business, but the chances of a regulatory backlash are growing, and distrustful users are beginning to switch off. Network effects can actually work in reverse. Facebook is worth $493bn, but only has $14bn of physical assets. Its value is intangible. A large part of that value is built on public trust.  And that’s why businesses must preserve and nurture public trust, in addition to the fact that it’s the right thing to do.

Unfortunately, the climate we are in now is hurting this trust.

The distrust we see all around is suspicion, a response to the corporate scandals and vicious downward cycles of cynicism. But when a company focuses on the principle of contribution for all stakeholders, that becomes good business. Executives need to understand the economic benefits of this trust dividend, especially when the behavior is real, not artificially or superficially created as PR to manipulate trust.

Leaders must lead in creating trust and the job of the leader is to go first.  Someone needs to go first, and that’s what leaders do—leaders go first.  PepsiCo believes in “performance with purpose” and CEO Indra Nooyi shows us that business plans and strategy must include products, people and the planet!

In a recent interview, Merck’s CEO Ken Frazier says that “…businesses also exist to deliver value to society. Merck has existed for 126 years; its individual shareholders have turned over countless times. But our salient purpose in the world is to deliver medically important vaccines and medicines that make a huge difference for humanity. The revenue and shareholder value we create are an imperfect proxy for the value we create for patients and society.”

We will see more and more leaders and companies moving in this direction because it makes economic sense, period. Plus, it’s the right thing to do.

How do you identify a high-trust or low-trust organizations or institutions?


Trust is a powerful accelerator to performance and when trust goes up, speed also goes up while cost comes down — producing what we call a trust dividend. How do you know if you have a high trust culture? By observing the behavior of your people. In high-trust institutions we observe the following behaviors:

  • Information is shared openly
  • Mistakes are tolerated and encouraged as a way of learning
  • The culture is innovative and creative
  • People are loyal to those who are absent
  • People talk straight and confront real issues
  • There is real communication and real collaboration
  • People share credit abundantly and openly celebrate each other’s success
  • There are few “meetings after the meetings”
  • Transparency is a practiced value
  • People are candid and authentic
  • There is a high degree of accountability
  • There is palpable vitality and energy—people can feel the positive momentum

Another very visible indicator is the behavior of your customers and suppliers. What is your customer churn rate? Do you have a history of long-term customer and supplier relationships? What is your reputation or brand equity in your marketplace?

Conversely, when the trust is low, there’s a trust tax which changes your trajectory downwards. In our work with organizations, we find that low-trust, low-performance organizations typically exhibit cultural behaviors like:

  • Facts are manipulated or distorted
  • Information and knowledge are withheld and hoarded
  • People spin the truth to their advantage
  • Getting the credit is very important
  • New ideas are openly resisted and stifled
  • Mistakes are covered up or covered over
  • Most people are involved in a blame game, badmouthing others
  • There is an abundance of “water cooler” talk
  • There are numerous “meetings after the meetings”
  • There are many “undiscussables”
  • People tend to over-promise and under-deliver
  • There are a lot of violated expectations for which people make many excuses
  • People pretend bad things aren’t happening or are in denial
  • The energy level is low
  • People often feel unproductive tension—sometimes even fear

Sound familiar? These behaviors are all taxes on performance.

The work we do is to establish trust as your organizational operating system. That’s a high-tech metaphor, but it’s appropriate. We know how trust works, how to measure it, how to establish it, grow it, extend it, and sustain it – with all stakeholders.

Why is trust such a hidden variable to many otherwise competent managers?

Unfortunately, too many executives believe the myths about trust. Myths like how trust is soft and is merely a social virtue. The reality is that trust is hard-edged and is an economic driver.

For instance, strategy is important, but trust is the hidden variable. On paper you can have clarity around your objectives, but in a low-trust environment, your strategy won’t be executed. We find the trust tax shows up in a variety of ways including fraud, bureaucracy, politics, turnover, and disengagement, where people quit mentally, but stay physically. The trust tax is real.

There are many myths about trust, and in my book, I present them in a table your readers may find helpful:

So trust is measurable? Quantifiable?

Absolutely, trust is measurable. Smart organizations measure trust in three key ways: 1) actual trust “levels”; 2) the “components” or dimensions that comprise trust; and 3) the “effects”, or impact, of trust.

We have found that one very simple way to measure trust levels is to ask one direct question and roll it up and down throughout the organization. For internal stakeholders ask: “Do you trust your boss?” to employees at all levels of an organization. For external stakeholders, like customers or suppliers, you might ask them: “Do you trust our sales representative or account manager?” These are simple, direct questions that tell us more about our culture than perhaps any other question we might ask.

Now, wouldn’t it be great if “trust” showed up on the financial statements as either a ‘tax’ or a ‘dividend’? Organizations would then use resources to eliminate the tax or create a larger dividend! Although a high trust or low trust culture doesn’t literally show up on financial statements, it does show up in the following ways, which are measurable, observable and economically relevant (all of which make a strong “business case for trust”):

What are the competencies, the behaviors that build trust?

Trust too often has been pigeonholed as based on character and integrity alone. There’s nothing wrong with that, and that is clearly the foundation, but it’s insufficient.

Trust is a function of both character and competence. Of course, you can’t trust someone who lacks integrity, but hear this: if someone is honest but they can’t perform, you’re not going to trust them either. You won’t trust them to get the job done.

That’s one reason why trust has a soft image- because it has been severed from competence and results.

So how does one apply trust to branding?

When I look at a brand, a brand is nothing more or less than trust with the customer, trust with the marketplace. The principle behind a brand is reputation. The brand stands for a promise and the ability to deliver on that promise. And in that promise is a company’s character and competence, its reputation.

From the character-side you start with integrity—honesty, congruence, humility and courage.

The courage to be open, to stand for something, to make and keep commitments. Then there’s intent—is there a genuine concern for people, purposes and society as a whole or is profit your sole motive? What’s the company’s agenda? And how does it behave? Sometimes poor behavior can simply be bad execution of good intent.

On the competence side, you start with your capabilities—talents, skills, the ability to deliver. Is your company staying relevant, are you continually improving, do you have the right technologies to stay ahead of your competition? Brands need to reinvent themselves from time to time to stay relevant. Finally, look at your results. Your company and your brands are constantly measured based on past performance, present performance and anticipated future performance.

These four dimensions—integrity, intent, capabilities and results—make up the credibility and reputation of your brand. When the trust is high, you get the trust dividend. Investors invest in brands people trust. Consumers buy more from companies they trust, they spend more with companies they trust, they recommend companies they trust, and they give companies they trust the benefit of the doubt when things go wrong. The list goes on and on. On the Internet, a trusted brand versus an untrusted brand—the differences could not be clearer, you only give your credit card number to those you trust. And look what happens when a brand gets diluted or polluted or compromised, we see how fast consumers, and investors, turn away. They quit buying.

These same principles apply equally to companies and individuals.

What about the social responsibility of business? Is this part of the trust equation?

Initially many companies may move into this arena for PR purposes. More out of fear of not being in the arena, than really participating with their souls. But there are huge benefits that flow from this – the difference it makes with your employees first, then your customers, your suppliers, your distributors, your investors.

Trust varies by geography, as you’ve pointed out in your book. How do companies build trust globally?

Principles are universal; practices are local.  The principles for building trust—focusing on Credibility and Behavior from the inside out—apply everywhere but their practical applications are heavily influenced by the cultural context.  But trust itself is clearly a global principle.  And there’s no question that trust issues are global issues. Just like there might be an industry tax or dividend, there might also be a country tax or dividend. The Edelman Trust Barometer tells us, for example, that trust is often based on country of origin, as you cited from the Edelman study at the beginning of our interview.  That data showed, for example, that trust in companies based in Canada and Switzerland were effectively getting a dividend while trust in companies based in Mexico and India were effectively paying a tax, with the US suffering the biggest decline in the past year.

Trust can be rebuilt. So how do you rebuild trust?

By your behavior. We’ve identified 13 behaviors which build trust. These apply to individuals, businesses, and governments.

  1. Talk Straight
  2. Demonstrate Respect
  3. Create Transparency
  4. Right Wrongs
  5. Show Loyalty
  6. Deliver Results
  7. Get Better
  8. Confront Reality
  9. Clarify Expectations
  10. Practice Accountability
  11. Listen First
  12. Keep Commitments
  13. Extend Trust

Companies need to have a strong promise, because the promise builds hope. Keeping the promise is what builds trust.

My father had an expression: “You can’t talk yourself out of a problem you behaved yourself into.” So it is with trust.

Sometimes it takes a little time, but you can accelerate the process by declaring your intent and signaling your behavior, so others can see it.

People and companies can learn these behaviors. It’s not a simple process which happens overnight. But it is a systemic, cultural process which can happen one leader at a time, one division at a time, one company at a time, and you can see the behavior shifting toward authentic, real trust-building behaviors as opposed to the more common counterfeit behavior of spin and hidden agendas and the like which tend to dissipate and diminish trust.

Is there a danger in being too trusting or even gullible?

One thing about trust is that everyone’s for it.

However, there are three big objections which come up. The first one is that trust is a social virtue, to which I say no, it’s much more than that; it’s a hard-edged economic driver. Secondly, and we hear this all the time: “we can’t do anything about trust, it’s either there or it’s not there.” This too is a fallacy. Trust is a competency. It’s something you can get good at. It’s a strength you personally, and your team and your company can master. Being good at it will elevate every other strength you have.

The third complaint goes along these lines: “We’ve been burned before. We can’t trust everyone. Are you suggesting we trust everybody?” That’s where I suggest you exercise what I call “Smart Trust.” Most leaders have been burned before, so they become distrusting. Our society is that way.

If you’re not trusted, you tend to reciprocate with distrust. That’s how the vicious cycle of mistrust starts and spirals downward.

There is a risk in trusting people, but the greater risk is not trusting people.

Smart Trust says you look at the opportunity, the risk and the credibility of the people involved. And you add to that verification and analysis. So you trust and verify. As opposed to verify, then trust!

Let’s look at Berkshire Hathaway and Warren Buffet. I mention them in the book as an example of a high-trust company, about the acquisition they made based on a hand shake without due diligence.

But did you know that’s how the entire company operates? They have 377,000 employees from some 60 different wholly-owned companies. How many people do you think work at corporate headquarters? A mere 25!  Why? Because they choose to operate in a “seamless web of deserved trust” as Berkshire Hathaway Vice Chairman Charlie Munger calls it.

This is real. It’s not blind trust, but smart trust.

Thank you.

INTERVIEW by Christian Sarkar

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