Trust

Trust. Everyone is talking about it. Company directors are waking up to the fact that the success of their organisation rises and falls on trust. We are witnessing some of the biggest exposures of misconduct and breaches of trust this country has ever seen within the stalwarts of industry and religion. All eyes are on the fallout of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, the APRA Prudential Inquiry into the Commonwealth Bank of Australia, and the earlier Royal Commission into Institutional Responses to Child Sexual Abuse.

But that does not necessarily mean things are worse than before. Nor does it mean that trust is only ‘now’ foundational to business and organisational success. It always was.

“Trust is a dichotomy of simplicity and complexity. We know when we don’t have it and it’s easy to take for granted when we do.”

The difference, like it or not, is that the blinkers are off. Now is the time for company directors to face some truths. The question is: can we handle the truth? Rather than reiterate the findings of various investigations, this is an opportunity to go deeper; to ask questions and to provide a different lens through which company directors can view the landscape and begin to plan the way forward. Key considerations include what is trust? What is it not? How do we as company directors need to shape our own strategic thinking to tackle something as nebulous as trust?

What is trust? What is it not?

Trust is a dichotomy of simplicity and complexity. We know when we don’t have it and it’s easy to take for granted when we do. Back in 2006 when Entente began exploring trust conceptually and interviewing leaders across multiple sectors, 99% of leaders said that trust was ‘critical’ or ‘very important’ to their organisation and relationships, but a staggering 95% said they did nothing specific to actively build trust. Over a decade later, in the recent KPMG/AICD trust survey of company directors, less than half of those surveyed said their board proactively builds trust, and only 23% were actively measuring trust. It begs the question, what is stopping company directors from stepping up to the plate?

Digging deeper, the issue is not one of apathy. The challenge is that most people really don’t understand what we are talking about when we start talking about trust. Over the past twelve years, Entente has been asking tens of thousands of people around the world questions about trust. Not who they trust and don’t trust, as Edelman measures with its Trust Barometer or, more basically, Reader’s Digest’s most trusted people and brands survey. Instead, the questions have been more around what trust actually means to people: what influences their decision to trust or not; how far would they travel and how much energy and effort would they expend to be with people they trust, or work for organisations they trust, buy from brands they trust, and engage in services they trust; how do they feel when trust exists and when it breaks down; and how does trust shape and change their behaviour towards others and themselves. What became obvious – and these findings have been tested and proven across multiple cultures, sectors, industries, and different socio-economic segments – is this:

  • trust is fundamentally our ability to rely on someone or something – a person or group of people, an organisation or brand, a product or service;
  • we are relying on that someone and/or something to deliver an outcome;
  • the outcome is based on a combination of the Expectations and Needs of the person seeking to trust, and the Promises made by someone or something (ENPs®);
  • any combination of ENPs® failing can erode trust;
  • there are multiple layers of trust in an organisational context, and any one of those can erode trust and can build trust;
  • trust is something that is given, and can also be taken away;
  • we are all actively seeking someone or something in which to place our trust;
  • we all behave consistent with whatever we expect, whether those expectations are positive or negative;
  • we are all attracted to promises made;
  • trust and trustworthiness are not one and the same thing;
  • ethics and trust are related, but are distinctly different;
  • you can strategically and tactically both plan for and measure the impacts of trust.

Because trust has been widely misunderstood, there are a number of myths that need to be addressed if company directors are serious about developing strategies to grow trust in their organisations. Here are just a few:

Myth No. 1: Consistency builds trust

Whilst this is sometimes true, it is not always the case. Consistency is continuing to do the same thing with regularity. For those customers and employees needing a high degree of stability, consistency does build trust. But it also flies in the face of innovation. Consistency is the antithesis of Industry 4.0, the technological revolution that boards are struggling to understand and plan for. So, in particular, for creative and many of our next generation stakeholders, consistency is not necessarily going to upswing trust. Early adopters embrace change and distrust stagnation.

Myth No. 2: Transparency builds trust

Whilst this is also sometimes true, it is often not the case. As an extreme example, a company that is transparent about child labour in its apparel manufacturing process is not going to build trust with its customers, unless it is accompanied or immediately followed by the communication of an ethical decision to source new suppliers whilst ensuring that the price point doesn’t vary significantly. Transparency comes with the risk of damaging trust if it is not considered part of a broader strategy of trusted transformation.

Myth No. 3: Trustworthiness builds trust

Although it may seem logical that trustworthiness would build trust, surprisingly it is also not always true. There are countless examples in our day-to-day lives when we trust – having no idea whether the person, organisation, product or service is trustworthy – but we extend our trust in any case. Each time we drive down the street or, as Alan Finkel in his speech to the Committee for Economic Development of Australia (CEDA) reminds us, each time we switch on a light, there is trust with no knowledge of the trustworthiness of the system underpinning that action. The greater the need, the greater the propensity to take risks in terms of who and what we trust.

Conversely, you can be extremely honest and transparent in your actions – the epitome of a trustworthy leader – and still not be trusted. Why? If your honesty inadvertently, or deliberately, exposes others, they will certainly not trust you.

These are just a few examples of what can, frankly, be confusing rhetoric that often stalls attempts to build trust.

So, how do we strategically build trust?

Like any strategy, a strategy for building trust requires deep thinking and consideration of the whole picture. We are beyond asking ‘why build trust?’ – there is an abundance of evidence to answer that question. The bigger more elusive question is ‘how?’

It is clear that trust will have influence over a company, its reputation and its performance. Like brand recognition, trust is an intangible asset, and can and should be recognised, assessed, valued, protected and built on. Like other intangible assets, its value to the organisation is difficult to measure in and of itself. But it does leave markers, tracers and pointers which enable it, to varying degrees, to be linked to the success of a plan, project, product or service. Likewise, its deterioration, breakdown or betrayal can also be pinpointed and reasonably attributed. What is certain is that it cannot be ignored.

Some have gone down the path of determining they want to create a ‘culture of trust’. Unfortunately that is like saying ‘we want air to breathe’. Unless there are clear, measurable and (let’s face it) profitable outcomes, culture initiatives get relegated to the ‘too hard basket’ or end up with no momentum, no support and no funding.

Others push for legislative reform – if you can’t do the right thing to protect trust, then we’ll embed it in tons of legislation and force you to sit up and take notice, and the penalties for getting it wrong will hurt you. The challenge with this approach is that it is fear driven, there are loopholes to duck and weave, and there is the temptation to weigh up the penalty against the cost of compliance. In addition, it can be difficult to know what to actually legislate for, or against, as the breakdown of trust is often attributed to a range of causal factors.

Others call for greater accountability. Those who betray trust, (and there are innumerable recent examples, including fees charged to dead people, and sexual abuse in faith based organisations) should be held to account. But how? And importantly, does greater accountability stop it from happening in the first place? Accountability requires clarity in terms of roles and responsibilities (e.g. accountability map for those falling under the Banking Executive Accountability Regime) and also needs to set out clear consequences for a failure to act in accordance with stated expectations. Whilst difficult to argue against the importance of ensuring appropriate behaviour, it comes with its challenges. We are generally happy for others to be put under the spotlight and examined, but few wish that upon ourselves. Further, how is behaviour tested and managed? It appears nobody wants to take on the responsibility of designing and overseeing something that calls into question the very character of a person.

What is critical for company directors and boards is to realise is that this is not an ‘either-or’ scenario. Anyone serious about tackling trust needs to avoid the all too tempting promise of the ‘silver bullet’. The answer lies not in any one of these options, but in all of them combined.

There are several key elements required to build and maintain a solid trust framework:

  1. Analyse leading trust influence factors for all stakeholders; that is, what increases trust and what decreases trust for them. Provide space for open dialogue and contribution to ensure alignment.
  2. Design policies, processes and systems to create clear accountabilities and consequences for a failure to protect trust. This might include using technology to help eliminate human errors or impaired judgment.
  3. Embed trust in everything from leadership to how staff are employed, empowered and managed; how products and services are created, branded, marketed and sold; how customers are serviced and cared for; and how the entire organisation is governed. This requires end-to-end process design to ensure capability for the delivery of promises.
  4. Identify and implement key measures for trust and ensure these are included in reporting to the board to ensure directors’ full line of sight on the potential and actual decline of trust.
  5. Train all staff in a basic understanding of trust to enhance a culture of trust, and develop leaders with skills to identify, measure, create and elevate trust and trustworthiness and ethical behaviours.
  6. Manage communications and PR carefully and strategically to avoid deepening any scepticism caused by earlier breaches of trust.
  7. Ensure diversity at the board level and throughout the organisation to meet the changing expectations of the general public, the broader community and all stakeholders.

In summary:

Dr Justin O’Brien of The Trust Project, writes in his upcoming book on Trust and its Discontents:

“Addressing the trust deficit through improved organisational and regulatory design has become a corporate, political and social imperative. Recalibrating the duties and responsibilities of the twenty-first century corporation to society is both potentially transformative and exceptionally complex. It requires a verifiable process of outlining a rationale, ongoing deliberation, implementation, monitoring, assessment and subsequent calibration.”

In the end, trust is a choice. The fundamental question each company director and every board needs to be able to answer is this: why would they choose you?


Vanessa Hall, through her organisation, Entente, has spent the past 12 years training and coaching over 30,000 leaders across 17 countries in ‘the truth about trust’, in politics, government, companies, NGOs, families, communities, education and faith. Formerly Head of Compliance for a number of financial services firms, Vanessa currently works for Deloitte Australia.