Trust is a fickle thing. Thousands of authors have penned thousands of books on the importance of trust in relationships. And yet there’s still no secret formula for creating trust. Every day, you still strive to build trust in your relationships. And when you build it, you fight to maintain it. And it doesn’t matter how long you maintain it, it can disappear in an instant.
And while people tend to understand the importance of trust in personal relationships, they’re all too quick to skip over the part trust plays in a successful business. Consider some of the simple ways you trust drives business performance: you place an outgoing package in your mailbox.
You trust USPS to ship it. You make a mobile deposit on your phone, trusting the bank’s technology to credit your account with the correct amount. You give your barista your coffee order, trusting your Americano will be piping hot. We engage in small acts of trust every single day.
But let’s say for instance that the barista serves you incorrectly. One offense might not destroy your trust. Multiple times? Goodbye Starbucks, hello Dunkin Donuts. In this four-part series, we’ll discuss the importance of trust in your business, the three components of relational trust, how to assess trust within your company, and finally, how to drastically improve that level of trust.
However, before diving in, you’ll want a working definition of trust, which we’ll unpack in the second post of this four-part series. At Wildsparq, we define trust as confidence in another person’s intent, ability, and execution. With that definition in hand, let’s take a look at the profound impact trust can have on your business.
Internal Trust Drives Business Performance, Leading to More Engaged Employees
It doesn’t matter if you’ve been in the workforce for five years or forty; you’ve likely experienced cultures that ace internal trust and those where you live in constant fear your cubicle neighbor will steal your lunch. Sure, lunch thievery won’t ruin a business, but a culture of mistrust certainly can.
You can readily see this in companies with a revolving door for new hires. Studies show that employees leave their managers, not companies, highlighting the role personal relationships play in job satisfaction. Ultimately, these departures come down to a violation of trust.
Simply put, employees trust their managers (initially, at least) to carve out a positive work environment. Employees look to their managers for support in a variety of ways: fair compensation, healthy work-life balance and to provide the tools needed to perform at a high level. When any of these expectations break down, trust plummets, as does employee satisfaction.
Conversely, trustworthy leaders have a way of bringing out increased cooperation from their employees. This in turn leads to better community, a deeper sense of commitment, and even greater company loyalty. And that loyalty translates into a healthier bottom line for your organization:
- Increased employee retention means less training costs for employee replacements
- Employee satisfaction spills over into customer satisfaction via better job performance
- Greater internal cooperation increases collaboration and efficiency
Needless to say, a culture of trust can seriously boost your success internally, and trust drives business performance. But there’s more to reap than internal rewards.
External Trust Creates Brand Champions
While critical for success, concern, and care for employees only makes up a small piece of organizational trust. Ask any leader what their ultimate goal would be for their customer relationships. Most will tell you that they want to create an army of brand champions. These are your customers that are not only satisfied with your product or service but also rave about you to friends and colleagues.
And the desire for brand champions is warranted. Consider this: a customer is 4x more likely to buy when referred by a friend. Couple this finding with the fact that referred customers tend to spend 13 percent more than customers won through different methods, and you begin to understand the importance of referrals.
So put on your consumer hat for a moment. What does it take for you to recommend a product to a friend? If you’re excitable, you can probably try a new restaurant, have a phenomenal hamburger, and then tell all of your friends about the “best hamburger you’ve ever had.” For other consumers, the hype only comes after several repeat transactions that all meet expectations.
Regardless, the excitement only comes after having had expectations met and typically exceeded. Unfortunately, there are going to be times when you betray this trust. And when that happens, nobody wins.
Broken Trust Can Bleed Your Company Dry
There are times when you’re going to let people down and betray their trust. And it doesn’t matter if it’s inadvertent. Consider this quote from Ralph Waldo Emerson.
“Our distrust is very expensive.”
Emerson means “expensive” in a multi-dimensional way, but the fact remains: mistrust is bad for business. Let’s look at an example.
The Beetle, the Passat, the Golf. You likely recognize each of these cars. The reason? All three models are on the top 10 list of best-selling cars around the world, and each belongs to Volkswagen. With these three cars, Volkswagen has the most cars of any automobile manufacturer in the list that are still being manufactured.
In order to maintain that level of success over the years, Volkswagen produced quality vehicles at an affordable price, and as a result, garnered levels of trust that spanned generations. Yet in 2015, that trust took a massive hit.
In the fall of 2015, US regulators found that the carmaker designed software for thousands of diesel cars that gave false emissions data. In other words, engineers designed software to falsely pass clean air emissions inspections.
As a result of this catastrophic scam, the CEO, Michael Horn, was brought before a congressional panel for a hearing. He had few genuine answers, initially blaming the entire incident on two rogue engineers. Now Volkswagen faces fines in the billions of dollars as well as countless lawsuits from angry customers whose trust they violated. The broken trust also showed up in sales — they dropped 25% in the US in November 2015 when compared to the same month in 2014.
Trust Drives Business Performance, So It Cannot Be Ignored
The takeaway? You can’t afford to ignore trust. Healthy trust can lead to a healthy business just as a violation of trust can sink one. But as mentioned, trust is fickle. So before we examine how to analyze the trust within your organization, we need to flesh out our working definition of the concept. Circle back for our next post, in which we’ll offer our definition of trust, which dives into three key parts: intent, ability, and execution.
Wildsparq is a web-based leadership development platform that has quickly become the go-to way for companies — from small businesses to large corporations — to invest in developing leaders. Developed by the recruiting and leadership development experts at FireSeeds in Birmingham, Alabama, Wildsparq is an indispensable tool for companies that are serious about building their culture.