I contend that the ability to establish, grow, extend, and (where needed) restore trust among stakeholders is the critical competency of leadership needed today. A recent study showed that high trust companies outperform low trust companies by nearly 300%! My experience is that significant distrust doubles the cost of doing business and triples the time it takes to get things done.īy contrast individuals and organizations that have earned and operate with high trust experience, the opposite of a tax, a ‘dividend’ that is alike a performance multiplier, enabling them to succeed in their communications, interactions, and decisions, and to move with incredible speed.
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. Research shows similar effects for the other disguised low trust taxes as well. 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. 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. But the fact is, the costs of low trust are very real, they are quantifiable, and they are staggering. If it remains that way, then people don’t know, how to get their arms around it or how to improve it. For many, trust is intangible, ethereal, and unquantifiable. 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 as so called ‘soft’ factor as trust. 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? This crisis compels us to ask three questions.
Indeed, ‘trust makes the world go ‘round’ and right now we’re experiencing a crisis of trust. Consider the loss of trust and confidence in the financial markets today. Research shows that only 49% of employees trust senior management, and only 28% believe CEOs are a credible source of information. Trust in our culture at large, in our institutions and in our companies significantly lower than a generation ago.
Certain words are given in bold to help you locate them while answering some of the questions.Īlmost everywhere we turn, trust is on the decline. 1-10) Read the following passage carefully and answer the given questions.
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