Trust Across America-Trust Around the World™

(A Historical and Current Perspective)

I recently came across a powerful blog post written by Jason Tapp (www.truaimconsulting.com) called BUILDING THE CASE FOR BUILDING TRUST. With Jason’s permission, the blog is reposted below, followed by some further research performed by Trust Across America (www.trustacrossamerica.com) that supports Jason’s case.

Trust is thought of as a form of social capital, which can be considered the emotional or psychological equivalent of financial capital.  When trust is abundant and we invest our time and efforts in continually building it, we can gain great emotional and financial returns.  However, when trust and confidence are nonexistent and our relationships are emotionally bankrupt, the results can be catastrophic.

Francis Fukuyama put it best after examining the differences in economic prosperity among different cultures.  He concluded, “A nation’s well-being, as well as its ability to compete, is conditioned by a single, pervasive cultural characteristic: the level of trust inherent in the society.”  In our current global economic reality, he believes that “social capital represented by trust will be as important as physical capital.”Thomas L. Friedman in his book The World Is Flat put it this way; “Without Trust, there is no open society, because there are not enough police to patrol every opening in an open society.  Without trust, there can also be no flat world, because it is trust that allows us to take down walls, remove barriers, and eliminate friction at borders.”

Intuitively, we know that trust is required to have successful relationships, and successful relationships are required to have successful businesses.  In any business relationship, we have to have some level of confidence that others will deliver on their business agreements and commitments.  If we have no confidence in a potential business relationship we are not likely to enter into it.  When it comes to our businesses and our money, none of us wants to take a business risk with a person or organization that has no credibility or track record of results.

Beyond the intuitive level, there is well-researched hard evidence that high trust relationships are good for business.  For example, the 2009 Edelman Trust Barometer research www.edelman.com  showed that for low trust businesses, 77% of people refused to buy their products and services, 72% criticized them to a friend or colleague, and 34% shared negative opinions and experiences online.  In high trust businesses 91% chose to buy their products and services, 76% recommended them to a friend or colleague, 55% paid a premium for their products and services, and 42% shared positive experiences/opinions online. Obviously these customer actions would have a huge impact on the bottom line.  In the WorkUSA 2002 study the Total Return to Shareholders (TRS) over a three year time period was 20% for high trust companies and only 7% for low trust companies, an increase of about 300%.

Trust also affects employee engagement.  According to the 2008 Global Recognition Study, 35% of employees in low trust companies were engaged as compared to 65% in high trust companies.  If you add a culture of appreciation and recognition to the equation, engagement jumps to 63% for low trust companies and an amazing 91% for high trust companies with appreciation.

Trust is related to positive results in areas other than business.  Researchers from the Consortium on Chicago School Research reported on their investigations of Chicago school reform during the 1990s.  They found that in schools where teachers didn’t trust one another the schools had either flat or declining test scores, and both teachers and students were less satisfied with their experiences.  On the other hand, in schools where trust and cooperative efforts among adults were strong, scores were improving, students felt teachers cared about them, and they felt more challenged academically.

Kurt Dirks of Washington University examined the effect of NCAA basketball players’ trust in their leader on team performance.  He found that in the two teams trusting their coach the most, one was ranked top in the country for much of the season and the other played in the national championship.  On the other hand, the team with the lowest trust in their coach lost 90% of their games and the coach was fired at season’s end.

The evidence is undeniable.  Individuals and organizations who invest energy in successfully cultivating the social capital dimensions of trust and confidence with their constituents will reap the emotional, psychological, and financial benefits of their efforts. (end of Jason’s post.)

Under the theory of “What Can be Measured Can be Managed,” creating measurable standards of trust would appear to be the next logical step in building a business case for building trust.  According to Frank Sonnenberg, author of Managing With a Conscience,

In the twentieth century, a company measured success by the number of tangible assets (such as property, plant, and equipment) it posted on its balance sheet. In the Information Age, however, intangible assets rule the day. Intangible assets such as trust, creativity, speed, relationships, reputation, loyalty, employee commitment, brand identity, and the ability to adapt to change determine success.

Why track company performance based on trustworthy behavior? Because trust is an inherent element of optimism that buoys any economy, and companies that understand the correlation between trust and sustainable business create greater value for all stakeholders, in addition to “doing the right thing.” 

Trust Across America’s proprietary research confirms that the most trustworthy companies provide long-term benefits to all stakeholders, including shareholders. In November, 2010, our data identified 59 companies that met our benchmark standard for trustworthy business behavior.  The chart below is a graphic representation of the performance of the “Gold 59” from 1999- April 2011 vs. the S&P 500.

This group contains many “household” names like Aflac, Fed Ex, Lexmark and Cigna. Others are not as well known- Albemarle, Praxair, Ecolab and Lubrizol, which was acquired by Berkshire Hathaway earlier this year. But whether well known or unknown, they all share a common characteristic. They have integrated a culture of trustworthy business that benefits all stakeholders, including shareholders- representing the “best in breed” of sustainable business.

Charles Green, the Founder of Trusted Advisor Associates, sums up the case for building trust in business as follows.  “Reliance solely on economic and market-based tools works for mono-focus and short-terms; by contrast, trust scales as a management tool.  More deeply, trust itself is also built on extensive relationships over time. It is a natural way of doing business for those who believe in sustainability.”

Do you want to help us build the case for building trust?

Contact  Barbara Kimmel at barbara@trustacrossamerica.com or Jason Tapp at jason@trueaimconsulting.com

It seems like it is happening more frequently… those “accidental” billing errors imposed by companies… and I’m not referring to the pizza joint on the corner, but rather large and well known businesses that seem to think nothing of tacking on bogus charges, perhaps with the hope that only a small percentage of customers will notice, and the rest will  mistakenly pay these fees, much to the delight of the corporate coffer watchers and quarterly earnings manipulators.

In the past two weeks I have been on the receiving end of three corporate “scams.” Scam is an ugly and slanderous word, and I wouldn’t use it if I didn’t think it was accurate.

The first involved an estimated bill by a utility company (the actual bill was half, resulting in bill reduction of almost $300). The second offender was a “rent-a-car” company that imposed “phantom” gas charges, but could not produce any evidence of the actual gas used. The third was a large hotel chain that thought nothing of tacking on $32.00 in “honor bar” fees (you know- the jar of peanuts or package of M&M’s in the hotel room refrigerator), when, in reality, the honor bar was never accessed.

In the first and third instance, the extra fees were cancelled without a single question… almost too easily.  In the second case, two minutes of online research turned up an undercover investigation of this company’s deceptive and bogus gas charge practices. (I’m still working on resolving this one, as it is a bit more complicated. I did not rent the car directly. It was a service loaner from a “high end” auto manufacturer who was fixing my SUV. The interesting twist on this story is that the auto company released my personal credit card info to the rental company…but that’s a story for another discussion.)

And this brings me to Trust Across America’s metrics. As a followup to an article I wrote on the Role of Trust in Sustainabile Business, www.triplepundit.com/2011/07/role-trust-sustainable-business/, I decided to do a tiny study (of these 3 public companies) to see if there is a correlation between “good trust and good business” and what I found should not be surprising. Two of the three companies have below average aggregated trust scores. The third is slightly above average, but has a very low score in corporate integrity.  All three have at least one link that breaks the chain. The weak links are concentrated in corporate integrity and transparency- two of our five FACTS trust drivers- and certainly no surprise.

In conclusion, these are not companies that understand the benefits of trustworthy business behavior, nor have they adopted a culture of trust. In fact, they may believe that trust is not relevant to conducting good business. Unfortunately for them, as our world becomes more transparent, it will be more and more difficult for companies like these to sustain their business model. Oh well. I certainly won’t be sorry to see them go.

Trust Across America’s mission is to highlight companies that do the right thing.  This blog post is as close as we will come to reporting a scam. But let us know about your own corporate interactions, be they good or bad. Feel free to use actual names. We will be happy to provide some personal insight back to you regarding the company’s trust metrics. They must be public companies, and in our database.

www.trustacrossamerica.com/documents/offerings-reports/facts-audit.pdf

Trust Across America (TAA)  has set a standard for measuring trustworthy business behavior through our FACTS analysis, combining financial and non-financial metrics. TAA has been tracking the performance of the top companies based on our five FACTS drivers- Financial stability, Accounting conservativeness, Corporate integrity,Transparency and Sustainability.

Our proprietary research and external back-test of our universe of almost 3000 public companies confirm that the most trustworthy companies provide long-term benefits to all stakeholders, including shareholders. In November, 2010, our data selected 59 companies that met our “Gold Standard” of trustworthy business behavior.  The chart (link) below is a graphic representation of the performance of this group of companies since 1999 vs. the S&P 500.

Gold Company Performance

These Gold Standard companies are outperforming the S&P 500 by over 500% since 1999, and by approximately 35% since we began tracking them in November 2010.

This group contains many “household” names like Aflac, Fed Ex, Lexmark and Cigna. Others are not so well known- Albemarle, Praxair, Teco Energy and Lubrizol, which was recently acquired by Berkshire Hathaway.

But whether well known or unknown, they all share a common characteristic. They have adopted a culture of trustworthy business that benefits all stakeholders, including shareholders.

So while the news continues to be filled with stories about the lack of trust in business, companies actually can do good and be profitable at the same time.

This email exchange could be the “Poster Child” for how not to “do” customer service. Names have been deleted to protect the offender.

Me: Today I opened a box of (Name of Company) 12 Taco Shells. Much to my surprise, there were only 10 shells in the box. The UPC code is XXXXX XXXXXX. It seems like you have a quality control problem. My address is _____________ if you would like to send me the $2.39 that I paid for 12 taco shells.

The Company’s Response: Subject: RE: Taco shells

To ensure that our staff conducts itself in a manner that reflects the high regard that we have for our customers, we’ve notified the proper department of your complaint.

If you send the receipt or the proof of purchase with the attached Refund Request form, we will reimburse you for the objectionable product. In the meantime, I’m sending the enclosed coupons because we value your goodwill and would like to give you the opportunity to try our products again. If you have questions or comments in the future, please don’t hesitate to contact us.

We appreciate your time in bringing your concern to our attention and apologize for this problem.

Sincerely,

(Name of Company)
Customer Service Department

Me: Dear (Name of Company): There were no coupons attached to your email, only a refund form.

May I also suggest the following:

1.Change the word “complaint” to “inquiry”.
2.Change the word “objectionable” to “product in question”.
3.Do not make it difficult for customers who take the time to write to you to obtain coupons or refunds. A UPC code should be satisfactory.
4.Have an actual “person” sign your email responses.
5.Remember that without customers, you have no business 

Charles Green, founder of Trusted Advisor Associates issued a white paper yesterday summarizing the results of their Trust Quotient Quiz that has been taken by over 12000 people. It’s an interesting paper. Here are some of the highlights:

Women rated themselves as just slightly more trustworthy than men.

Higher scoring industries include medical care, retail, banking, real estate and consulting.

We tend not to trust those who seem erratic or inconsistent.

Skill mastery and knowledge don’t seem to help in building trust.

Trust CAN be taught.

Listening and empathizing are more important in building trust than an advanced degree.

For the complete white paper, click here: Read full paper

I am planning a large event and have had the opportunity to establish many new vendor relationships. This past week was particularly busy. Earlier today I was reflecting on some of the meetings I have had and how some businesses are very trustworthy and accountable and others, well let’s say, not so much. I have some simple, common sense advice on building trustworthy relationships in business for people who run small businesses or participate in the management of large ones.

1. Keep your word: If you say you will return a phone call, return it. If you schedule an appointment, keep it.

2. Listen to your customer’s needs: If you can’t meet those needs, don’t waste your time or theirs.

3. Be respectful: Return phone calls promptly. Be on time for meetings.

4. Be timely: Don’t make customers wait to hear back from you so they question whether you are still “engaged”.

5. Make it easy: Make sure your website and online ordering capabilities don’t turn customers away.

6. Make sure your advertising claims are accurate.

7. Anticipate needs in advance: Be proactive, not reactive. Address the questions the customer may not know (or forget) to ask.

8. Keep it simple: Do the hard work and make it easy for the customer.

9.Tell the truth: If you can’t meet a deadline or fill an order, be honest.

10. Engage with your customer: End every meeting and phone call with a simple question, “Is there any other way I can help you?”

Barbara Brooks Kimmel is the Executive Director of Trust Across America (www.trustacrossamerica.com)

Our first blog interview was conducted with Charlie Green who provided some excellent responses to the following questions. The complete interview can be read at: Complete Interview

1) Tell us a bit about your background, qualifications and expertise.
2) Trust Across America’s mission is to rebuild trustworthy behavior in America, starting with public companies. How would you generally define trustworthy behavior?
3) What are some of the specific components of trustworthy behavior in your opinion?
4) We all know that the erosion of trust is a big problem in corporate America. What are companies doing to combat this, and is it enough?
5) Is the “trust” climate in corporate America improving or worsening? What actions will turn things around?
6) Can you provide a few examples of companies that are doing the “right” thing in your opinion? What steps are being taken by these companies?

1. Trust is built over time but the process can be accelerated by acting in a beyond reproach manner.

2. Trust begets trust. Keep keeping your word.

3. If you want someone to trust you, show that you trust them first.

4. If someone says “trust me”, run as fast as you can.

5. It takes much more effort to rebuild trust than it does to build it the first time.

6. When in doubt, keep testing the trust (“Trust but verify”).

7. Trust is the union of many guiding principles including ethics, transparency, accountability and integrity.

8. Leaders, employees and customers control the public’s perception of trust in every business.

9. Trustworthiness can be measured both quantitatively and qualitatively, and while there will always be a margin for error, there is also always room for improvement.

10. As Charles Green at www.trustedadvisor.com likes to say “Trust your dog with your life, but not with your ham sandwich”. This applies to people as well.

Barbara Kimmel is the Executive Director of Trust Across America, a program of Next Decade, Inc. For more information please visit www.trustacrossamerica.com and listen in on our weekly radio show called Trust Across America at:
www.voiceamerica.com/voiceamerica/vshow.aspx?sid=1713