Center for Leadership and Change, Inc.
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The following is an excerpt from Smart Trust: Creating Prosperity, Energy, and Joy in a Low-Trust World by Stephen M. R. Covey and Greg Link

Smart Trust: The Ultimate Leadership Skill

We suggest that the ability to establish, grow, extend, and restore trust with all stakeholders—customers, business partners, investors, and co-workers—is the key leadership competency of the new, global collaborative economy. Without trust, we don’t truly collaborate; we merely coordinate or, at best, cooperate. It’s trust that transforms a group of people into a team.

Leaders Go First

In order to increase influence and grow trust in a team, an organization, or a relationship, someone has to take the first step. That’s what leaders do. They go first. They lead out in extending trust. In fact, the first job of a leader is to inspire trust, and the second is to extend it.

Bottom line, if we’re not inspiring and extending trust, we’re not leading. We might be managing or administering, but we’re not leading. We manage things; we lead people. And real leadership requires trust. As renowned leadership authority Warren Bennis put it, “Leadership without mutual trust is a contradiction in terms.”

Smart Trust leaders in all walks of life lead out in extending trust to others. In doing so, they build the capacity and confidence of those who are trusted. They unleash human potential and multiply performance. They inspire reciprocal trust in both directions—back to those who extended it and forward to others who could benefit from it. They help create high-trust cultures.

The Smart Trust Action of extending trust is based on the principles of leadership and empowerment. The opposite is to withhold trust, attempt to control others, and/or try to do everything yourself. Counterfeits include extending “false trust” (giving people responsibility but not authority or resources), extending “fake trust” (acting as though you trust people but then micromanaging and hovering over them), and “managing” or “administering” while thinking you’re “leading.”

When leaders don’t extend trust, people often tend to perpetuate vicious, collusive downward cycles of distrust and suspicion. As a result, they become trapped in a world where people don’t trust each other—where management doesn’t trust employees and employees don’t trust management; where unions don’t trust management and management doesn’t trust unions; where suppliers don’t trust partners and partners don’t trust suppliers; where companies don’t trust customers and customers don’t trust companies.

But when leaders take the lead in extending trust—in a relationship, on a team, or in an organization—negative, collusive cycles of distrust and suspicion can be broken, and the door can be opened to greater prosperity, energy, and joy for all stakeholders. 

Most of what we call Management consists of making it difficult for people to get things done.”—Peter Drucker

How Does a Leader Extend Smart Trust?

There is risk in extending trust. That’s why it takes courage. But there is also risk—often greater risk—in notextending trust. So how do we navigate through the decision-making process and determine whether or not to extend trust, and—if so—how much to extend and under what conditions?

Smart Trust identifies the two factors people have found most helpful in making Smart Trust decisions: the propensity to trust and analysis of opportunity, risk, and credibility. It’s the combination of the two that creates sound judgment.

Creating the highest synergy between these two factors is more of an art than a science. It takes assuming positive intent in others—unless there’s good reason to do otherwise. In takes determining when verification will enable trust—or when it will get in the way. It takes discernment and sometimes the willingness to take a leap of trust, sometimes even when “logic” may direct otherwise.

Smart Trust requires judgment. It’s an integral combination of the wisdom of heart and head—a synergy between the propensity to trust and analysis that is far greater than the sum of its parts. And there are times when others may not understand why we do what we do or the “Smart Trust” label we may put on it. Nevertheless, there are few experiences in life that provide the energy and joy we feel when we know we’ve made a significant difference in the lives of others by extending trust.

Successful organizations also lead out in extending Smart Trust to their employees.

At Ritz-Carlton, the impact of extending trust to employees is validated by anecdotal customer reports of heroic service, as well as by verifiable bottom-line results. Ritz-Carlton company research shows that a guest who is actively engaged with Ritz-Carlton and its staff spends 23 percent more money than one who is only moderately engaged. When employees produce a 4 percentage-point increase in customer engagement scores companywide, the Ritz-Carlton achieves an extra $40 million in incremental revenue. 

Creating a Smart Trust Culture

The summum bonum of leaders wisely extending trust in teams and organizations is the creation of a Smart Trust culture that generates prosperity, energy, and joy.

“Culture eats strategy for breakfast.”—Peter Drucker

Whole Foods CEO John Mackey believes the key is to get trust flowing in all directions:

Trust is optimized when it flows between all levels within the organization. Many leaders make the mistake of believing the key to increasing organizational trust is to somehow get the workforce to trust the leadership more. While this is obviously very important, it is equally important that the leadership trust the workforce.

When leaders lead out in wisely extending Smart Trust, their actions have a ripple effect that cascades throughout the team, and organization, and begins to transform behavior in the entire culture. Sometimes the acts of trust-extending leaders become legendary. For example, when CEO Gordon Bethune burned the Continental Airlines policy and procedure manuals in the parking lot and told his employees they would be trusted to use their own judgment in solving problems, that act became the symbol of Continental’s new culture of trust.

One reason some leaders don’t extend trust is that they think they will have greater control in a culture that depends on rules, policies, and regulations to cover every contingency. The relationship between trust and control is inverse: The greater the level of trust, the greater the actual control. French sociologist Émile Durkheim put it this way: “When mores [cultural values] are sufficient, laws are unnecessary; when mores are insufficient, laws are unenforceable.” In a low-trust culture, it’s literally impossible to put enough rules and policies in place to control people’s every action. Therefore, the best way to increase control is to create a high-trust culture.

A Smart Trust culture is a culture of immense momentum, possibility, and power. The increased freedom of expression, the autonomy, the enhanced trust, and the greater speed at which things can be accomplished make an enormous tangible, measurable difference in prosperity, energy, and joy. This is one reason Smart Trust is smart. It’s not built on the assumption that what we need is more rules, more regulations, and more referees; it’s built on the evidence that extending trust and creating a high-trust culture in which top performance is expected brings significantly greater dividends for stakeholders on every level. 

Stephen M. R. Covey and Greg Link are co-founders of CoveyLink & The Global Speed of Trust Practice with worldwide license partner FranklinCovey. They advise and train leading organizations, government agencies, and educational entities to transform toxic relationships, toxic teams, and toxic cultures to high-trust, high-performance, fully engaged growth engines.  In addition to “Smart Trust, they are the authors of “The Speed of Trust: The One Thing That Changes Everything.”

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