"Trust is the glue of life..."

I've been posting about the so-called five Waves of Trust, a concept developed by Stephen M.R. Covey in his book, The Speed of Trust: The One Thing That Changes Everything.  I introduced the topic in a post from last November, "Change happens at the speed of trust..."  Again, Covey compares trust to the well-known ripple effect, in which waves start out small at the center and become larger and more powerful as they move and expand outward.  He describes five "waves of trust" to drive home the point that trust begins with oneself and expands outward to relationships, organizations, the market, and society.  

Covey said, "Trust is the glue of life."  Today, we will cover the third, fourth, and fifth Waves of Trust, which Covey collectively describes as "Stakeholder Trust":

The third Wave of Trust is Organizational Trust.  Here, Covey refers to a concept called the "Economics of Trust" - he is simply using the analogy of a bank.  Organizations (and to be honest, the analogy works for individuals as well), are always paying a "Trust Tax" or earning a "Trust Dividend".  If the dividends are greater than the taxes, the organization builds up its "Trust Account Balance."  Organizations build up their account balance based upon how well they align systems, processes, and culture.

Covey describes seven common "Trust Taxes" that create unnecessary bureaucracy, red tape, inefficiency, and suspicion.

1. Redundancy

2. Bureaucracy

3. Politics

4. Disengagement

5. Turnover

6. Churn

7. Fraud

The management theorist Laurence Peter (who is most famous for describing the eponymous "Peter Principle") said, "Bureaucracy defends the status quo, long past the time when the quo has lost its status."  

On the dividend side, Covey described seven common "Trust Dividends" that foster open communication, collaboration, efficiency, and speed to action ("Speed of Trust").

1. Increased value

2. Accelerated growth

3. Enhanced innovation

4. Improved collaboration

5. Stronger partnering

6. Better execution

7. Heightened loyalty

Organizations should focus on increasing the Dividends and decreasing the Taxes!  I won't spend as much time on the fourth and fifth Waves of Trust, but I do not wish to diminish their importance.  The fourth Wave of Trust is Market Trust and refers to the level of trust between the organization and its customers and stakeholders.  Market Trust describes an organization's reputation in the marketplace.  If an organization consistently delivers  on its promises, Market Trust will increase.

The fifth and final Wave of Trust is Societal Trust and refers to the level of trust within the community.  Organizations have an important role to play on building mutual trust within the community.  He refers to the concept of "Corporate Social Responsibility".   Organizations should act as good citizens within broader society by protecting the environment, investing in communities, and dealing fairly with stakeholders.  Integrity and ethics are key here.

Overall, I thought Covey's book was superb, and I highly recommend it.  Given the widespread (and growing even more so) lack of trust in society today, I think we can learn a lot from Covey's book.  Carol Stephenson wrote an excellent article on trust entitled "Rebuilding trust: The integral role of leadership in fostering values, honesty and vision" (unfortunately, I can't find a link to the article on the Internet).  I will conclude with what she thinks about leadership and trust.  She said, "A leader must do three things.  First, leaders must not only talk about their ethical values, they must live those values - every day - and in every action they take.  Second, leaders must create a climate of trust and compassion based on open communication.  And third, leaders must embrace a strong vision or purpose for their organization, and that vision and purpose must take into consideration both the economic and the social impact of the business."  And with that, you have the Five Waves of Trust in a nutshell.