The 10 Laws of Trust

Building the Bonds That Make a Business Great

Joel Peterson

• Publisher: AMACOM
• Year: 2016
• eBook ISBN: 9780814437469
• Topic: Business
• Subtopic: Management
• Index: Business

Because of trust in leadership, in each other, and in the mission, a tiny company like John Deere grew into a worldwide leader. On the opposite spectrum, a lack of trust is what eventually sank the seemingly unsinkable corporation of Enron. A culture of trust for all companies large and small is invaluable. Trust turns deflection into transparency, suspicion into empowerment, and conflict into creativity. And what many have learned unfortunately is that no enterprise is too large or too successful to withstand a lack of trust within its walls.In The 10 Laws of Trust, JetBlue chairman and Stanford Graduate School of Business professor Joel Peterson explores how a culture of trust gives companies an edge. Consider this: What does it feel like to work for a firm where leaders and colleagues trust one another? Peterson has found that, when freed from micromanagement and rivalry, every employee contributes his or her best. Risk taking and innovation become the norm. In clear, engaging prose, highlighted by compelling examples, Peterson details how to establish and maintain a culture of trust, including:• Start with integrity• Invest in respect• Empower everyone• Require accountability• Keep everyone informed• And much more!As Peterson notes, "When a company has a reputation for fair dealing, its costs drop: Trust cuts the time spent second-guessing and lawyering." With this indispensable resource for businesses large and small, you will learn how to plant the seeds of trust throughout your organization--and reap the rewards of reputation, profits, and success!

LAW

1

START WITH PERSONAL INTEGRITY

THE WATCHWORD OF ANY high-trust organization is integrity—and it has to start with those at the top. Leaders in high-trust organizations must serve as archetypes of integrity, and not just at the office or during business hours. For an organization to develop durable trust among all team members, its leaders must be consistent and predictable, having integrated (a) private with public scruples, (b) competence with benevolence, and (c) action with utterance.

Building a high-trust organization, rather than relying on a vague, generalized sense of honor, requires working to establish integrity as its foundation. Without leaders who have integrity in the first place, a leader’s efforts will be perceived as hollow techniques aimed at fooling people into ceding power.

Some leaders try to compartmentalize their lives into private and public arenas, filing violations of personal trust under the “private” label. But no matter their competence or charisma, leaders who violate commitments to family, friends, or associates are unlikely to build enduring organizational trust. Personal corruption cannot comfortably coexist with long-term public trust. Even those in the nether regions of an organization will eventually figure out whether their leaders act in a manner consistent with their words and with the stated values of the organization.

The gap between what a leader says and does is at the heart of trust. For an example, one need look no further than the highly publicized breach of trust involving David Petraeus. Over the course of four decades, he became a decorated four-star general in the US Army, in command of all coalition forces in Iraq. Next, he was director of the CIA—confirmed unanimously by the Senate—and was even mentioned as a potential presidential candidate. And then it was over. In 2012, barely a year into his CIA tenure, he resigned under pressure, citing an extramarital affair and his mishandling of classified information.

Petraeus’s downfall occurred because of the disconnect between how he behaved privately and who he said he was publicly. His story is a particularly sad instance of the loss of legacy because of a private violation of trust. It proves how fragile—but vital—the connection is. Because Petraeus gave so many years of capable service, he comes as close as anyone to being an exception to the First Law of Trust: being trusted in one arena while violating trust in another. But even one so esteemed professionally could not maintain his leadership once the discontinuity between private and public integrity became apparent. As ABC News anchor Diane Sawyer noted, “People will forgive you for not being the leader you want to be—but never for not being the leader you claim to be.”

Meeting the high-integrity test does not depend only on perceived benevolence. Because one can have a good heart and still be utterly disorganized, unpredictable, or unreliable, the second element of integrity is even more central to trust. This is the requirement that we complement our benevolence with competence. We’ve all known people with high character who can’t seem to figure out how to be on time, to complete assignments when due, or to carry out simple tasks such as double-checking what doesn’t matter to them personally. While we might trust them to sign checks for us because they would never think of being dishonest, we can’t trust them to be our CFOs or lawyers.

Growing up as the child of a homemaker and research scientist, I absorbed lessons in both of these elements of integrity from my parents. My mother was as kindhearted as anyone I’ve known, passing the benevolence test with flying colors, never doing anything to deceive anyone. My father, though not as reliably kind, was deeply competent and capable of delivering results. Neither had mastered the other’s chief reason to be trusted. I could count on my mother’s heart—but not always her ability to deliver. I could count on my father’s reliability—but not always on his benevolence. Each had an incomplete version of the integrity required to build a high-trust enterprise.

In many organizations, integrity is emphasized without sufficient focus on both notions. But building an enduring trust within an organization requires not only integrating private with public honor and benevolence with competence. It also requires removing the gaps between what we say and what we do.

In other words, organizations will not, and should not, trust leaders if they’re merely virtuous. Followers also need to count on leaders for competent execution, and for little space between action and utterance. In the business world, for example, Starbucks employees tend to trust their place of employment not only because they feel it’s a virtuous company but also because they believe that its CEO, Howard Schultz, does what he says he’ll do, be it about things like the primacy of health insurance or about the company’s commitment to hiring veterans.

All trust begins with character. And because character embodies both forms of integrity, what follows are ways to think about personal integrity as an underpinning of trust. Although these observations may seem intuitive, you might be surprised to learn that some leaders view them as trivial, having little to do with realpolitik in the boardroom, in the workplace, or during negotiations. The politics of power, rather than integrity, is, in their view, the coin of the corporate realm.

While no one can claim perfect congruence between private and public actions, or complete reliability and predictability around results, there’s a continuum along which we all operate. The further we get from any of these dimensions of integrity, the more likely we are to rely on carrots and sticks and other more primitive applications of power to achieve objectives. And the closer we get to integrity in all of its dimensions, the more likely our organizations will enjoy the benefits of self-directed employees, innovation, and lower turnover.

In seeking the kind of integrity on which leaders can build organizational trust, they should always remember to:

1. Sync words with actions. Individuals who run things must demonstrate the way they want business to be done as well as the way they want others to be treated. Talking alone won’t cut it. Leaders must embody the spirit they want the team to adopt. Just as people pick up on phoniness and instinctively spot say-do gaps, they recognize—and trust—authenticity. Just as kids see parents as examples—for good and bad—team members watch leaders for cues.

Incongruence spreads, first to other individuals, then to pockets within a company, and finally to the organization as a whole. So, when leaders miss an opportunity to exemplify core values, they sow distrust. Whatever else observers criticized in Steve Jobs’s management style, nobody doubted his commitment to design, even at the risk of market share. Other foibles earned him a reputation as an imperious boss, but many eventually came to trust him, in part because he predictably spent time, money, and energy on exactly what he claimed were his values.

George Steinbrenner, the late owner of the New York Yankees, preached the values of philanthropy and kindness. He, too, could be a management bully. But when Steinbrenner died in 2010 at age eighty, scores of people came forward to tell of his private acts of generosity: unpublicized scholarships for poor children, quiet donations to the families of fallen police officers, letters and visits to past employees and strangers in need of support. Those kinds of quiet actions—backing up his words—carry continuing power for the Yankee and Steinbrenner brands. While generosity does not equal the kind of integrity required by the First Law of Trust, Steinbrenner showed a certain measure of consistency between values and actions upon which trust could build.

2. Avoid hypocrisy. A leader can’t build trust on skills, charisma, and expertise alone. Trustworthy leaders show respect, consider the welfare of others, and keep their word. This doesn’t end at the close of the workday; leaders who can’t manage commitments outside the office are far less likely to establish enduring trust with colleagues, suppliers, or customers. If they pretend to have virtues or competencies they don’t possess, leaders risk creating cynicism and a loss of trust. Better to promise less and deliver more in order to build trust.

3. Work on establishing integrity as a habit. Leaders who strive to do the right thing under any circumstance have developed the discipline to consider the long run, to subordinate themselves to the mission of the enterprise, and to act as a fiduciary for others. Trustworthy leaders are intentional about “fixing things” in themselves, about receiving feedback, and about making changes based on that feedback. Just as a great mechanic keeps a race car in top condition, high-trust individuals monitor and tune their behavior, striving to do better.

In my own case, I decided early on to turn my values into reality before the temptation to violate them appeared. I wrote out a plan to reserve time with family. Shortly after I joined Trammell Crow Company, the founder called me at home on a Sunday, asking me to come to the office to discuss a deal. Although flattered, I nervously informed him that I had reserved Sundays for family and would see him as early as he wanted on Monday morning. This boundary established to myself, and to my boss, the values I intended to keep.

ANYONE WANTING TO BUILD a high-trust organization must start by looking in the mirror. Doing so will inevitably reveal shortcomings—breaches of integrity—where our actions don’t reflect our words, or our private behavior isn’t up to our public image. Even if you’re not where you want to be, team members who see leaders working on shortcomings will tend to trust them, and enterprise-wide trust will grow.

LAW

2

INVEST IN RESPECT

PERSONAL INTEGRITY MEANS DOING what you say you’re going to do, and that your actions will consistently reflect your principles, publicly and privately. While personal integrity is the foundation for a culture of organizational trust, leaders must also be looking to spread trust across an organization. How? By practicing the art of respect—for everybody, in ways large and small.

Respect is the currency of trust, the way it’s exchanged among people. Like any attitude or behavior, respect requires focus, awareness, and practice. The trust that grows out of respect depends more on the value placed on individuals than on management techniques or policy statements. And it is reflected in simple, daily interactions.

Nothing shows greater respect for others than to listen to them without agenda. That means listening not to agree or disagree (or to stall as you prepare a response), but simply to understand. The late author and thought leader Stephen R. Covey, one of the most effective leaders I’ve worked with, suggested you should always try to “capture” another person’s point of view, especially in a potential disagreement. Covey would begin, “If I understand what you’re saying,” and then describe the opposing viewpoint to that person’s satisfaction. Powerfully demonstrating respect, he could often state the other position better than the other person had. From this model, I’ve learned to ask people, “What alternatives did you consider when coming up with your recommendation?” Listening carefully, I’ve learned to withhold judgment until I’ve understood how they thought about a problem, not just how they decided to solve it. Many have told me that this is a sign of respect, and one that forces them to prepare carefully.

Leaders further demonstrate and encourage respect when they empower team members, celebrate their contributions, and help them learn from missteps. In his book Social Physics: How Good Ideas Spread, Professor Alex “Sandy” Pentland of the Massachusetts Institute of Technology, a computer scientist who directs the school’s Human Dynamics Laboratory, wrote:

“It is not simply the brightest who have the best ideas—it is those who are best at harvesting them from others. It is not only the most determined who drive change—it is those who most fully engage with like-minded people. And it is not wealth or prestige that best motivates people—it is respect and help from peers.”

Showing respect in an organization doesn’t center only on those in the executive suite. You’ll know you’ve got a high-trust organization when you find leaders showing respect to people at every level, especially those from whom they stand to gain the least. Watch chairman and CEO Marc Benioff walk around the vast offices of Salesforce and you’ll see that he’s engaged with his people. He knows details—not just about board members and major shareholders, but also about receptionists and drivers in different cities.

Trusted leaders show respect by seeking feedback from individuals outside their inner circles. They remember names of colleagues and even the names of their colleagues’ children and friends—not to score points, but because they care. Sincerity matters. There are many traditional ways to show respect to colleagues, such as recalling birthdays or anniversaries. But here’s another thought: Make the boilerplate “How are you doing?” mean something. Most recipients of that throwaway question have been trained to believe you don’t really care how they’re doing. So try to develop such follow-up responses as, “I’ve noticed that you’ve been away/under pressure/quieter than usual.” Likewise, instead of asking, “Is there anything I can do?”—which will seldom elicit a request for help—query, “Could I take something off your plate?” or, “Would taking a day off help?”

At Google headquarters, leaders foster interaction up and down the ranks, a form of encouraging cross-team respect. In its various on-campus cafeterias, though the food may be gourmet, the tables are decidedly high school: long and narrow, with too little space behind the chairs. It’s intentional. That way, you’ll be forced to bump into somebody when you sit down or get up—and thereby interact with a colleague, perhaps a new one. Consultants call such workplace design serendipitous interaction; at Google, employees call it “the Google Bump.”

At HP, back in the day, management let engineers take equipment home to tinker with; they didn’t need to ask permission or fill out forms in triplicate. Management showed respect by trusting them to return the equipment, which in turn cemented a stronger bond of trust at HP. This is an example of what Stanford professor Rod Kramer calls “measured trust”—“small” and “imaginative” acts that “foster reciprocity.” Writing in the Harvard Business Review, Kramer noted that such policies “sent a strong signal that the company trusted employees, yet involved relatively little risk, because the policy was tied to employees’ not abusing the trust.”

Just as you can’t fake character or integrity, you can’t feign respect. Too many leaders, be they a state senator, a neighborhood shopkeeper, or a bank manager, trip up by simply failing to be respectful.

A textbook example of what respect doesn’t look like happened at Hewlett-Packard in 2007, when the company acknowledged it had spied on its own b...

Table of contents

• Cover
• Title
• Dedication
• Contents
• Foreword
• Introduction
• The Power of Trust
• Law 1: Start with Personal Integrity
• Law 2: Invest in Respect
• Law 3: Empower Others
• Law 4: Measure What You Want to Achieve
• Law 5: Create a Common Dream
• Law 6: Keep Everyone Informed
• Law 7: Embrace Respectful Conflict
• Law 8: Show Humility
• Law 9: Strive for Win-Win Negotiations
• Law 10: Proceed with Care
• Restoring Trust
• Acknowledgments
• Index
• Free Sample Chapter from Leading at the Edge
• About Amacom
• Copyright