Orange County Register

The instructions, "trust, but verify," haven't exactly been an easy sell to consumers.

A recent survey commissioned by two Chicago-area business schools found that only 19 percent of respondents believe in the financial system.

This cagey reality has a way of perpetuating itself, says Stephen M.R. Covey, author of "The Speed of Trust" and son of leadership guru Stephen R. Covey. But, he adds, it can just as speedily turn around if leaders speak truth to stakeholders.

Next week, Covey takes to 16 U.S. cities - including Irvine on Wednesday - to make his case (click for registration information). Here, he offers a glimpse into what he sees as the remedy to a worldwide crisis of confidence.

Q: On a recent father-son speaking tour, your dad said "If leaders do not operate based on principles, they lose their voice, their power." How integral of a principle is trust in this equation?
A: I like to say you can't talk yourself out of a problem that you behaved yourself into. When people do put aside or ignore or forget their principles, they end up behaving in ways that cause others to lose trust and cause them to lose their sense of moral authority. Not only does that have a social impact, but I'm arguing that it has an economic impact as well. Trust is not merely some nice soft social virtue; it's much more than that. It's a hard-edged economic driver, and we see that right now playing out in the marketplace at large. Financial markets work because of capital and liquidity, but those two elements alone are not enough. The government has stepped in to help out with liquidity, but you can't artificially pipe in trust.

That's the macro level. You can make the same argument on a micro level, the individual relationship level. We have to behave ourselves out of the problem we behaved ourselves into.

Q: As the recession drags, un-trust seems to feed on itself. Is that how you see things?
A: Yes, you're exactly right. The danger is that it'll be a perpetuating downward cycle where distrust and suspicion create more of the same. We see scandals and gross violations, and we start to become more suspicious, more jaded, and more cautious because we want to protect ourselves, naturally. But when we lead off with distrust, people tend to reciprocate. It does feed upon itself, and it's contagious. You get to where there's frenzy. That happens to relationships, to teams, to companies, to markets, and to economies. The interesting thing is that it can also work in the opposite direction. Trust can build a virtuous, upward cycle where it becomes the norm, the standard. When someone behaves outside of the bounds, culture brings them back in... It either gets rid or reforms. We've seen companies achieve that state of a high-trust culture.

Q: Where has this high-trust culture taken root?
A: There's a Fortune 500 company in the high-tech sector whose name I don't have permission to use. They've really embraced this whole notion of the speed of trust as not some nice soft social virtue, but rather a real economic driver. It's permeated into their culture. They recently had to a massive reorganization, which included significant layoffs because they had to get their cost structure more aligned with what was happening with their current revenues. They've not been immune to layoffs in the past, but this time they approached it quite differently. They wrote us a letter and said, "If there ever could be such a thing as a healthy reduction of force, we just experienced it." They described how they confronted the economic reality, but were really transparent, sought to work out the solution with employees. They talked straight, didn't try to manipulate or twist things, and treated everybody with such respect that the survivors came out prouder of their organization than they had been before.

Q: That's one company, but what about the wider reality?
A: Data shows that trust in business has reached a low point, even lower than after Enron. There is a crisis of trust in business, in the world, and restoring trust doesn't happen until we do what we say we're going to do. We know it and everyone knows it. And it's so basic, so foundational, so common sense. But common sense isn't always practiced, and that's what's happened.

I'm not advocating a blind trust, where you just indiscriminately trust anybody and everybody. That's being gullible, not smart. I'm not a Pollyanna about this, but I'm also saying don't swing the pendulum too far in one direction, where because you've been disappointed or let down that you no longer trust anybody. Some managers do that; they say you can't trust anybody but yourself because it's too risky. Well, there is a risk in trusting, but there's also a risk in not trusting. Look at what happens when there's distrust, how it creates more bureaucracy and politics and disengagement and turnover and fraud. Trust, but verify.

Q: Since publishing the book, what have you personally learned about trust?
A: I've seen really how fast this whole thing works. Someone asked me if I foresaw this financial crisis. I said "no," and their follow-up was, "were you surprised by the consequences?" And my answer to that was also "no." It just kind of verifies that trust really does make the world go around.

The most remarkable thing is that I used to have to spend a lot more time making the case for trust; it was seen as a soft, cuddly idea. Today, people see it more clearly. It's right in front of them.

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