Building trust is central to building a great business. For companies to grow they need to earn the trust of their clients, partners, and the community at large. Unfortunately, many companies are failing to earn that trust, and confidence in business integrity is at an all time low. In fact, recent reports calculate that fewer than 26 percent of individuals have trust in the financial systems at the foundation of business.
Despite the downward trend in building and maintaining trust in business, there are plenty of examples of how to get it right. Warren Buffett made news recently when he and Charlie Munger revealed hiring trustworthy leaders is a central component of their growth strategy at Berkshire Hathaway (BH). Given the collective size, diversity, and success of their portfolio of companies, BH offers many company leaders a path worth following.
Buffett and Munger clearly understand the simple and powerful truth—trust is built from the inside out.
BH companies build a culture of trust among their employees who then extend that culture to clients, owners, and the community. Once hired, BH steps back and lets these trustworthy managers do their job. Working from the inside out, this approach is in stark contrast to many companies that “double-down” on centralized compliance measures that slow decision making and increase costs. All too often, centralized compliance strategies fail to produce cultures of trust and integrity. The lack of trust eventually extends to customers and the community at large.
On a daily basis, we see examples of ethics issues in business. Recently, the public learned that Snap Chat was dishonest to their customers about images saved on their servers. This latest example joins the growing number of ethics violations by financial companies, who now are paying record fines for illegal activity.
So what can business leaders do to build a culture of trust? In addition to hiring trustworthy people, leaders can take the following steps:
- Set clear expectations and regularly reinforce integrity as the basis of all activities
- Ensure proper and adequate training
- Have zero tolerance for any activity “close to the line” on ethics
- Include values in performance management tools
- Align compensation plans with values
I believe Buffett and Munger’s success stems as much from who they are as what they do. Specifically, I believe they have developed a deep level of self-understanding that enables both leaders to build trusted relationships and set the tone that fosters trust in their companies.
In the book Building Trust, authors Robert Solomon and Fernando Flores offer an insightful view on what they call authentic trust. They assert that the ultimate question is not who to trust, but how to trust. They contend that the ability to trust comes from inside an individual.
To Solomon and Flores, trust is “an emotional skill, an active part of our lives that we can build and sustain with our commitments, emotions and integrity.” The key to building the capacity to trust, they say, comes with self-understanding.
So how can business leaders develop self-understanding to build a culture of trust? In my experience, this insight comes when we make five choices:
- Be present and focused on the here and now
- Be generous with others
- Be grateful for the opportunities in front of you
- Be accepting of the reality of what is
- Be still and learn to listen to your own voice
Creating a culture of individual accountability—through the development of insight—is the key to rebuilding trust. When individuals throughout an organization are hired, recognized, trained, compensated to act ethically, and trusted with authority to make decisions that are connected to their values and who they are, they operate with an elevated level of intensity and commitment where speed and quality are the byproducts and growth is the result.
A culture of trust is the key to building a great business and it must be built from the inside out.