Trust always affects two outcomes - speed and cost. When trust goes down, speed will also go down and costs will go up. When trust is up, speed goes up and costs go down.
Covey promotes the concept of five waves of trust. The five waves of trust are derived from the "ripple effect" metaphor that graphically illustrates the interdependent nature of trust and how it flows from the inside out.
1. Self Trust - having credibility by having confidence in ourselves and having the ability to inspire trust in others. This goes beyond "ethics" and explains why personal credibility is the foundation of all trust. Covey goes into great detail about each of the four Cores of Credibility, helping us understand more about what they are, why they are vital to credibility and trust, and how we can improve them in a way that increases trust on every level from the inside out.
Core 1: Integrity (Character)
Core 2: Intent (Character)
Core 3: Capabilities (Competence)
Core 4: Results (Competence)
2. Relationship Trust - having a consistent behavior in order to establish and increase the "trust accounts" we have with others.
Here, Covey gives us the 13 Behaviors that significantly enhance our ability to establish trust in all relationships. They are powerful because they are based on principles that govern trusting relationships. They grow out of the four Cores. They are actionable, and they are universal.
3. Organizational Trust - By having alignment, leaders can generate trust with all kinds of organizations by creating structures, systems and symbols of organizational trust. In this section, Covey lists seven symbols that represent a low-trust organization (taxes) and seven symbols that represent a high-trust organization (dividends).
The 7 Low-Trust Organizational Taxes(tm) are:
Redundancy: Redundancy is unnecessary duplication. A costly redundancy tax is often paid in excessive organizational hierarchy, layers of management and overlapping structures designed to ensure control.
Bureaucracy: Bureaucracy includes complex and cumbersome rules, regulations, policies, procedures and processes. One estimate put the cost of complying with federal rules and regulations in the U.S. alone at $1.1 trillion more than 10 percent of the GDP.
Politics: Office politics divide a culture against itself. The result is wasted time, talent, energy, and money. In addition, they poison company cultures, derail strategies and sabotage initiatives, relationships and careers.
Disengagement: Disengagement occurs when people put in enough effort to avoid getting fired but don't contribute their talent, creativity, energy or passion. Gallup's research puts a price tag of $250 billion - $300 billion a year on the cost of disengagement.
Turnover: Employee turnover represents a huge cost, and in low-trust companies, turnover is in excess of the industry standard - particularly of the people you least want to lose. Performers like to be trusted and they like to work in high-trust environments.
Churn: Churn is the turnover of stakeholders other than employees. When trust inside and organization is low, it gets perpetuated in interactions in the marketplace, causing great turnover among customers, suppliers, distributors and investors. Studies indicate the cost of acquiring a new customer versus keeping an existing one is as much as 500 percent.
Fraud: Fraud is flat out dishonesty, sabotage, obstruction, deception and disruption - and the cost is enormous. One study estimated that the average U.S. company lost 6 percent of its annual revenue to some sort of fraudulent activity.
The 7 High-Trust Organizational Dividends(tm) are:
Increased value: Watson Wyatt shows high-trust organizations outperform low-trust organizations in total return to shareholders by 286 percent.
Accelerated growth: Research clearly shows customers buy more, buy more often, refer more and stay longer with companies they trust. And, these companies actually outperform with less cost.
Enhanced innovation: High creativity and sustained innovation thrive in a culture of high trust. The benefits of innovation are clear - opportunity, revenue growth, and market share.
Improved collaboration: High-trust environments foster the collaboration and teamwork required for success in the new global economy. Without trust, collaboration is mere coordination, or at best, cooperation.
Stronger partnering: A Warwick Business School study shows that partnering relationships that are based on trust experience a dividend of up to 40 percent of the contract.
Better execution: FranklinCovey's execution quotient tool (xQ) has consistently shown a strong correlation between higher levels of organizational execution and higher levels of trust. In a 2006 study of grocery stores, top executing locations had significantly higher trust levels than lower executing locations in every dimension measured.
Heightened loyalty: High-trust companies elicit far greater loyalty from their primary stakeholders than low-trust companies. Employees, customers, suppliers, distributors and investors stay longer.
4. Market Trust - establish and maintaining a reputation with business partners outside the organization, building trust and loyalty.
Build your brand (your reputation), and thereby your trust in the marketplace, by applying the 4 Cores and the 13 Behaviors.
5. Societal Trust - creating value for others and society at large by the contribution that is made or by "giving back".
The overriding principle of societal trust is contribution. The principal of contribution is the intent to create value instead of to destroy it, to give back instead of to take and to be a responsible global citizen.