The Speed of High(er) Trust Leaders: Part 1

Trust is vital for leadership, fostering unity toward shared goals. FranklinCovey's Leading at the Speed of Trust highlights trust as measurable, emphasising integrity, moral authority, capability, and results through 13 actionable behaviours. While trust reduces costs and enhances agility, its complexities require addressing relational and contextual factors for sustained effectiveness.

If there is one certainty about the future, it is that the future is uncertain. This perhaps represents the key challenge all leaders face—getting people to unite to pursue a common goal in an uncertain world. This is true whether leaders are trying to galvanise a nation behind their vision or simply implore a team to achieve this quarters targets. If they cannot get followers to trust in their leadership, it is unlikely they will achieve their goals.

You may be deceived if you trust too much, but you will live in torment if you don't trust enough.

Frank Crane

For this reason, trust is frequently lauded as an organisational asset, underpinning cooperative behaviour, reducing transaction costs, and promoting swift decision-making. FranklinCovey's Leading at the Speed of Trust program, based on Dr Stephen M.R. Covey's book The Speed of Trust: The One Thing That Changes Everything, posits that trust is both measurable and actionable. Leaders, the program suggests, can implement specific trust-building practices to achieve a 'trust dividend'—enhanced efficiency and lowered costs. Dr Covey's core thesis is that trust transforms organisations by reducing the need for extensive oversight, thereby increasing speed and cutting down administrative costs. However, a more nuanced examination reveals that trust's role in organisations is deeply complex, as it encompasses organisational structures, cultural norms, and intricate relational dynamics that challenge the program's rather mechanistic approach.

Key Strengths and Underlying Assumptions

The program revolves around Dr Covey's definition of trust:

Trust is confidence born of the character and the competence of a person or an organization. The opposite of trust is suspicion.

While character has been explored across a number of disciplines—philosophy, psychology, leadership to name a few—a consistent conceptualisation is that character is a manifestation of traits that are consistent across time and situations. Building on this base, the program identifies four cores of credibility that leaders must demonstrate to establish trust:

1. Integrity: Acting with honesty, transparency, and consistency.
2. Moral Authority: Demonstrating a strong sense of purpose, values, and ethics.
3. Capabilities: Possessing the skills, knowledge, and expertise necessary to lead.
4. Results: Delivering tangible results and outcomes.

These four cores unpack into 13 behaviours that high-trust leaders exhibit:

1. Talk Truthfully: Be honest, transparent, and straightforward. Avoid misleading or manipulating; communicate directly, ensuring clarity and openness.
2. Demonstrate Respect: Show genuine care and consideration for others. Treat people with dignity, especially those who may not have authority or power in the organisation.
3. Create Transparency: Be open and authentic about motives, agendas, and information. Operate in a way that is easy for others to see and understand, eliminating hidden motives.
4. Right Wrongs: Acknowledge mistakes and take accountability. Make sincere apologies and take action to correct errors without blaming others or hiding the issue.
5. Show Loyalty: Speak positively about others when they are not present and avoid gossip. Protect others' interests and give credit freely, fostering a loyal environment.
6. Deliver Results: Consistently achieve goals and meet expectations. Demonstrating competence and accountability reinforces trust as people rely on tangible outcomes.
7. Get Better: Continuously improve and learn. Seek feedback and proactively enhance skills, demonstrating adaptability and a commitment to growth.
8. Confront Reality: Face difficult situations, acknowledge challenges, and tackle issues head-on. This builds trust by dealing with problems directly rather than ignoring or deflecting them.
9. Clarify Expectations: Ensure that expectations are clear, mutually understood, and agreed upon. Prevent miscommunication by setting clear objectives and discussing deliverables.
10. Practice Accountability: Hold oneself and others accountable for results. Follow through on commitments and encourage others to take responsibility for their actions.
11. Listen First: Listen actively and empathically before offering advice or responding. Demonstrating understanding builds trust by showing respect for others' perspectives.
12. Keep Commitments: Fulfill promises and commitments reliably. Honour your word consistently to establish reliability and trustworthiness.
13. Extend Trust: Empower others by extending trust to them, which can encourage confidence and initiative. Use discernment in trusting others but avoid being overly cautious.

Case Study: Berkshire Hathaway's Acquisition of McLane Company

Perhaps the mic drop moment in the Speed of Trust program for the power of trust is the Berkshire Hathaway case study. In 2003, Warren Buffett's Berkshire Hathaway acquired McLane Company from Walmart in a transaction noted for its simplicity and speed. The acquisition, completed after a two-hour meeting, relied primarily on the trust established between Buffett and Walmart's leadership, eliminating the typical extensive legal procedures. Buffett's approach exemplifies Dr Covey's notion of high-trust transactions, where trust reduces transaction costs and enables rapid decision-making.

For several years, I have given my vote to Wal-Mart in the balloting for Fortune Magazine's "Most Admired" list. Our McLane transaction reinforced my opinion. To make the McLane deal, I had a single meeting of about two hours with Tom Schoewe, Wal-Mart's CFO, and we then shook hands. (He did, however, first call Bentonville). Twenty-nine days later Wal-Mart had its money. We did no "due diligence." We knew everything would be exactly as Wal-Mart said it would be – and it was.

Warren Buffett

The Berkshire Hathaway-McLane acquisition ($1.45 billion USD, ~$3.5 billion AUD in today's money) serves as an instructive example of trust-based efficiency but also underscores the situational dependencies of trust. The transaction was feasible due to Walmart's established reputation and Buffett's relationship with its executives—conditions not universally applicable in all business contexts. While the case illustrates the potential of trust to facilitate high-stakes decisions, it also highlights the limitations of a generalised framework, suggesting that successful trust-based interactions almost invariably depend on pre-existing relational capital. Hot dog vendors notwithstanding.

The mention of hot dog vendors is a reference to the second case study used in the Speed of Trust program, in which the example of a hot dog vendor who speeds up sales and increases revenue by allowing customers to "choose their own change". For the casual observer, this seems to be a high trust relationship, and thus a second mic drop event for the power of trust. Certainly, it is an example of a trust-building process, specifically 'calculative', in which trustor calculates the costs and rewards of a target acting in an untrustworthy way. In the case of the hot dog vendor, the calculation is that the rewards would outweigh the cost of theft. However, this only worked because the vendor was a sole trader (Owner, Director, and Manager), in a more governance rich environment such options are generally not on the table.

This all sets the scene for the value of high trust organisations, which can be distilled into three key concepts.

1. Trust as a Strategic Lever in Organisations

Dr Covey underscores the role of trust to reduce bureaucratic controls and promote agility. This assertion is supported by research highlighting trust's capacity to reduce monitoring costs and reliance on formal control mechanisms. Trust is associated with lower transaction costs and increased cooperative behaviour, suggesting that Dr Covey's emphasis on trust is well-founded. Trust can also create what Dr Covey describes as a 'high-trust culture', allowing for seamless collaboration and diminished administrative expenses.

2. Behavioural Approaches to Trust-Building

Dr Covey advocates actionable trust-building practices, such as demonstrating transparency and integrity, as a means to cultivate trust. Roger Mayer, James Davis, and David Schoorman proposed a model that aligns with Dr Covey's view, identifying behaviours such as consistency and reliability as crucial to fostering trust in leadership. Empirical studies confirm that leader actions—particularly those reflecting openness and accountability—have a direct impact on trust perceptions. Most particularly a leader's behaviour (e.g., behavioural consistency, behavioural integrity, sharing and delegation of control, communication, and demonstration of concern). Dr Covey's focus on actionable steps offers practical guidance for leaders aiming to build trust through visible, consistent behaviours.

3. Trust's Role in Organisational Agility

The third key takeaway from the program is that trust fosters organisational agility by streamlining decision-making processes, thereby reducing delays commonly caused by hierarchical checks and balances. Dr Covey's principle is supported by literature on team dynamics, where trust is shown to enhance knowledge-sharing and cooperation, which are critical for responsiveness. 'High-trust' environments are noted to promote flexibility and collective problem-solving, essential components for effective team performance.

These key concepts only scratch the surface of what is delivered in the Speed of Trust program and why trust is not merely a desirable quality in organisations—but a strategic necessity that underpins effective leadership, streamlined operations, and organisational success. However, as illustrated by the nuanced dynamics of trust-building and the Berkshire Hathaway-McLane acquisition, trust is context-dependent, shaped by cultural norms, existing relationships, and organisational structures.

Thus, while the program provides a compelling framework for trust-building, it is not without its limitations. In part two of this article, I critically examine these limitations, their applicability in diverse contexts, and the challenges leaders face in operationalising trust within complex organisational systems.

Good night, and good luck.

Further Reading

Burke, C. S., Sims, D. E., Lazzara, E. H., & Salas, E. (2007). Trust in leadership: A multi-level review and integration. Leadership Quarterly, 18(6), 606–632.

Covey, S. M. R., & Merrill, R. R. (2008). The Speed of Trust: The One Thing that Changes Everything, New York: Free Press. (Original work published 2006)

Dirks, K. T., & Ferrin, D. L. (2002). Trust in Leadership: Meta-Analytic Findings and Implications for Research and Practice. Journal of Applied Psychology, 87(4), 611–628.

Fulmer, C. A., & Gelfand, M. J. (2012). At What Level (and in Whom) We Trust: Trust Across Multiple Organizational Levels. Journal of Management, 38(4), 1167–1230.

Schoorman, F. D., Mayer, R. C., & Davis, J. H. (2007). An Integrative Model of Organizational Trust: Past, Present, and Future. Academy of Management Review, 32(2), 344–354.

Whitener, E. M., Brodt, S. E., Korsgaard, M. A., & Werner, J. M. (1998). Managers as Initiators of Trust: An Exchange Relationship Framework for Understanding Managerial Trustworthy Behavior. Academy of Management Review, 23(3), 513–530.