Have you ever trusted someone—and gotten “burned?” Have you ever failed to trust someone and missed significant opportunities as a result? The practical issues with regard to extending trust are these: How do you know when to trust somebody? And how can you extend trust to people in ways that create rich rewards without taking inordinate risk?

When you’re dealing with trust, it seems there are two extremes. On one end of the spectrum, people don’t trust enough. They’re suspicious. They hold things close to the vest. Often, the only people they really trust are themselves. On the other end, people are too trusting. They’re totally gullible. They believe anyone, trust everyone. They have a simplistic, naive view of the world, and they don’t even really think (except superficially) about the need to protect their interests.

Extending trust can bring great results. It also creates the possibility of significant risk. The decision to trust or not to trust is always an issue of managing risk and return. So how do you hit the “sweet spot?” How do you extend trust in a way that maximizes the dividends and minimizes the risk?
Life is filled with risk. However, as noted historian and law professor Stephen Carter has observed: “Civility has two parts: generosity when it is costly, and trust, even when there is risk.” The objective, then, is not to avoid risk. In the first place, you can’t; and in the second place, you wouldn’t want to because risk taking is an essential part of life and leadership. Instead, the objective is to manage risk wisely—to extend trust in a way that will avoid the “taxes” and create the greatest “dividends” over time.

Learning how to extend what I call “Smart Trust” is a function of two factors—your propensity to trust and your analysis. “Propensity to trust” is primarily a matter of the heart. It’s the tendency, inclination, or predisposition to believe that people are worthy of trust and a desire to extend it to them freely. “Analysis” is primarily a matter of the mind. It’s the ability to analyze, evaluate, theorize, consider implications and possibilities, and come up with logical decisions and solutions.

As you think about these two factors—“propensity to trust” and “analysis”—how would you rate yourself on each? Do you typically tend to trust people easily—or do you tend to be suspicious and hold things close? Do you tend to analyze, theorize, and ponder over things—or do you give problems your cursory attention and then move on?

While extending trust to other people always brings with it some risk, the often greater risk that’s frequently ignored is what happens when managers don’t extend trust to others. These managers usually incur much larger taxes than they think—including bureaucracy, politics, disengagement, and turnover—and they often lose the dividends that flow from extending trust, such as innovation, collaboration, partnering and loyalty. Sadly, their suspicion sometimes even helps produce the very behaviors they fear, which further validates their suspicion. By treating people as if they can’t be trusted, they help to create a collusive, downward cycle of distrust. And this is one reason why—in this “flat world” global economy—not trusting people is often the greatest risk of all.
With regard to “propensity to trust,” I once knew a business owner who was so suspicious that his employees might be stealing from him, that he would literally interrogate them almost daily. He would even do occasional spot “frisk checks” when they left the office. This man was convinced that people were trying to steal from him. In reality, no one was, but his suspicious actions drove away his most talented people who wouldn’t tolerate working in such a distrustful environment or for such a suspicious boss.

With regard to “analysis,” it’s helpful to consider three vital variables, which you can do by asking these questions:

1. What is the opportunity (the situation or task at hand)?

2. What is the risk involved? (Possible outcomes? Likelihood of outcomes? Importance of outcomes?)

3. What is the credibility (character and competence) of the people involved?

Smart Trust doesn’t mean that you extend trust to everyone. Based on the circumstances, your judgment may be to not extend trust or to extend only a limited measure of trust. In extending trust, the general guideline is to extend trust conditionally to those who are earning it and abundantly to those who have already done so. Keep in mind that even when you extend trust abundantly, there should still always be clear expectations and accountability because those are principles that actually enhance trust.

I affirm that in our “flat world” economy, the ability to establish, grow, extend, and restore trust is the key professional and personal competency of our time. And the ability to exercise Smart Trust is a vital part of that competency. It will enable you to create a powerful balance and synergy between analysis and the propensity to trust, which, in turn, will produce the judgment that enables you to effectively leverage yourself and to inspire the talent, creativity, synergy, and highest contribution of others.

Note: The preceding article is based on the book, The Speed of Trust, by Stephen M. R. Covey, which will be released in trade paperback on February 5, 2008 by Simon & Schuster’s Free Press.

Author's Bio: 

Stephen M. R. Covey is the former CEO of Covey Leadership Center, which, under his stewardship, became the largest leadership development company in the world. Stephen personally led the strategy that propelled his father’s book, Dr. Stephen R. Covey’s The 7 Habits of Highly Effective People, to become one of the two most influential business books of the 20th Century, according to CEO Magazine.

As President & CEO, Stephen nearly doubled revenues while increasing profits by 12 times. During that period, the company expanded throughout the world into over 40 countries, greatly increasing the value of the brand and enterprise. The company was valued at $2.4 million when Stephen was named CEO and within three years he had grown shareholder value to $160 million in a merger he orchestrated with then Franklin Quest to form FranklinCovey.

A Harvard MBA, Stephen recently co-founded his own boutique firm—CoveyLink—which is a learning and consulting practice focused on enabling leaders and organizations to increase and leverage trust to achieve superior performance. Stephen’s new book, The Speed of Trust, was recently published on October 17, 2006 by Simon & Schuster, and is already in its 7th printing. Business Week just named The Speed of Trust as one of the top five career books of 2006.

Purchase your own copy today by visiting BarnesandNoble.com or Amazon.com.