Why have societies for centuries concerned themselves with the question of ethics? Why have governments, regulators and companies concerned themselves with defining codes of ethics? One answer to this question is to suggest that being ethical is an end unto itself. Moral scholars (e.g., Kant) say humans have a moral obligation to act based on universal moral principles. Virtue ethicists (e.g., Aristotle) tell us that acting in an ethical manner is necessary to being a good and even a happy person.

A very different answer to the question of “why ethics” leads directly to the issue of trust as it pertains to relationships. We are interested in ethics in large part because we are concerned, even obsessed, with the question of who we can trust is a world where there is risk and uncertainty. I would challenge your thinking by suggesting that we humans are much more concerned about assessing trustworthiness of others than we are in trying to figure out how ethical they are. So what is trust and what is trustworthiness. The image on the right paints the picture very well - has the person making this leap made a good decision to trust?

In our personal and professional lives we are embedded in human networks where we need to assess trust (see Trust Choice Schematic). The DTM or Decision to Trust Model was developed (see below HBR 2006 article or Jossey Bass 2012 book) to help us understand how to make better decisions and more systematically discern trustworthiness and even repair trust (see DTM Model). There are some videos below describing how trust really works. 

Two of the dimensions of trustworthiness relate directly to ethics: integrity and benevolence. There is even a definition of trustworthiness that makes the connection to ethics directly: ‘‘A trustworthy party is one that will not unfairly exploit the vulnerabilities of the other party in the relationship.’’ (see Banerjee, Bowie and Pavone An Ethical Analysis of the Trust Relationship page 308 in Bachmann and Zaheer eds. Handbook of Trust Research in book chapter below). In most codes of morality, ethics, and virtue there is a concept of fairness. We expect members of a society to treat one another fairly just as they themselves would want to be treated. 

We can examine trust relationships at many levels: between two people, among members of a team, between teams, within an organization, between workers and management and even within an entire system, like the financial system or the air traffic control system. While we can use the same definition of trust (confident reliance), as we move further and further away from dyadic interpersonal relationships, the cues we use to assess trustworthiness get more complicated. For example, how does a trustor who is looking for a bank to put his money in judge the trustworthiness of a bank or a financial system. This moves us into what some call impersonal trust or even a combination of personal and impersonal cues. For example, if we were making a trust judgement about a doctor for surgery, we might feel the need to assess good about not only the doctor but what hospital he or she operates in. The ideas in this page will cover various aspects of trust but will concentrate on the trustworthiness of organizational systems and institutions which are central to a well functioning society.

 

 

 

 

 

 


Ideas to Apply

"The toughest thing about the power of trust is that it's very difficult to build and very easy to destroy."
-Thomas Watson, founder of IBM

    1. How do you create organizations or cultures centered on trust? How can leadership enhance or erode trust?

    2. How do people establish trust?

    See the late Graham Dietz from Durham University in the UK describing: 

    How do biases, perceptions and habits interact with organizational efforts to create a trusting culture? 

    Since the degree to which we offer trust is based on our perceptions of the trustworthiness of another, all of our cognitive biases and our emotions affect whom and when we trust. 

    For example, research in social identity theory shows that we are more apt to trust people who we think are similar to us. This is why the decision making research page is so helpful in understanding the decision to trust. There is a need to make trust decisions more slowly and more deliberately so that we are less subject to the fast thinking part of our brains and emotions that can sometimes fool us.

    Research also shows that our perceptions of what it means to be trustworthy are socially constructed and vary across cultures (see excellent review by Ferrin and Gillespie Trust Differences Across National Cultures in Saunder, Skinner, Dietz, Gillespie and Lewicki Eds. Organizational Trust: A Cultural Perspective).
     

    3. What is the business case for trust?

    There is a tremendous case to be made that “trust pays.” See this presentation that summarizes the empirical research on the link between various aspects of performance and trust.  The case is so compelling that it begs the question: if trust is so valuable, why don’t we have more companies chasing this holy grail? One answer is that it is very hard to do and takes great leadership and consistent focus on building the elements of a trustworthy organization. 


    Research and Resources

    Research Entry Points

    How to Inspire Trust

    Robert Hurley writes about the crisis of trust in business in The Wall Street Journal.

    Human Capital As a Lead Indicator of Shareholder Value

    A 2002 study by Watson Wyatt surveying 12,750 workers across all industries showed that high-trust organizations had a total return to shareholders (stock price plus dividends) that was 286 percent higher than low-trust organizations

    The Business Case for Trust

    Chapter from Trust, Inc. outlining how trustworthiness should be viewed as a business decision. Includes research supporting trust as a valued contributing factor for long-term growth. See also this supporting document on the return methodology for trust.

    How Does Trust Affect the Bottom Line?

    Fortune magazine's independent analysis of the stock market performance of the U.S. 100 Best Workplaces 1998-2010

    The Impact of Corporate Sustainability on Organizational Processes and Performance

    Robert G. Eccles, Ioannis Ioannou, and George Serafeim provide evidence that High Sustainability companies (those integrating both social and environmental issues) significantly outperform their counterparts over the long-term, both in terms of stock market as well as accounting performance

     

    Trust Models

    This model suggests that even when trustors have a low disposition to trust, and are in a situation with low security, they may when elements of trustworthiness are demonstrated in their relationship with the trustee. Robert Hurley uses the acronym CBASIC to help people remember 6  key elements of trustworthiness.

    C - Communication. Does the trustee communicate clearly and openly with me

    B - Benevolence. Does the trustee care about my welfare.

    A - Alignment of interests. Are the trustee’s interests aligned with my own.

    S - Similarities. Is the trustee a member of my identity group and do they share my values.

    I - Integrity. Is the trustee predictable and does behavior match his/her words.

    C - Capability. Is the trustee capable and competent to deliver on commitments.

     

    Organizations Promoting Trust in Business

    Books

    From a Managerial and Applied Perspective

    From a Scholarly Perspective

    Journal Articles

    Newspapers and Magazines

    Videos

     

     

     

     

     

     

     

     

     

    Case Studies

    A 2012 study estimated that the average company lost 5 percent of its annual revenue to some sort of fraudulent activity...a total of $3.5 trillion in losses worldwide.

     

    Further Learning

    Learn why Ethics Pays Explore the research of ES collab Dr. Robert Hurley Read our research on
    Cheating and Dishonesty