January 2007

 

Trust: The Fuel of High-Performing Teams

“Without trust, there is no open society, because there are not enough police to patrol every opening in an open society. Without trust, there can also be no flat world, because it is trust that allows us to take down walls, remove barriers, and eliminate friction at borders. Trust is essential for a flat world.”

 

Thomas Friedman, The World is Flat

 

Trust is the key ingredient of high-performing teams. In fact, when working with investment leaders on the selection of core values, we no longer consider trust negotiable. Teams can choose whether or not to focus on other values − creativity, discipline, etc. − but trust is mandatory.

 

Why is trust so critical? As master investor Warren Buffett has stated many times, the high level of trust at Berkshire Hathaway allows for “less overhead and faster decision making than any other place of our size in the world.” And according to recent Watson Wyatt research, employee trust in corporate leaders − especially senior managers − strongly influences turnover, productivity, and profitability. Even if employees don't physically leave, once trust is gone, they mentally and emotionally check out.

 

Defining Trust
Trust has four basic elements:

• Congruence: Words and actions that line up
• Competence: The ability to deliver promised results
• Caring: A win/win attitude
• Candor: An open and revealing environment

 

It’s possible to do three of these well and miss the fourth entirely.

 

Measuring Trust
When working with an investment team, we ask individual members to score themselves and each other on the four elements of trust. These are the “trust-busters,” the behaviors that lower scores:

 

We enter the single scores for each team member on a spreadsheet and show the results in a chart, such as this one:

 

 

This level of trust in this example is exemplary and corresponds with a top decile 10-year performance record. Not surprisingly, the leader scored the highest on this team. If we were in the business of selecting managers, we would choose this one in a heartbeat.

 

Conversely, here are the results for a team that has struggled with performance:

 

 

Not surprisingly, this team has a lot of drama and poor investment performance. We would advise the leader to “fix it or fold it.” In other words, the people who are receiving low trust marks must improve those scores or find another place to work. There is no room on a top-performing team for people who cannot build trust.

 

Building and Repairing Trust: Eight Steps
How do you build trust? By asking for and receiving feedback with an open and curious attitude.

 

This requires the use of a “clearing process,” a clearing of the air, which is based on the simple but all-powerful principle that genuinely listening to another person can resolve even the most difficult issues. It involves a “sender,” the person with the complaint; the “receiver,” the complainee; and optimally, a facilitator, the mediator.

 

Step One. The sender begins by stating his positive intention to the receive: “I want a good working relationship with you.”

 

Step Two. The sender states what happened to erode trust, just using facts: “Yesterday, John and I had planned a 9 a.m. meeting. John was 20 minutes late.” Opinions, such as, “John doesn’t value people’s time,” aren’t allowed.

 

Step Three. The sender states her feelings about the facts: sad, angry, scared. etc. Sometimes an event will trigger multiple feelings simultaneously.

 

Step Four. The facilitator asks the receiver to repeat back to the sender, as accurately as possible, what was said. This seems simple, but listening carefully to another person is the single most respectful behavior we can engage in.

 

Step Five. The sender tells the “story,” or interpretation, she constructed from the facts. For instance, the sender’s story about her colleague’s tardiness might be, “Bob is disrespectful; he doesn’t value people’s time.” The story is not a fact, though many people consider their stories to be facts.

 

Step Six. The receiver then repeats the story, showing that he is able to listen without becoming defensive. The role of the receiver is simply to understand the sender’s reality. How did the incident look and feel to the other person? The receiver again checks for accuracy.

 

Step Seven. The sender states what she wants. In this case, “I want to feel valued and respected.” Sometimes clearings get off track at this point because the receiver falls into “fix it” mode. Instead of remaining neutral and only listening, the receiver may jump in and say, “Gee, I’m sorry I never intended to be disrespectful; I can promise you in the future that….” Whoa! Clearing sessions are not problem-solving sessions. They are about the sender being respectfully heard.

 

Step Eight. The receiver asks the sender, “Are you clear?” Meaning, did you successfully get this off your chest? If the process above has been followed, the answer will most likely be “Yes,” and a big step will have been taken toward rebuilding trust.

 

Trust is the fuel that drives high-performing teams. The asset management firms that have committed themselves to building high levels of trust consistently show better returns than those with poor trust levels. Trust is the foundation for high performance.

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