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7 Low-Trust Harms and 7 High-Trust Helps!

Trust is a characteristic the Team Higher Ground explores in virtually all of our Adventure-Learning work with clients. Check out Stephen Covey’s clever take on how Low-Trust hurts, and High-Trust helps organizations:

The 7 Low-Trust Organizational Taxes™

Redundancy: Redundancy is unnecessary duplication. A costly redundancy tax is often paid in excessive organizational hierarchy with 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 an 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™

Increased value: Watson Wyatt study 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: A strong correlation between higher levels of organizational execution and higher levels of trust has consistently been shown. 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.