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The Trust Tax

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The calendar indicates that this is the time of year when we are all expected to submit our personal income tax forms to the IRS (and by the way, if you have not done so yet, there is still time to go to http://www.irs.gov and download the appropriate forms).  And while many of us are not caught unaware by this annual practice, there is another tax that most of us are paying that we are not even aware is costing us in our professional lives.

Trust Economics

In the most simplistic form, we tend to think of our business performance in terms of the following equation:

S  x  E  =  R

S – strategy employed to accomplish the goals and objectives of the company.

E – execution and tactics employed to achieve or implement the strategy

R – results or levels of performance/achievement

However, the reality is that the equation is missing a core component:

(S  x  E)  T  =  R

The “T” represents Trust.  The level of trust directly impacts the performance level achieved.  When it is at an apex, performance will be positively affected.  However, when it is on the wane, performance will suffer and be sub-optimized.

Trust Tax

As this graphic shows, trust has a rolling effect on the other components leading to success:

Trust has a major role in establishing business results

 

When trust ebbs, the speed to making decisions also decreases as hesitancy creeps in, more steps are required to be convinced to move forward, and greater proof is needed in order to move forward.  Further, owing to the additional requirements, incremenetal time to make decisions, and demands for more examples and proofs – the business suffers.

Compare that to what happens when trust is at a high point.  The speed to make decisions increases as there is less doubt, greater belief without the need for constant proving, and costs decrease.

At first blush, this may seem like a fertile ground for abuse and for poor decisions to be permitted.  After all, most of us have had it ingrained in our professional thinking that we must base our decisions on facts, proofs, being cautious, etc.  However, the recognition of one’s trustworthiness often requires a rather comprehensive process that ensures that both parties are aligned and view the business opportunity similarly.  Rather than asssume that trust is offered indiscriminantly, trust must be developed and proved through experiences with each other.  Once established though, it allows for greater speed, lower costs, and improved business performance outcomes.

For more insight into the process and how trust hinders or contributes to the success of business relationships, consult the book, The Speed of Trust by Stephen M.R. Covey.

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David Zahn

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