Trust Across America-Trust Around the World™

Companies Ignoring the Social Fallout of Bad Customer Service

Will Find Themselves at a Competitive Disadvantage

I didn’t set out to write 3 blog posts in 24 hours, but what’s that expression about “striking while the iron is hot,” especially when the subject is trust?

This afternoon one of my sons and I headed out to run a few errands. First stop was Verizon Wireless to inquire about my data plan. There was no wait and customer service was fast and knowledgeable. Kudos to Verizon. Maybe Wednesday afternoons are the best time to visit!

Next we headed over to the home improvement store. Think The Home Depot or Lowe’s and my luck abruptly ran out. First stop was the door and window department. I needed to order a few window screens and brought the old ones with me to ensure the right purchase. Upon completion of the $70.00 order I politely asked the employee to discard the old screens. And then I heard one of my favorite lines, “Sorry our policy doesn’t permit it.”  The employee turned his back and walked away.

We proceeded to finish shopping.  I carried the screens (one was 6 feet long) while my son flat bedded 8 bags of mulch, and then off to checkout where I asked the checker whether there was a suggestion box in the store. “Suggestions? They must be made online and instructions are to be found on the back of the receipt.” She never asked if she could help me, and apparently had no interest in hearing my story, but I told her anyway.  Her response, “Customers always try to hand off all sorts of trash to store employees.” According to the checker, if the store took the garbage that all the (evil) customers brought in the door, they would have to raise their prices. She then completed the transaction, handed me the paperwork for the screens I had ordered, along with a separate sales receipt and commented that she would be happy to attach them, but the store did not provide staplers at checkout… something about a policy. As we were leaving the store, my son asked me why I had even bothered to engage the checker in a conversation.

Moral of the story… I have no loyalty to this store. My experience today was pretty typical. Next time, I’ll just shop at their competitor a few miles up the road. And all because store #1 would not discard my screens, which might  have been the right thing to do, policy aside. And finally, just a few years ago, a consumer facing a customer service issue had only a few avenues of recourse-  a letter, a phone call or a glass of wine. Now the customer has an additional opportunity  to report their story on social media, “outing” the offender should they choose to do so.

Companies recognizing that good customer service is an important component of a trustworthy organization build a competitive advantage called loyalty. They bank trust with their customers. They don’t have an intern standing by on Twitter to send a stock “I’m sorry” response when something goes wrong. They don’t need to do that. They have happy loyal customers and they have staplers.

Those interested in reading more about the history of customer service at both The Home Depot and Lowe’s, might want to read this great article from Babson.

www.babson.edu/executive-education/thought-leadership/retailing/Documents/improving-customer-experience-at-home-depot.pdf

Please share your comments and suggestions! Email: barbara@trustacrossamerica.com

Barbara Brooks Kimmel is the Executive Director of Trust Across America-Trust Around the World whose mission is to help organizations build trust. She is also the editor of the award winning TRUST INC. book series. In 2012 Barbara was named “One of 25 Women Changing the World” by Good Business International.

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Do  Trustworthy Companies Sacrifice Profitability?

Not a Chance!

Copyright © 2014 Next Decade, Inc.

Trust Across America, via its  FACTS® Framework has been tracking the performance of the most trustworthy public companies for over 5 years, and the results are nothing short of staggering. Trustworthy companies have produced an 82.9% return vs. the S&P’s 42.2% since August 2012.

But the daily headlines continue to feature countless  stories about bad corporate behavior and the ongoing distrust in business. Rarely do we hear senior management even mention the word “trust” until they are attempting to minimize the fallout from the latest crisis. And what is usually the root cause of the crisis? Low trust, and a failure of senior leadership to place trust on its agenda. If it sounds like a vicious cycle it is, and certainly no way to reverse decades of declining trust in business.

Combine the chart above with the following data and The Case for Trust  becomes increasingly difficult to ignore.

The Hard Costs of Low Trust

• Gallup’s research (2011) places 71% percent of U.S. workers as either not engaged or actively disengaged.

• The disengaged workforce (Gallup, August, 2013) is costing the US economy $450-550 billion a year, which is over 15% of payroll costs.

• The Washington Post reported that “the federal government imposed an estimated $216 billion in regulatory costs on the economy (in 2012), nearly double its previous record.”
• The cost of the tort litigation system alone in the United States is over $250 billion. – or 2% of GDP (Forbes, January 2012)

• The six biggest U.S. banks, led by JP Morgan Chase & Co. and Bank of America Corp. have piled up $103 billion in legal costs since the financial crisis (Bloomberg, August 2013)

• According to The Economist Intelligence Unit (2010), 84% of senior leaders say disengaged employees are considered one of the biggest threats facing their business. However, only 12% of them reported doing anything about this problem.

• According to Edelman globally, 50% of consumers trust businesses, but just 18% trust business leadership.

• And finally, in the United States, the statistics are similar, but the story is a bit worse for leadership. While 50% of U.S. consumers trust businesses, just 15% trust business leadership.

This trust gap negatively impacts a company’s revenue, market share, brand reputation, employee engagement and turnover, stock price, and bottom line profitability.

The Low Cost of Hard Trust

Building a trustworthy business will improve a company’s profitability and organizational sustainability.

A growing body of evidence shows increasing correlation between trustworthiness and superior financial performance. Over the past decade, a series of qualitative and quantitative studies have built a strong case for senior business leaders to place building trust among stakeholders high on their priority list. While none of these studies are perfect, over the next decade their results will be increasingly difficult to ignore.

In a Harvard Business School working paper from July 2013 called 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 environmental and social issues) significantly outperform their counterparts over the long-term, both in terms of stock market as well as accounting performance.

According to Fortune’s  “100 Best Companies to Work For”, based on Great Place to Work Employee Surveys, best companies experience as much as 50% less turnover and Great Workplaces perform more than 2X better than the general market (Source: Russell Investment Group)

Forbes and GMI Ratings have produced the “Most Trustworthy Companies” list for the past six years. They examine over 8,000 firms traded on U.S. stock exchanges using forensic accounting measures, a more limited definition of trustworthy companies than Trust Across America’s FACTS Framework but still somewhat revealing. The conclusions they draw are:

• “… the cost of capital of the most trustworthy companies is lower …”
• “… outperform their peers over the long run …”
• “… their risk of negative events is minimized …”

 In addition to the chart above, numerous indirect indicators of trust also show a direct correlation to superior financial performance.

From Deutsche Bank:

• 100% concurrence on Lower Cost of Capital (“… academic studies agree that companies with high ratings for CSR (corporate social responsibility) and ESG (environment, social responsibility, governance) factors have a lower cost of capital in terms of debt (loans and bonds) and equity.”)
• 89% concurrence on Superior Market Performance (“,,,studies indicate companies with high ratings for ESG factors outperform market-based indices”)
• 85% concurrence on Greater Performance on Accounting –Based Standards (“… studies reveal these types of company’s consistently outperform their rivals on accounting-based criteria.”)

From Global Alliance for Banking on Values, which compared values-based and sustainable banks to their big-bank rivals and found:

• 7% higher Return on Equity for values-based banks (7.1% ROE compared to 6.6% for big banks).
•  51% higher Return On Assets for sustainable banks (.50% average ROA for sustainable banks compared to big bank earning 0.33%)

These studies are bolstered by analyses from dozens of other respected sources including the American Association of Individual Investors, the Dutch University of Maastricht, Erasmus University, and Harvard Business Review.

Business leaders may choose to continue to challenge the business case for trust but the evidence is mounting. There is not only a business case but also a financial case for trust.  Trust works.

Please share your comments and suggestions! Email: barbara@trustacrossamerica.com Barbara Brooks Kimmel is the Executive Director of Trust Across America-Trust Around the World whose mission is to help organizations build trust. She is also the editor of the award winning TRUST INC. book series. In 2012 Barbara was named One of 25 Women Who are Changing the World by Good Business International.

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Copyright © 2014 Next Decade, Inc.

Leaders Often Overlook the Obvious

Remember, What You Give is Often What You Get 

The following comments are sure to reduce the level of trust among your team.

How often have you heard these?

• Who works for whom?
• Because I said so.
• Fudge it if you don’t know.
• Who do you think you are?
• Not now.
• So what? Who cares?
• Don’t make a mistake.
• Who do you think you’re talking to?
• My door is closed for a reason.
• Because I make the rules.

What would you add to this list of things trustworthy leaders should never say?

Please share your comments and suggestions! Email: barbara@trustacrossamerica.com

Barbara Kimmel is the Executive Director of Trust Across America-Trust Around the World whose mission is to help organizations build trust. She is also the editor of the award winning TRUST INC. book series.

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Are you a trustworthy leader?

What differentiates your leadership style from your peers?

While we continue to hear talk of the importance of  trust, rarely do we read about the leader who is placing trust at least somewhere near the top of his/her agenda. Trust Across America-Trust Around the World is looking for those “best in practice” leaders. We have assembled an online  questionnaire addressing trust as it relates to:

• SUCCESS
• PERFORMANCE
• COSTS
• BENEFITS
• COLLABORATION
• CULTURE
• ACTION
• LEADERSHIP
• TRANSFORMATION
• PROOF
• VISION

We want to hear your story and share it with others. Our goal is to continue to bring awareness to organizational trust as the new standard of leadership. Will you help us?

Please share your comments and suggestions! Email: barbara@trustacrossamerica.com

Barbara Kimmel is the Executive Director of Trust Across America-Trust Around the World whose mission is to help organizations build trust. She is also the editor of the award winning TRUST INC. book series.

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July is “Truth” Month 

according to Trust Across America’s

2014 Calendar

Truth-telling is at the core of trust. Any leader who wants to build a trustworthy organization must have an extremely comfortable relationship with the truth. No company is perfect and it’s not necessary to air all the dirty laundry – just don’t lie about it or intentionally mislead. In times of crisis, a habit of truth-telling yields particularly good returns.

During the  52 weeks of 2014 you can build trust in your organization by thinking about, discussing and following the advice of the experts. Below are weekly reflections on trust for the 5 weeks in July 2014.

Week 1: Trust is the glue that will bind the private, public and civil sectors together Eric Lowitt, Nexus Global Advisors

Week 2: Trust is the absence of fear. James Lukaszewski, The Lukaszewski Group

Week 3: When leaders convey their overall vision to employees, a high trust, highly committed organization can be created. Amy Lyman, The Trustworthy Leader

Week 4: The real advantage of trust is that it is the deepest yearning of all humans. Robert Porter Lynch, The Warren Company

Week 5: Ethics is the foundation of trust. Chris MacDonald, PhD, Ryserson University

Please share your comments and suggestions! Email: barbara@trustacrossamerica.com

Barbara Kimmel is the Executive Director of Trust Across America-Trust Around the World and editor of the award winning TRUST INC. book series.

What is it about lasting friendships that are so easy?

Yesterday was a special day. I had breakfast with one of my best friends from high school. I won’t tell you how many years have passed since those days, but suffice it to say, her children are grown and living on their own, and mine are 95% of the way there!

For many years we didn’t see each other or even speak. She took a different life path after college by marrying a friend from high school and quickly starting a family.  I took the grad school and “career” route, living in New York City, traveling and remaining single until my 30’s.

About 5 years ago we got back together at a high school reunion and picked right up where we had left off. Sure, there were lots of life events in between, but at the end of the day, two old friends just found each other again. Nothing had gotten in the way of the relationship in all the years we had been apart.

What is it about lasting friendships that are so easy?

Is it the innocence of childhood or the complexities of being an adult that complicate relationships?

Maybe it’s simply that trust grows by sharing similar childhood experiences and teenage trials and tribulations. The foundation is laid, and building upon it becomes very easy. Maybe trust can’t be established quickly, and maybe that’s why it gets broken just as easily. Maybe trust simply takes time.

Thank you Judy!

Barbara Kimmel is the Executive Director of Trust Across America-Trust Around the World and editor of the award winning TRUST INC. book series. Visit Trust Across America’s website for tools and resources on building trust.

Which sounds better? High stress, meaningless relationships, frequent job loss and suspicion OR well-being, great friendships and frequent promotions?

We’ve all heard the expression “Happy Wife, Happy Life” but how about “High Trust, It’s a Must” or “Low Trust Go Bust!.” I contend that being trustworthy will not only make you happy, but wealthier in many ways than you are today.

What do we mean by being trustworthy? Let’s use this very simple definition.

Act with integrity and always keep your word.

First, let’s talk about the inherent risks of being untrustworthy: 

It takes more time and  psychological energy than it’s trustworthy counterpart and results in:

• High stress
• Low energy
• Frequent job loss
• Meaningless relationships
• Low levels of creativity
• High levels of suspicion among friends, family and coworkers
• High barriers to communication due to lack of honesty and broken promises
• Poor and slow decision making
• High transaction costs
• Win/lose situations

On the flip side, here are ten great reasons to be trustworthy:

• Psychological well-being
• Meaningful friendships and business relationships
• Faster, more efficient decision making
• Greater personal effectiveness in groups
• Greater support for your decisions
• Career promotions
• Win/win opportunities
• Role modeling trustworthy behavior
• More time for creativity and relaxation
• More money in your pocket (people want to do business with those they trust)

Be trustworthy. The benefits are far greater than the alternative. What do you think? Leave a comment.

Barbara Kimmel is the Executive Director of Trust Across America-Trust Around the World and the “Tribal Chief” of the growing Alliance of Trustworthy Business Experts. She is also the editor of the award-winning crowd sourced book series TRUST INC. In 2012, Barbara was named “One of 25 Women Who Are Changing the World.”

Trust Rocks!™ Summer ’14

Let’s raise our glasses to trust this summer!

A great way to start the “trust talk” at your next event.

(recipe courtesy of Trust Across America-Trust Around the World)

Ingredients:

Tangerine Juice (orange juice works fine)

Red Pomegranate or Red Cranberry Juice

Umbrella

Seltzer splash

Twist

(add a few ice cubes and  kick it up a notch with a shot of vodka)

 Copyright © 2014 Next Decade, Inc.

 We hear lots of “talk” about trust but see very little action in building it. Trust is not as confusing a term as many make it out to be.

1. Trust cannot be legislated
2. Without trust at the top, trust in the middle is hard to maintain
3. Ethics and compliance are related to trust but not the same
4. Hanging a corporate credo on the wall doesn’t build trust
5. Growing quarterly earnings does not make a company trustworthy
6. Trust cannot be owned by one corporate silo
7. Corporate responsibility or sustainability are not substitutes for trust
8. Trust CAN be measured
9. Trust is a hard currency, not a soft skill
10. The business case for trust has been made

More information on building trust in your organization can be found in our award-winning TRUST INC. series of books and on our website at www.trustacrossamerica.com

Trust Inc.

How can organizations expect to be trusted without the buy-in of senior leadership? Trust is not a soft skill. It’s the hard currency behind the most profitable institutions.

TRUST INC.:  A Guide for Boards & C-Suites, edited by Barbara Brooks Kimmel, Executive Director of Trust Across America – Trust Around the World, is the second book in the award-winning TRUST INC. series. It convenes over 60 experts from around the world including CEOs, academics, consultants, military leaders, and many others to share 100 strategies on building organizational trust at the Board & C-Suite levels.

Trust is not merely a soft skill or a social nicety.  Research shows that trust is as important to successful and sustainable organizations as customer service or teamwork.  One study by Watson Wyatt found that the rate of return to shareholders was almost three times higher at companies with high levels of trust than at those with low levels.

TRUST INC.: A Guide for Boards & C-Suites is organized into seven sections addressing various challenges of boards and executive leadership:

• Trust and Corporate Culture
• Trust and the Role of the Board
• The CEO Who Leads with Trust
• Trustworthy Communications
• Trust and Engagement
• Trust Builders and Best Practices
• Trust Busters and Risk

A major theme running through the book is that trust is the bedrock of great leadership, with significant implications for how the organization interacts with its stakeholders — customers, employees, vendors, shareholders, and the community.

“Any Board members or C-Suite executives who don’t evidence an unmistakable sensitivity to this societal drumbeat, do so at their own peril” writes Doug Conant, former CEO of Campbell Soup Company and currently CEO of ConantLeadership, in his contribution.  “Help build a better world.  Earn the trust and respect of all stakeholders…”on the other hand, there is no other hand.”

While each contributor has written in his or her own voice and style, they all arrive at the same conclusion — trust works. Regardless of whether the reader is the owner or Board Member of a small startup or the CEO of a Fortune 500 company, TRUST INC. provides lessons on how to reap the rewards of “trust at the top.”

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About the Editor

Barbara Brooks Kimmel is Co-founder and Executive Director of Trust Across America –Trust Around the World and editor of the 2014 Nautilus and Eric Hoffer award-winning book Trust Inc. Strategies for Building Your Company’s Most Valuable Asset. In 2012 Barbara was named one of “25 Women who are Changing the World” by Good Business International. A former consultant to McKinsey & Company, Barbara has owned the award-winning communications firm, Next Decade, Inc. for over 20 years. She majored in International Affairs at Lafayette College and has an MBA from Baruch at the City University of New York.

Trust Across America’s mission is helping organizations build trust.  For more information visit www.trustacrossamerica.com

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