How the High Cost of Low Trust Hurts You and Your Organization

Let’s take a few minutes to consider the impact of low trust in business.

  • Only 10 percent of workers trust their bosses to do the right thing, and only 14 percent believe their company’s leaders are ethical and honest.
  • Less than a fifth of the general public trusts business leaders to be ethical and honest.
  • Only 16 percent of Americans trust large corporations.
  • 82 percent of workers believe that their senior leaders help themselves at the organization’s expense. They look at their leaders and see too much self-interest, short-term focus, and ego-driven decision-making.

82% of workers believe that their senior leaders help themselves at the organization’s expense.

Oxford University Professor Colin Mayer diagnoses the situation this way: “The loss of trust in the corporation reflects a belief that it exists simply to make money for its owners, its shareholders, and it will do whatever it takes to achieve this. From our point of view as customers, employees, and communities, we are therefore pawns in a game in which we are manipulated for the benefit of others. The repeated recurrence of scandals only serves to reinforce the belief that the corporation is inherently untrustworthy.”

If you think that the general low trust in for-profit organizations is sobering, consider how citizens see government. For over 50 years, the Organisation for Economic Cooperation and Development (OECD) has “helped forge global standards, international conventions, agreements and recommendations in areas such as governance and the fight against bribery and corruption, corporate responsibility, development, international investment, taxes, and the environment.” The organization consists of 34-member countries including the United States, Australia, the United Kingdom, Mexico, and Japan. In 2014, OECD reported that only 40% of citizens trusted their government. “Trust in government is deteriorating in many OECD countries. Lack of trust compromises the willingness of citizens and businesses to respond to public policies and contribute to sustainable economic recovery.”

Levels of trust in government differ among countries, but nearly all are reporting unprecedented lows. According to the Pew Research Center, the United States is experiencing historic lows in the public’s trust in government. “In 1958, when the American National Election Study first asked the question, 73% (of Americans) said that the could trust the government just about always or most of the time…Only 19% of American today say they can trust the government in Washington to do the what is right.”

Widespread mistrust acts like a brake on the economy. Everything in the supply chain slows down because transactions have to be regulated, verified, documented, and double-checked. Deals take forever because due diligence is now intensediligence. Costs go up at every point. Low levels of trust in government and business conspire to make everything cost more and take longer. An example: The Sarbanes-Oxley regulations in response to the scandals at Enron and World-Com are unbelievably time-consuming and expensive—one study pegged the costs of implementing just one section of the law at $35 billion!

Trust—A Performance Multiplier

When an individual, team, or organization is known for being trusted, the bad news is good news. People, both inside and outside your organization, are hungrier than ever to work with and support people they can trust. At every level of your organization and in every interaction, the “economies of trust” are at work.

Consider this: trust always affects two measurable outcomes—speed and cost. When trust goes down, speed goes down and cost goes up. This creates a trust tax. When trust goes up, speed goes up and cost goes down. This creates a trust dividend. It’s that simple, real and predictable.

How do you feel about those relationships where trust is high? How effective is your communication with a person you trust? In our experience, it’s easy, simple, and fast. Even if we’re dealing with a tough issue, it can be resolved with the person quickly. In high-trust relationships, you can misspeak, but you don’t feel like you’re walking on eggshells, worrying that you’ll offend the other person or make a commitment by accident.

Conversely, when trust is low, it seems that no matter what you say, your words are taken wrong or out of context. Communication is nearly impossible, even about the most trivial things.

Where Does it Start?

Ultimately, trust starts with you—with your personal credibility. In The Speed of Trust, Stephen M.R. Covey explains how credibility is the foundation on which all trust is built and how, in the long-run, you’ll never have more trust than you have credibility. Credibility is a function of two things: your character (who you are—your integrity and intent), and your competence (what you can do—your capabilities and results). Competence is visible above the surface, while your character, like the roots of a tree, lies beneath the surface and feeds your success—or lack of it.

If we were doing business with you, and you knew that we had all the right professional qualifications and skills but didn’t keep our word, you wouldn’t trust us and everything would stop. Our lack of character would prevent you from doing business with us, even though we might be the best at what we do. Think of the many high-profile athletes and executives with world-class competence the public no longer trusts because of some very deep lapses in character.

Conversely, if we were doing business with you, and you knew that we were honest and cared about you but didn’t have the right capabilities and were no longer relevant and didn’t have a track record of results, you also wouldn’t trust us and everything would stop. Our lack of competence would undermine the trust, even though we might be extremely honest and caring. You might trust us to watch your home if you went on vacation, but you wouldn’t trust us on the key project or deliverable if we didn’t have a track record of results.

Both character and competence are vital to building trust, with character being the deeper root, the first among equals.

If you want to learn more about the speed of trust and how to increase trust in your organization, I encourage you to visit my friends at FranklinCovey.

All the best- Patrick


Jeanette Mulvey, “American Workers Don’t Trust Their Bosses,” BusinessNews,Jul. 12, 2011.

Geoffrey James, “Warning: Customers Don’t Trust Leaders,” Inc., April 19, 2013.

“Anger Over Economy Remains,” Chicago Booth/Kellogg School Financial Trust Index,May 31, 2013.

Colin Mayer,Firm Commitment: Why the Corporation Is Failing Us, and How to Restore Trust in It,Oxford Univ. Press, 2013.

2016 OECD Annual Report

OECD “Trust in Government” published in 2014.

Pew Research Center. “Beyond Distrust: How Americans View Their Government” November 23, 2015.