Leading through the Trust Crisis, Part 1: Begin with Generosity

Around the globe, levels of trust are down. Fortunately, ethical leaders can take specific actions to signal trustworthiness. In part one of our series on leading through the trust crisis, we explore generosity, a powerful but often overlooked strategy for building trust with strangers.

 

Generosity


Only 37%. That is the percentage of people who believe CEOs are credible, according to the 2017 Edelman Trust Barometer. This number plummeted 12 points during 2016, settling at a new all-time low. And this figure is only part of a larger trend. Across society and across the world levels of trust are down—not only in business, but in media, in government, and in NGOs.

Here’s the good news: levels of trust remain much higher for business than for other social institutions like the government and the media. And 75% of those who responded to the Edelman survey agreed that “a company can take specific actions that both increase profits and improve economic and social conditions in the community where it operates.”

In other words, in our current climate, many now depend on business to lead the way toward a better future. Ths means high-trust organizations have a tremendous business advantage. Here are just a few of the benefits of trust that will help them succeed:

  • Trust makes our relationships resilient, allowing us to navigate change smoothly. A trusted leader can, for example, guide an organization successfully during rapid growth or through a merger or acquisition.
  • Trust allows us to act even when we have incomplete information. When two business partners trust one another, they can enter into an agreement without attempting to double-check every last detail. Since it reduces the complexity of transactions, it also decreases the cost of doing business.
  • In high-trust organizations employee engagement and productivity soar.

In order to help you build trust in your organization, let's take a look at the science behind what causes trust to increase or decrease.

The Science of Trust

Imagine you are given $10. You are told you can keep that money, or you can choose to send any amount of it to a person you've never met. This stranger will triple any money you send. But here's the catch: that person is under no obligation to send any money back to you. Would you decide to trust this stranger? Researchers call this scenario the "Trust Game." They use variations on this game to measure how much we trust others and to determine what factors contribute to our trust decisions. Their discoveries about when we trust, who we trust, and how much we trust may surprise you.

Trust Game Infographic

First, the decision to trust is more emotional than rational. When I decide to trust you, I am not making a calculation based on the potential costs and benefits. If you ask players in the Trust Game whether they predict the other player will send them money, they will often express doubts. But both players typically choose to send money anyway. When we trust, we do form expectations. But our expectations are about respect, cooperation, and reciprocation. They are not about specific financial outcomes. To harness the emotional side of trust, you must resist the temptation to think like an economist.

So if you want to develop trust, start by appealing to this emotional side. Know that when a person is trying to decide whether to trust you, he or she is probably not thinking about the rules or incentives affecting your behavior. Instead, that person is thinking about your intentions: are you friendly or are you hostile?

Start with Generosity

When a new employee joins your team or you begin to work with a new business partner, you might think that caution is the best way to interact with them at first—at least until you get to know them better. But in fact, research shows that you should do just the opposite: start by being generous. Offer the new employee your time and energy. Don’t be tight-fisted with your new business partner. Keep in mind that these individual are also sizing you up. Generosity is the best way to make your values and motivations clear. It signals that you genuinely care about others and that you are motivated to help them.

If this sounds like a recipe for being taken advantage of, keep in mind another surprising discovery researchers have made: we tend to grossly underestimate how much we can trust other people (Fetchenhauer & Dunning, 2009). Most participants in the trust game do not give enough. If player one would give more money to player two, most of the time both participants would end up better off. Researchers suggest that we don’t trust others more because we receive "asymmetrical feedback" about our trust decisions. If I trust you and I get "burned," I'll know right away, and that experience will stick with me. I won't forget it, and it will shape my behavior for years to come. But when I choose not to trust you, I never receive similar information about all the benefits I’ve missed out on (Fetchenhauer & Dunning, 2010).


When you begin a relationship with generosity, you’re not acting on blind faith. You’re also shaping the other person’s behaviors in three key ways.

  1. Trust invites trust. Trust is reciprocal; by showing that you trust that person, you’re inviting others to trust you.

  2. Others know where you stand. By making it clear that you are an other-oriented person, not a self-oriented person, you’re cutting through “noise.” If the other person ever has reason to doubt you, they will remember the way you set the tone for your relationship with generosity. One study revealed that because it guards against the effects of inevitable errors and disappointments in our relationships, generosity is a more effective way to sustain long-term collaboration than a tit-for-tat or give-what-you-get strategy (Klapwijk & Van Lange, 2009).

  3. First impressions set the tone for future interactions. As an old Dutch proverb says, “Trust comes on foot, but it leaves on horseback.” Since trust is so difficult to build, you cannot afford to miss the opportunity a first impression offers. If you begin an interaction with doubt, trust will be very difficult to rebuild.

Begin with generosity – but keep your eyes open. While we can trust most people more than we think, there are some people who will not reciprocate, no matter how generously we treat them. In fact, the more we are generous, the more they take advantage of generosity and use it for their own personal gain. So be generous initially, but don’t be naive. Researchers recommend being ready to switch to a tit-for-tat strategy when you encounter this kind of person. Generosity includes risk, but it does not mean you need to develop a reputation as someone who is routinely taken advantage of.


"Don’t let the harmful effects of a few bad exchanges cause you to miss out on all the benefits that come from high-trust relationships."   Tweet: Don’t let a few bad exchanges cause you to miss out on the benefits that come from high-trust relationships. https://ctt.ec/qGd6s+ @NDDCEL


Still, even when you encounter someone who seems to act selfishly, keep in mind that we all make mistakes. Even after switching to a tit-for-tat strategy, it is still a good idea to remain flexible enough to be generous now and then. Game Theorists call this strategy “Generous Tit-for-Tat,” and they have proven over and over again that this strategy is the most successful over the long term since it maximizes the benefits that come from cooperation while still allowing us to remain realistic about the fact that many people do not choose to cooperate.

Remember that even when you’ve been disappointed, there is still a chance for a more trusting and cooperative exchange. Don’t let the harmful effects of a few bad exchanges cause you to miss out on all the benefits that come from high-trust relationships.

 

Tell us about your experiences integrating generosity into your work and life on Facebook, Twitter, or LinkedIn.

Sign up for our series on leading though the trust crisis. We will offer insights on other trustworthiness signals including acting with integrity, finding common ground, and deepening commitment.


Further Reading:

Key Points

  • In our current trust crisis, many now depend on businesses to lead the way toward a better future.
  • The decision to trust is more emotional than rational; building trust requires emotional intelligence, not economic thinking.
  • Generosity is the best way to build trust during a first impression. It makes your values and motivations clear.
  • We tend to grossly underestimate how much we can trust other people. Don’t let the harmful effects of a few bad exchanges cause you to miss out on all the benefits that come from high-trust relationships.

 

 

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