Trust and Respect in the Financial Markets
Sorryia Barnard, Project Manager, United States
If you don't trust people, people will not trust you."– Lao Tzu
Showing respect – is it vital to build or rebuild trust?
Trust isn’t universal or perfect. We know it’s crucial to building positive relationships but will enhanced respect increase trust? Is trust today really an issue?
To examine trust, we should probably consider the common definitions of trust
- Predictability: Trust means being able to predict what other people will do and what situations will occur. If we can surround ourselves with people we trust, then we can create a safe present and an even better future.
- Value exchange: Trust means making an exchange with someone when you do not have full knowledge about them, their intent and the things they are offering to you.
- Delayed reciprocity: Trust means giving something now with an expectation that it will be repaid, possibly in some unspecified way at some unspecified time in the future.
- Exposed vulnerabilities: Trust means enabling other people to take advantage of your vulnerabilities—but expecting that they will not do this.
For many of us our daily lives in business are mostly dependant on trust as defined as a value exchange.
Accepting that there is a global confidence issue, what is the relationship between respect and trust?
If we accept that respect is the act of holding a person, their position or their qualities in high esteem, and that respect according to Maslow’s Hierarchy of Needs
is crucial to building self esteem. Then the failure to show respect must adversely impact our human capital. Therefore, it seems that mutual respect is crucial to productive human behaviour and vital to build self-esteem. Then showing trust as a value exchange, we are really demonstrating our willingness to respect each other.
Are you a Trust Blocker? Do you devalue or empower when you communicate? Moving into the realms of science - are we designed to trust
A. Experiments conducted by Michael Kosfeld, a professor of business administration at Frankfurt University in Germany led him to the conclusion that trust is “a biologically-based part of human nature
.” Kosfeld discovered that when humans interact, brain hormone oxytocin is released to build trust. “ It is, in fact, one of the distinguishing features of the human species,” Kosfeld states, “When trust is absent, we are, in a sense, dehumanised.”As corroborating analysis, economic researchers are also uncovering the chemical trigger in our brains that spark feelings of trust—and using their findings to better understand how markets work.
B. Paul Zak, Professor at Claremont Graduate University in Southern California. When someone demonstrates that they trust you, your body releases faint traces of oxytocin, which creates a "fleeting signature of safety and care." Are you trusting in and do you demonstrate you are worthy of the trust placed in you?
The Institute of Leadership & Management (ILM) and Management Today publish an annual Index of Leadership Trust
which reveals some interesting insights into current levels of trust in UK organisations. This index measures trust on six dimensions:
1. Ability – to do your job
2. Understanding – displaying knowledge and understanding of their colleague’s roles and responsibilities
3. Fairness – behaving fairly and showing concern for the welfare of others
4. Openness – being accessible and receptive to ideas and opinions
5. Integrity – striving to be honest and fair in decision making
6. Consistency – behaving in a reliable and predictable manner
Trust as a Source of Sustainable Competitive Advantage
(Resource Based View of the Firm - VRIN
- Valuable, because it allows your firm to better serve your customers and to improve its performance as a result.
- Rare because few rivals have the relationship between managers and employees that trust denotes.
- Costly to Imitate because trust is causally ambiguous and socially complex. As such, it is difficult for your competitors to understand what trust is and how to establish it in their firms.
- Nonsubstitutable, because trust is a capability that is difficult for your competitors to observe, and capabilities that cannot be observed at least somewhat easily are hard to imitate.