Trust Is a Must

It's Up to You

Fortunately, entrepreneurs carry an ace in this game. Trust is easiest to maintain through person-to-person contact. You run a company that's small enough to know your employees, customers and suppliers. Your larger competitors don't. "With entrepreneurial companies, customers are dealing with the person who makes the decision instead of the middle manager," says Baard.

This assumes, of course, that you're acting in a trustworthy manner. And trust is based on people believing you're acting ethically. Ah, ethics. The culture wars of the past two decades have made "ethics" a loaded word. Successful businesses are built on comity, not antagonism. So who wants to engage in debates over ethics?

You do, actually. Ethical behavior is as simple as living up to your stated values. And only you can define what those values are. More important, Hoffman and other business ethicists believe that ethical behavior can become your competitive advantage during this crisis of confidence in American business.

There are two components to instilling trust through ethical behavior. You have the most control over the first: your actions as a leader. The second is more troublesome: how your employees interact with customers and suppliers. Their actions will determine how trustworthy your company is perceived to be. Think about your work relationships. You haven't been paying enough attention to building trust, says Baard, if you notice coolness in your employees, customers or suppliers. That signal indicates distrust, and you'd better work fast to address its causes.

Ethics Never Go Out of Style
Back in 1998, we ran a feature on social responsibility in three of our magazines. That feature, "Goodwill Hunting," is as relevant as ever. Read it here.

Hoffman suggests evaluating whether your actions match your values. With ethical muteness, you're not expounding the values in your heart. "You have to talk about ethics and make it an important part of your company before it becomes important for you to act," he says. Stating your beliefs gives people a marker for judging your actions.

An equally common source of the values-action gap is ethical paralysis. This comes when the opportunity to act on your beliefs conflicts with the opportunity to make money. The short-term cash infusion you receive might backfire if your customers or suppliers think you're only in the relationship for the money.

As bad as that may be, even worse is ethical hypocrisy. One example, says business coach Daniel K. Oestreich, co-author of Driving Fear Out of the Workplace: Creating the High-Trust, High-Performance Organization, is negotiating to sell the company while telling your employees you're not going to sell it. Should your employees find out, you will lose their trust. They may flee the company and leave you holding an empty shell. Better to be forthcoming. A surprising number may stick around because you trusted them to make decisions for themselves.

For many entrepreneurs, addressing ethics takes time they don't believe they can spare. According to Douglas K. Smith, management consultant and author of the forthcoming On Value and Values (The Financial Times Press), they're right about the time commitment."It's extremely hard to find space and time to deliberate about things," he says. "But that lack of deliberative context is often a cause of a lack of trust." By not thinking before acting, you frequently cut ethical corners without realizing it.

Confidence Crisis
THINK YOU'RE IMMUNE from the ethical lapses of Enron or WorldCom? Your employees might not agree, according to a survey by Walker Information of 2,500 employees at companies of different sizes. In general, small businesses fared worse than the largest corporations.

Percent who disagree or strongly disagree with the following statements:

SOURCE: Walker Information

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This article was originally published in the October 2002 print edition of Entrepreneur with the headline: Trust Is a Must.

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