Robbed Of Trust

Kathy Sweeney is on vacation. Howard Weldon stepped up to fill in as our first "guest blogger" handling a very tough subject, the loss of trust when ethics are upside down.

Mr. Weldon is a graduate of the National Commercial Lending Graduate School of Banking at the University of Oklahoma where he received the designation of CCL, Certified Commercial Lender. He completed coursework at Williams College, Wharton School of Business, Duke University, advanced real estate at Harvard University and has been a guest lecturer at Carlson School of Business at the University of Minnesota.

Mr. Weldon served as President of Valley National Bank in Apple Valley, MN and as Vice President and COO of Fidelity Bank and Trust Co. in Burnsville, MN. He was also a Vice President with First Bank Edina in Edina, MN, where he headed various lending departments as well as being charged with Strategic Planning for the bank. He spent four years as a Commissioner on the Planning Commission for the City of Apple Valley, MN. Mr. Weldon served in Branch Administration for Peoples Bank in Rhode Island for over ten years. Locations included Providence Main Office, Wayland Square, Barrington and Johnston.

Howard wrote:
There was an article in the September 2006 issue of Harvard Business Review on trust in the workplace. That got me thinking about how important trust it is in marketing as well, and in fact, in any business relationship. One of the most important ingredients in building a thriving business is establishing a feeling of trust in potential customers. Without a degree of trust at least sufficient for the dealings at hand, customers are unlikely to give us their business.
The HBR article includes some gloomy statistics, starting with the finding that about half of all managers don't trust their company's leaders. In 2002, a University of Chicago survey found that four out of five (80%) Americans have little confidence in the people running major corporations, and a Golin-Harris survey found that almost 70% of Americans “just don't know who to trust anymore.” That paints a pretty grim picture, and I daresay things may be even worse today than in 2002.

The headlines are full of failed-trust issues: Formerly “respected business leaders” being jailed for illegal financial manipulations; companies accidentally revealing or losing sensitive customer data; and let's not even start talking about the political arena!

What is a person to do? What is a marketer to do? In order to win their business, we have to establish trust with our prospective clients and customers. On the one hand, with people feeling so robbed of trust today, we might ask how a company can possibly create the necessary trust with prospects in order to turn them into customers. On the other hand, we can speculate that with so few people and companies to trust, people are hungry for trust connections they can make.

Who Do You Trust?
To paraphrase the old Jim Croce song, You don't tug on Superman's cape, you don't spit into the wind. You don't pull the mask off that old Lone Ranger, and you never trust anyone who says “trust me.” Trust is something that has to be earned, not just asked for.
Apparently the folks at Perot Systems want to be known for being trustworthy, but aren't aware that saying they are isn't enough. The headline in their current advertisement says just “Trust.” The copy then begins, “At Perot Systems, earning our clients' trust is not just a goal – it is what distinguishes us in our industry.”

Does that make you inclined to trust them? I think not. Talking about being trusted or trustworthy is almost an ineffective as saying “trust me.”

So how do we build that necessary trust? There are a number of factors that influence both perceived trustworthiness and an individual's willingness to convey trust. Let's look at the latter first.

If a person is in a precarious situation, one outside his control or his comfort zone, he is likely feeling ill-at-ease to begin with. In this case, the stakes are already high for the prospect, so he is apt to feel at greater risk and less willing to bestow trust. In such a case, it may take the influence of several trust-inducing factors to gain the prospect's trust.

It is also important to realize that there are all sorts of people: some are risk takers, and some are risk-averse. The amount of risk the prospect sees being involved with bestowing trust on the person or company that wants his business is an important factor, and this will vary depending on the customer's risk tolerance.

Another consideration is that the prospect may have previously been let down by a company or advisor in whom he placed trust. This type of prospect is less likely to readily trust a new relationship until trust has been well-earned. “Once burned, twice shy,” is an expression we need to take to heart.

Important questions a prospect (truster) is likely to ask include, how reliable is the trustee? Do I get a sense of integrity from him? How reliable has he demonstrated himself to be? These are significant contributors to conveying trust.

Make a Promise, Keep a Promise
FedEx's "absolutely, positively overnight" promise (an old favorite of ours) communicated that sense of reliability and therefore trust, and it worked incredibly well for the company. If they are promising certain overnight delivery, we thought, they must really come through! In fact, the campaign only worked because FedEx was able to come through and keep that promise virtually every time.

Coming through on promises inspires trust. And if someone does more than just come through, so much the better. That is why the advice to under-promise and over-deliver is so wise. People are impressed when they get more than they expect.

I have purchased a number of computers from Dell over the years, and I found them to under-promise and over-deliver almost to an extreme. Several times the computer we ordered was delivered before the date they quoted as being the “expected shipping date.” Perhaps this is one of the reasons the company became so successful!

The opposite is devastating, though. A company that over-promises and under-delivers exhibits unreliable behavior, and unreliable behavior arouses distrust instead. It doesn't matter how well-intentioned the company – or the person – is, the fact remains that they didn't come through as promised.

Tell Me True
Good communication is another essential element in building trust. This seems obvious when you think about it, but it is something that businesses often ignore. Many businesses tend to use their communication budget – be it time or money – to solicit new customers rather than maintain current ones. They seem to think, well, we're doing what they hired us to do, so that is enough, isn't it? Often it is not.

Poor communication creates distrust, because without communication, we don't know if the trustee is doing anything on our behalf. At one time I had an investment advisor who called me every month or so just to touch bases and update me on the outlook for the securities I was invested in. I appreciated that communication and felt I was being taken care of. When he left the business, I switched to someone else who had come highly recommended. After the honeymoon period, though, I never heard from her unless there was a trade to discuss. Even when I told her I would like to hear from her more often, she basically told me that I'd hear from her when there was something to talk about. As a result, I felt that she was not paying much attention to my account and didn't have my best interests at heart. Needless to say, she lost my trust and my business.

Communication can be especially important in times of crisis. Someone who proactively communicates and is honest and forthright when things are rocky can engender a great deal of trust. Maybe that is because so many others treat us like mushrooms … you know, keep us in the dark and feed us so much manure!

Are You Interested?
How closely someone's interests are aligned with yours can affect your willingness to trust that party. If you both benefit from the same outcome, you naturally have the feeling that the other party will serve your interests, because her interests are being served at the same time.
In the case of a stock broker, there is little alignment of interests. The broker makes her money by buying and selling securities. The client only makes money if the securities go up in price. The broker has an interest in keeping the client from becoming so dissatisfied that he takes his business elsewhere, but only to that extent do her financial interests align with those of her clients. Therefore, this is a situation in which other trust factors (like good communication) come more heavily into play.

Competence is the final trust factor we will cover, although there are certainly other issues involved in engendering trust. Competence can be difficult to judge, especially when the trustee has some specialized or expert knowledge. How is the lay client supposed to judge the expert's competence?

Often it is really the ”perception” of competence rather than the actual that we assess. If the person has the trappings of someone who is successful in his area – reputation, accreditation, apparent success, referrals from other trusted sources, etc. – we believe he must have the necessary competence in order to have achieved those things.

This is why recommendations are so great, both for the prospect and the business. Since it is difficult to judge competence outside our own ken, and it is impossible to know if someone keeps their promises and comes through, a referral from someone we do trust imparts that feeling of trust to the party being recommended. As the business being referred, the referral from a trusted source legitimizes you. Naturally, you have to live up that as you build you own relationship with the client or customer, but you don't have to forge the initial trust from scratch as you would otherwise.

Trusted Brands
The need for trust is another reason why building your brand is so important. Brands that become well known become familiar entities, something like friends in their own right. We tend to trust our friends, so a familiar brand inspires trust as well. It is similar to getting a recommendation. A strong brand image can convey the perception of success, professionalism, competence – those qualities a prospect tries to judge before doing business with a company.

Suspension Of Disbelief

Scene 1: Rural town department store circa 1970, before security devices

Male Shopper: He folder the sweater he was thinking of buying and with direct eye contact with me he stuffed it inside his parka, zipped the jacket up to his neck and with one more glance at me walked out of the store.

Store Clerk (me): ( panic thoughts ) Stop him! Wait…he is over 6’ tall, at least 250 pounds and is the star football player in our small college town. Ok then, tell the store manager quick! No, wait…he is this shoplifter’s uncle. My manager is NOT going to like me accusing a family member of theft. My word against his….this guy is going to get away with it.

On that day I vowed to never again compromise my values and to never again be so weak. Wrong is wrong and theft is wrong.

Fast forward 10 years and now I am a seasoned mortgage loan processor with many loan approvals under my belt. Suddenly I was faced with another business moral dilemma. An appraiser that was the favorite of one of our newest builder accounts began bringing appraisals prepared in pencil (remember, this is before computers!). When I mentioned to him I didn’t want penciled work ups he shrugged and said “Oh, I gave you my work up copy…I will get the final to you before closing.” It happened again on the next loan. Again I told him this wouldn’t work for my file. He said, “Look, these take out loans based on the construction loan are a moving target. I will get the final to you when the builder tells me how much value he needs to cover the transaction”.

Wrong! Even though he was our #1 client’s favorite appraiser he was dropped from our approved appraiser list that day.

I share these stories with you because we have all been there. Faced with a moral dilemma and sometimes feeling powerless we fold to acceptance. However, most companies today have a vehicle for us to voice our concerns. We can seek out the best avenue in our companies and ask for complete confidentiality if and when we are aware of wrong doing in our mortgage workplace. Please understand, I am not advocating running a muck and looking for every single thing that YOU think is wrong. Being too quick to judge is as bad as watching a guy steal a sweater. Just keep in mind, sometimes things are not what they seem. Generally accepted business practices and a good corporate ethics policy will guide you in telling right from wrong at work.

Most people do the right thing or are thinking they are doing the right thing. Sometimes it is a gentle word from a co-worker correcting a simple blunder that will change a person’s work habits to the good and improve their skills for the long term. Even workplace discussions about ethics will evoke renewed understanding in people who have before fostered an illusory sense of piety because they have not yet faced themselves and their tricky ways. And as always we should continue to look upon our fellow workers with love and understanding even when we ‘think’ there is something amiss. Sometimes it is *“that willing suspension of disbelief for the moment, which constitutes poetic faith” that we need to apply to allow correction in the workplace. Have faith in your fellow workers that they are an important ingredient in the renewal of ethics in the business world.

*That willing suspension of disbelief for the moment, which constitutes poetic faith.
Samuel Taylor Coleridge

Truth’s Competition

Today’s news reports that the Feds filed criminal conspiracy charges against one of our nation’s 10 largest home builders reaching a deal that allows it to clear its record by paying up to $50 million dollars to compensate borrowers who were defrauded by its former mortgage arm, Beazer Homes.

As English essayist, Alexander Pope (1688-1744) so aptly put it “No one should be ashamed to admit they are wrong, which is but saying, in other words, that they are wiser today than they were yesterday.” So it makes sense that Ian McCarthy, Beazer’s CEO would make a statement for the media saying, “We deeply regret these matters and have used what we learned to strengthen our control and compliance culture.” Now, the proof “is in the pudding” as great grandmother used to say. Over and over in mortgage we have seen bad players, having been caught, move shop, change names and re-open with the same unethical practices.

Does paying a drop in the bucket fine really change their modus operandi? Love of money gets Lenders into the mess; having money gets them out; then wanting more money makes the appeal to do what ever it takes to get there faster even more tempting. It is and always will be about money. Check it out in the poem I wrote in 1986:

Money
I am a newly minted coin.
Bright and Shiny.
Sought After.
Treasured.
I am a well worn coin.
Spent.
Tossed for Decisions.
Changing Lives in Passing
I am Truth’s Competition.

So what else can the Feds do but fine the guilty and move on? How about a complete freeze on their ability to lend in the United States? You know, kind of like if you loose your drives license due to reckless behavior. You are not allowed to drive a vehicle – not legally, anyway. Maybe that is the concept here.

If the Feds put a freeze on a company’s executives’ and loan originators’ lending ability but the company and/or its originators begin lending again under another company name or in another state they could possibly go to jail.

Breaking a law like that might just be illegal enough to qualify for jail time; whereas defrauding American homeowners one loan at a time, apparently is not.


No one should be ashamed to admit they are wrong, which is but saying, in other words, that they are wiser today than they were yesterday. Alexander Pope