Trust is one of those things that takes a long time to build, but can be lost in a moment.
Occasionally, we encounter inflection points as a society. These points in time, where trust is at a premium, can dictate how much trust people place in institutions, businesses, and even other people. COVID-19, the disease caused by the novel coronavirus, has brought us to one of these inflection points.
We need to try to earn people’s trust during this time, or the fallout could last for years.
I started thinking about this after an interview CNBC held with billionaire investor Mark Cuban on the prospect of reopening businesses while everyone is dealing with this pandemic episode.
“Not only is it a safety issue, it’s a business issue,” Cuban told CNBC. He continued:
How companies respond to that very question is going to define their brand for decades. If you rushed in and somebody got sick, you were that company. If you didn’t take care of your employees or stakeholders and put them first, you were that company.
When he’s talking about a brand, he’s talking about trust. All branding is, at its core, about knowing something or someone and trusting them more than a competitor.
It’s a two-fold issue. First, there’s the trust between the business and its employees on ensuring health and safety in the workplace. And second, there’s trust between company and customer, which can involve both how the business protects the customer and the employees, and how it treats everyone during an economic shock, such as this one.
And this moment is a shock — a potential black swan event, even. For reference, a black swan is “an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, their severe impact, and the widespread insistence they were obvious in hindsight,” Investopedia reports. The term was famously coined by Nassim Nicholas Taleb, who wrote a book on the topic after the Great Recession of 2008.
Diseases and pandemics are predictable in a way, but the global response to this event has been uniformly the same: shut everything down and let this moment pass.
That’s the unpredictable part. That’s what takes this from a bad flu season to the full-blown pandemic response that has taken us into black swan territory.
We’re dealing with an event that has abruptly intruded on every part of society. No industry or segment of human life is going untouched by this virus. And because everyone is getting tossed around by this storm, that means trust is more valuable than ever.
I don’t use the word “valuable” lightly here. There are real, measurable, economic benefits to trust. Harvard Business Review put it this way:
Your ability to build trust has a profound effect on business results because trust affects two measurable outcomes: speed and cost. When trust goes down (in a relationship, on a team, in an organization, or with a partner or customer), speed goes down and cost goes up.
This is what Stephen [Covey] calls a “low-trust tax.” The inverse is equally true: when trust goes up, cost goes down, and speed goes up resulting in a “high-trust dividend.” These trust taxes and dividends are real and essential for leaders to understand as they develop their trust-building competence.
If you don’t trust someone, you’re likely to be hesitant with them, investigate more, and spend time questioning them before you spend your money. If you trust them, decisions are secure and transactions fast.
Trust is the most basic and invaluable aspect of capitalism. The system requires and builds trust.
This brings us to the present pandemic and the crisis of trust it presents. Most businesses were enjoying a booming economy just a few weeks ago. Now, they face the prospects of layoffs or not bringing back independent contractors because there’s no business.
How they manage these moments of trust between employees and customers will define them for years to come. Look at the auto-company bailouts during the crisis. Ford built trust. General Motors did not. It took GM years to build itself back up.
Another issue is trust between the government and citizens. That’s why the CARES Act, a $2 trillion spending plan from Congress, has to work. The government is demanding that people stay at home and either not work or work remotely unless they’re an essential service. If the government makes this demand, and monetary help from the government doesn’t arrive fast enough, the trust will break down.
Donald Trump appears to be one of the only people in Washington who understands this right now. He’s demanding that the government send out checks to people by April 6.
The federal bureaucracy is far more lackadaisical about this and thinks the end of April will work. It won’t. People have bills due now, and they’re prohibited from working.
This event is not a normal recession situation. It’s not a stimulus package. It’s a pandemic we’re trying to survive without totally wrecking the economy and spiraling into a recession. Not to mention a far more fundamental problem: if people see the government demanding that they take personal action to send help, but then the government makes no immediate action to help alleviate this problem, the trust will end up broken.
We’re threading a very fine needle right now. We’re trying to balance the needs of an economic shutdown while defeating a virus that has dropped other countries to their knees.
As long as everyone can maintain trust both in each other and the government, we should be able to get through this. But if people and businesses start failing that trust, it’s going to take longer to recover.