“Your word is as good as gold” is a popular idiom and a high compliment, meaning you are dependable, trustworthy, and full of integrity. A person described this way does as they say they will, and you can count on them.
While the origin of this idiom is unknown, it’s not hard to understand why trustworthiness is tied to something as valuable as gold. And historically, the US has protected the gold of many foreign nations. Right now, 507,000 gold bars sit in the underground vaults of the New York Federal Reserve Bank in lower Manhattan. That is 6,331 metric tons of gold, 98% of which belongs to foreign countries, and a large fraction of the gold reserves that banks from around the world hold. But why do foreign countries allow their gold to sit in those NYC vaults?
According to Paul Krugman, the Nobel Prize winning economist, traditionally it is because “The sanctity of nations’ ownership of gold stored in New York is guaranteed by the word of the U.S. government — a government that is utterly reliable, because it honors the rule of law.” Today, countries are starting to remove their gold from the control of the US government. Why? They no longer trust the US government to abide by the rule of law, and that puts their gold reserves at risk.
France recently removed 129 metric tons of its gold out of NY, and the Dutch followed by removing 78 metric tons. (It doesn’t physically move, but ownership of the gold in NYC is shifted while gold sitting in foreign vaults is acquired.) Other countries are planning similar movements.
When an institution or organization loses the confidence and trust of its customers, it is very bad for business. The parallels are obvious. In this case, that’s as the custodian of their gold reserves. Canadian Prime Minister Mark Carney stated that the U.S. signature on trade agreements was "written in pencil" to criticize Washington's shifting commitments and unreliability; government by whim, indicating a complete lack of trust that the US would be a reliable, dependable partner. If the pattern continues, there is worse to come.
Trust and confidence are extremely valuable assets of any organization. I met a CEO a few times who was described by his reports as extremely trustworthy. “You could give him your last dollar, and he would guard it well,” they would say to me. His executives would do anything for him, for he had their complete confidence in terms of his integrity, dependability, and benevolence. Due to this culture that emanated from the top of the house, trust was pervasive throughout the organization, making it a top-performing company.
Every organizational leader should be asking questions around trust these days.
Do our employees trust both the organization and their managers?
Externally, do suppliers trust that they have a reliable relationship, and will they be paid on time? Will they be treated as valuable partners, working together to provide products and services, or as a fungible asset that can be tossed away at will?
Can customers trust the products and services provided and will they be of high quality and good value? Will it make them sick?
Can people trust that the organizations embedded within their communities will be good neighbors? Will they support the local economy and be good stewards of the environment, or will they run roughshod over zoning regulations?
The ways trust and confidence can go wrong are multitudinous, and certainly both are multi-dimensional. But a lack of trust in one area is likely not going to stay isolated in that area; rather, it will spread to all of the organization’s other relationships, and it will spread like wildfire. Once trust is lost, reestablishing it is a long and arduous road, if it can be done at all. Some organizations are no longer viable once trust is lost. The better path is not to do anything that destroys trust, even as organizations face profit pressure or competition.
Understanding and measuring trust, in all of its aspects, is critical to long-term successful organizational performance. Heading off issues before they metastasize will keep organizational performance on track. Yet no organization that I’ve ever encountered includes a Chief Trust Officer. Having someone focused on maintaining trust and heading off problems throughout the organization may very well be in the future for those organizations that thrive long-term.
Want to hear more? Join us as Jeffrey Saltzman discusses how to boost trust within your organization and why it's so important.
Register for our upcoming webinar
Why Trust Matters: A Hidden Driver of Business Performance