EDITOR: | June 6th, 2016 | 2 Comments

When your stocks are sliding – call Dr. Trust….

| June 06, 2016 | 2 Comments
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DrTrustThe biggest challenge of CEOs in hard economic times is to raise capital. But then why is it that some CEOs can raise money at any time whereas some are left flailing miserably in the doldrums?

Some CEOs can elicit the trust of investors. Some don’t know how to build up trust.

Like everything else in life, especially marriage, it comes down to trustworthiness.

Barbara Brooks Kimmel is the co-founder and Executive Director of Trust Across America-Trust Around the World (TAA-TAW), and the President of Next Decade, Inc., an award- winning communications firm that has been in business for over 20 years. The mission of TAA-TAW is to help organizations build trust.

According to Ms Brooks Kimmel lack of trustworthiness is what is keeping investors out of the stock market.

To paraphrase Ms Brooks Kimmel: handing out a “beyond reproach” strategy to investors that combines the key indicators of corporate trustworthiness would provide an invaluable solution to a widespread problem.

Dr Daryl Stickel (a.k.a Dr Trust; TrustUnlimited.com) coaches executives to identify the critical problems preventing them from reaching their goals or moving to the next level, develop practical solution sets and then prepare a thoughtful plan to achieve targeted goals and move forward in a positive direction. Dr Stickel holds a PhD in Business from Duke University and worked as a consultant with McKinsey & Company.

According to Dr Stickel, trust is the willingness to make yourself vulnerable to another party when you have the luxury of the option to choose otherwise and when you cannot be certain the other party will act in your best interest.

That’s a hard pill to swallow.

Without doubt trust is a key variable in most of our financial decisions. According to Dr Stickel there are two reasons why we don’t always have trusting relationships: 1. We don’t always recognize that there is a trust problem. 2. When we recognize that there is a trust problem, we don’t really know what to do.

Dr Stickel lists two critical determinants of trust: 1. perceived uncertainty (how likely are they to harm me?), and 2. perceived vulnerability (if they harm me, how much will it hurt?).

To paraphrase Dr Stickel, even though trust is a key determinant in all of our relationship and financial decisions we tend to assess trust based on contextual arbitrary parameters such as a unreliable stereotypes, irrational generalizations and irrelevant details. For example, we may decide that we like someone because he is a good dresser, uses big words, pays close attention to you when he speaks, remember your children’s names, tells funny stories. Any of these factors are perfectly useless to determine if someone will do the right thing.

The takeaway lesson for CEOs is to look at meaningful ways to build up the trust of their audience to prove that they will put the interest of their investors ahead of themselves.

The takeaway lesson for investors is to seek out trustworthy companies. One easy corollary is to invest in corporate teams with track records of achievements. But this approach can overlook excellent opportunities for investing in new companies.

Ultimately we need to build a tool to assess those who abide by this very simple principle that is the fundamental to most successful marriages: earn your keep and keep your word. Alternatively find a trustworthiness coach you can trust.


Dr. Luc Duchesne

Editor:

Dr. Luc C. Duchesne is a Speaker and Author with a PhD in Biochemistry. With three decades of scientific and business experience, he has published ... <Read more about Dr. Luc Duchesne>


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Comments

  • Tracy

    Love this column Luc, thank you. We need a regular column on analysis of what is working in the market — and what is not. Great work, and loved meeting Daryl Stickel.

    June 6, 2016 - 12:09 PM

  • Barbara Kimmel

    Thank you for the mention Luc. Our research on trustworthy companies and investor “return on trust” has been updated since the last report linked in your article. The business case for trust (and it’s link to profitability) continues to grow stronger.

    PS- Hi Daryl

    June 7, 2016 - 6:38 AM

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