Trust is Mandatory

Honesty is the single most important thing in every stakeholder’s eye.

Adam Smith is very well known in economics for some of his popular books like The Wealth of Nations. But he has always felt like The Theory of Moral Sentiments was his best work. Smith was very passionate about trust and ethical behavior.

“We’ve got it wrong when we say business is business, and [it] has nothing to do with ethics,” says R. Edward Freeman. He delivers lectures at the University of Virginia, Charlottesville on the subject of business ethics. “Adam Smith thought that markets wouldn’t work unless people wanted to do the right thing.”

Trust is at the center of your interactions with employees, business partners, and customers. Every major decision that will be made will weigh heavily in favor of who we trust.

In 2002, we all looked closely as Arthur Anderson, Enron, Tyco, WorldCom and similar companies cast an umbrella of suspicion over many other American companies. This is not just a big company problem. “Everyone has something to worry about,” says Laura P. Hartman, president of the Society for Business Ethics. “You could be at the most reputable firm, and this stuff could trouble you.”
An absence of trust will also drive up the cost of doing business one way or the other. Imagine situations where you do business with suppliers based on handshake deals. The moment you fail to honor any of those deals, suppliers will decide to deal with you on a contractual basis, and this will drive up legal costs.

This is an opportunity for small businesses to get a piece of the market that big companies might not have an advantage in. As a small business, you get to deal with the parties involved on a face to face level, and you can more easily maintain a level of trust that will be absent with large corporations. As long as you put forward a trustworthy attitude, you are setting up yourself for success.
There are two sides to maintaining ethical behavior. The first part has to do with you the owner or leader and how you deal with people and the other part has to do with how our employees deal with customers and suppliers. These two things together will determine the outlook of your business to the outside eye. Take time to build trusting relationships with everybody you work with and everybody you do business with.

These ethical values must be properly instilled in the culture of the company such that as the company grows, these beliefs continue to be passed on from employee to employee. You will not be able to maintain a one on one relationship with everybody at a certain point, so this needs to happen organically.

“Entrepreneurs put together companies by establishing relationships with people built on trust,” says the University of Virginia’s Freeman. “As the company gets bigger, entrepreneurs may not focus on that as much as they did in the beginning. Once they start thinking about the company as a regular business, they forget what made it successful in the first place.”