Trust Me, It's Time to Fill the Certainty Gap

Dov Seidman: Rethinking the emotional and monetary value of trust in the economic crisis

By Dov Seidman

Conventional wisdom holds that the economy is suffering from declining consumer demand, insufficient business investment, and the high cost or unavailability of credit.

Government and business leaders need to understand the problems run deeper. I believe that the global economy has been paralyzed by a widespread lack of certainty—about the value of assets, the trustworthiness of borrowers, and the outlook for the economy as a whole.

I call this problem the Certainty Gap—the distance between an individual's ideal vision of stability and security, and the realities of life. I believe it exerts a profound influence on our abilities, both individually and collectively, to pull ourselves out of our slump.

Filling the Certainty Gap requires business leaders to fundamentally rethink the meaning of trust and then do something that may strike some as counterintuitive: give trust away.

By extending trust, as opposed to requiring others to earn that trust, business leaders can help narrow the Certainty Gap. Doing so will get credit, risk-taking, and innovation flowing once more.

Trustworthiness Crashes

A steady flow of studies and news reports reinforce something most business leaders know: Trustworthiness—which differs from trust, as I'll explain later—is extremely low.

The global public relations firm Edelman recently published its 10th annual "Trust Barometer." This survey indicates that 62% of the 4,500-plus global respondents trust corporations less this year than they did last year, based upon a survey conducted Nov. 5 to Dec. 14, 2008. Seventy-seven percent of U.S. respondents say they trust corporations less this year.

A recent survey of 1,200 people conducted by strategic brand consulting firm Siegel+Gale shows that trust in financial-services companies has dropped nearly 40% in the past year. Nearly two-thirds of those respondents also believe that businesses complicate their processes and communications in an attempt to mask real risks. This is a stunning indictment of the financial establishment.

Business leaders need only take the pulse of their employees, customers, suppliers, and shareholders to reach a similar conclusion. Employees remain distracted; they are preoccupied by the fear of receiving a pink slip and the anxiety caused by dwindling retirement accounts. Shareholders worried about the plummeting value of their holdings are selling stock and stashing their cash on the sidelines while "waiting out the storm." Suppliers are reluctant to ship goods because they don't know if they will get paid.

Regulators, meanwhile, are eager to step in. Because of the behavioral lapses in the financial-services industry that helped cause the downturn, people appear hungry for more regulations: 65% of global respondents to the Edelman survey believe their government should impose stricter regulations and greater control over companies across all industries. However, regulations have their limits; indeed, rules alone cannot fill the Certainty Gap.

Cynicism Is One Response

I realize that some uncertainty is inevitable, so the Certainty Gap never disappears entirely; it grows or shrinks as conditions change.

Imagine that a three-legged stool represents a certain life. Each leg symbolizes one pillar of security: physical security, material prosperity, and emotional well-being. When the stool is stable, the Certainty Gap is small; we hardly pay it any attention. When something damages one or more legs, the stool becomes wobbly and the Certainty Gap grows. We then seek to protect ourselves from threats and look for reassurance.

Today our three pillars—physical security, financial prosperity, and emotional well-being—are simultaneously shaking violently. We are experiencing war, terrorism, recession, and a crisis in values that crosses business, society, and government. The Certainty Gap has never been greater.

We can respond to the Certainty Gap with cynicism or trust.

Cynicism—the belief that people are solely motivated by narrow self-interest—creates suspicion and breeds insecurity and fear.