The Trust Equation

The Trust Equation

The Trust Equation

One of the things that I learnt in this year 2023 when I attended a leadership course was the Trust Equation. Prior to attending the course, I never know that there was such an equation to evaluate Trust.

Trust relationship is vital in every aspects of our lives. At work, Trust can be internal with employees or colleagues or external with your customers and partners. Trust is also applicable to our personal lives with friends and families.

Why Build Trust?

At work, Trust help projects succeed. Relying on your team members to meet the project deadline is a sign of trust. Projects often fail because there is no trust between team members and each one starts blaming one another.

If I relate Trust with the investing community, I subscribe and read blog posts written by fellow financial bloggers because I trust their analysis and judgement. If you are reading my blog posts, this is also because there is a certain establishment of Trust in me.

The Trust Equation (How to Measure it?)

How can we proactively measure and increase our trustworthiness? If you are not aware, there is in fact an equation for Trust.

The Trust Equation is: T = (C + R + I) / S

T = Trustworthiness (the willingness or ability to rely on others)

C = Credibility (Trusting what someone says)

R = Reliability (The consistency of delivery. Trusting what someone does)

I = Intimacy (Psychological safety engendering openness and willingness to engage)

S = Self-Orientation (Extent to which we are perceived to focus only on our goals, sometimes at their expense)

We use a score from 1-Lowest to 10-Highest for each of the above components in trust.

Let me explain the above four components with more details.

Credibility

The credibility component is about how well someone know their stuff? How competent do we think that person is?

A higher credibility improves Trust.

Reliability

Reliability is about whether the person commit to what they say or promise to deliver. With regards to reliability, a track record and consistency in delivery is important.

Higher reliability improves Trust as well.

Intimacy

Intimacy is about feeling emotionally secure. Do you have doubts or negative thoughts about someone? Psychological safety help to connect one another and improves intimacy.

Similarly to Credibility and Reliability, higher intimacy improves Trustworthiness.

Self-Orientation

Self-Orientation is the extent to which we are perceived to focus only on our goals, sometimes at their expense. How much do you put yourself in front of others? A selfish person has high self orientation as they often put themselves first than others.

Higher self-orientation decreases Trustworthiness.

An Example on How to Apply The Trust Equation

Let us imagine you have a personal wealth advisor, named Kent. He is a certified chartered financial analyst (CFA). He has a track record of helping his customers make profits of more than 100%. You know Kent through an acquittance and Kent is someone you can speak to for personal wealth planning.

Through a few examples you saw, you know Kent put his customers first than himself. For example, you knew that Kent does not anyhow sell insurance plans or advise customers to buy stocks for his sake of earning big commissions.

Credibility = 8/10

Reliability = 9/10

Intimacy = 6/10

Self Orientation = 4/10

Trust = (8 + 9 + 6) / 4 = 5.75

From the above, we can see that we can improve on Intimacy to improve the Trustworthiness. As you get to know Kent better, you can review the self orientation component to identify whether Kent has the heart and soul and put his customers as his top priority. If he does, you can decrease the self-orientation score to improve the Trust.

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