Trust. A Company's Most Important Capital.
Trust is emotional. It's about people and feelings. It is often seen as soft and fluffy but is in fact hard and valuable. According to a report from Oracle, intangible assets account for about 80% of a company's value today compared to about 20% in 1975.
I call myself a trust capitalist because I am convinced that trust is our most important capital.
My goal is to inspire more people in business to want to build a stable trust capital that contributes to creating value and sustainable development in companies/organizations.
Why is trust the company's most important asset?
You may think it's money? How can something as soft and abstract as trust be more important than money?
In a company where trust levels are low, existing customers leave because they don't want to do business with someone they don't trust and new customers aren't interested. Employees lack commitment and trust in management, so they quickly look for another job. The company has difficulty attracting new employees. The suppliers do not prioritize the company as a customer and want to be paid in advance, and the bank is not willing to provide financing.
This company will not survive in the long run.
In a trusted company, business can be done with a handshake alone. The need for control and communication is minimal and employees work effectively together. Trust capital has been built up over time through long-term and sustainable relationships, internally and externally.
Trust capital creates value for all stakeholders. It is found both in the current income statement and in the balance sheet. When evaluating before an exit, or when raising capital, it is an important factor to take into account. The trust capital is included in the intangible assets (non-monetary without physical form) such as brand, customer relations, human capital and data.
According to the report 'Measure and manage what matters next' from Oracle, these intangible assets account for about 80% of a company's value today compared to about 20% in 1975.
It is the people in the company who build the trust capital through who they are, what they do and how they communicate.
For example:
- Owners who demonstrate their intentions through an ownership directive that contains clear values, a clear purpose and the orientation they desire.
- A board that works for the good of the company with responsibility for the trust capital and the corporate culture.
- A CEO and management who build the company culture by acting in a trustworthy manner. They live the company's values, they do what they say they will do, they admit mistakes and they execute on plans and goals.
- Employees who feel trusted are secure, they thrive and perform. They are also proud ambassadors who speak well of the company and recommend it to others.
- Customers who trust the company are willing to recommend the product/company to someone they know. They are loyal and return. They are willing to buy more and are not price sensitive to the same degree as customers who lack confidence.
- Suppliers who trust the company provide longer payment terms, better terms and are open to innovative collaborations over time.
- Banks and other financiers who feel confident are willing to provide financing and to take a greater risk.
- Auditors who have confidence in the company know that they receive the information they request and that transparency prevails.
- Politicians who feel confident in the company are more inclined to speak up for the company and help when needed.
- A society that feels trust in a company, and its leaders, has a willingness to actually listen to what it has to say.
High levels of trust saves time. Agreements are reached faster and the transaction time is shorter. It creates efficiency in the organization and we all know - time is money.
Trust capital is built over time and is tested in crisis, in which it can be destroyed quickly. Trust is fragile, it needs to be nurtured and managed over time with humility.
How high do you rate your organization's trust capital?