TRAC Newsletter

"Change starts within... a burning desire for different results. Become the CHANGE you seek." TRAC Consulting

Upcoming Events

Best Year Yet Program - Leader Training (Dates TBA)

Some 2008 Highlights

At the Sunshine Coast Excellence in Business Awards held on the 8 November 2008 TRAC Consulting received the Judges Highly Commended Award in the "Professional Services" category. Evidenced by the number of strong nominees the Sunshine Coast is really blessed to have so many professional and entrepreneurial driven businesses across the region. We urge you in the current economic environment to think of the nominees listed below as a rich resource of talent that can help you to grow and prosper in the future.

TRAC woud like to congratulate all the following nominees from the Professional Services category shown below.. This award was sponsored by the University of the Sunshine Coast.

Business Mentoring Program Update

The "Growing Creative Businesses" small business mentoring program has now attratced 80 SME's from across the region into the program who are very abley supported by our outstanding pre-trained team of over thirty business mentors. We would especially like to thank our mentors for the invaluable contribution to the longevity, success and sustainability of the small businesses involved, along with a huge note of thanks to Gerrie Carr-Macfie and her team at Sunshine Coast Enterprises.

With the program contiuing into 2009 are are very much looking forward to continuing the journey with you all, ensuring that 2009 will be bigger and better than the successes you have enjoyed this year. Remember that the first of the 2009 cluster mentoring sessions are scheduled for the first week in February.... see you all there!

Note: There are still limited places available for this program in 2009. Should you be interested or know of a business that would benefit from some world class business mentoring support have them contact Alison James at our office on email projects@tracc.com.au for an information pack!

The Speed of Trust...

The expansion of TRAC's partnership with USA based LearningChange International has introduced many opportunities for new thinking and organisational learning strategies. In 2009 we will be introducing the "Speed of Trust" program into the Australasian Market. Developed by accalimed author Stephen M Covey. "Seven Habits of Highly Effective People" notority, this program will change the way that businesses do business for ever! Here is a prelude...

Trust…a nice-to-have “social virtue” or a measurable, economic driver that impacts performance and stakeholder value? We would argue the latter. Unfortunately, because trust is a perception, it is often a hidden variable that is difficult to understand, measure and improve. It doesn’t have to be that way—particularly when we understand the economics of trust. The economics of trust simply state that trust always affects two measurable outcomes: speed and cost. When trust goes down, speed will also go down while cost will go up. This is a tax. When trust goes up, speed will also go up while cost will come down. This is a dividend.

Every interaction, every work project, every initiative, every communication, every strategic or tactical imperative we are trying to accomplish is affected positively or negatively by trust. If our organisation enjoys a trust dividend, then trust becomes the great ‘performance multiplier’. If, on the other hand, we are paying a trust tax, then everything we do takes more time, costs more money and the outcome in terms of quality and effectiveness goes down—which ultimately impacts the customer. As Columbia Business School Professor John Whitney says, “Mistrust doubles the cost of doing business.” Because trust is the one thing that affects everything, it is, without question, the most important strategic lever we can focus on. Since this is the case, it is critical to understand the impact that trust is having on our organizations so that we can do something about it.

We can quantify and measure organizational trust in 3 specific domains or categories:

3. The economic impact of the trust level inside the organization (trust effects)

1- The trust level inside the organization (trust levels): Most organizations don’t formally measure trust. Those that do, tend to measure it in this first category but then stop there. Nonetheless, measurement in this category can be helpful in that it creates awareness and a starting place. While some organizations ask general ‘trust’ questions using various methods, our analysis is that a very effective question is to ask “Do you trust your boss?” to employees at all levels of an organization. But to only measure trust levels and not to measure the trust components or effects is to limit our ability to solve the problem or run with the opportunity. Usually, most people already know when the trust is low and we don’t need an employee survey to tell us that. What’s valuable is for us to know why so that we can begin to behave ourselves out of a problem we may have behaved ourselves into.

2- The observable behaviors that create or destroy trust (trust components): When individuals, teams and organizations live the 13 Behaviors of High Trust Leaders, trust is created. The 4 Cores of Credibility—Integrity, Intent, Capabilities and Results—will correspondingly increase. When the opposite of these behaviors, or the more common ‘counterfeit’ behaviors are displayed, trust erodes and the 4 Cores will decrease. Going beyond the general and focusing on which specific ‘trust’ behaviors are strengths and which are deficiencies is very valuable. We can then focus our training, communication, processes, systems, etc, to strengthen the behaviors, and ultimately the Cores, that create trust.

As an example of measuring observable behaviors, consider a large health care organization: As we began to work through our Speed of Trust process, it was evident from the data that the behaviors Practice Accountability and Create Transparency were significantly lacking. Before going through our training process, the respondents indicated that 26% ‘usually’ or ‘always’ Practiced Accountability. After the process, that number went to 54%. Relative to Create Transparency, before the process this behavior showed up 32% of the time; after the training process, 67%.

The process resulted in the culture seeing “Trust as a visible asset” going from 6% to 20.5% in 3 months time.

3- The economic impact of the trust level inside the organization (trust effects): Wouldn’t it be great if “trust” showed up on the financial statements as either a ‘tax’ or a ‘dividend’? Organizations would then use resources to eliminate the tax or create a larger dividend! Although a high trust or low trust culture doesn’t literally show up on financial statements, it does show up in the following ways, which are measurable, observable and economically relevant (all of which make a strong “business case for trust”):

The quantifiable indirect costs of office politics are conservatively estimated at $100 billion per year; many observers put it substantially higher.

The Gallup organization put a conservative price tag of $250 to $300 billion a year on the cost of disengagement in America alone. Gallup’s research shows that 96% of engaged employees—but only 46% of actively disengaged employees—trust management.

Unwanted turnover is expensive. On average, it costs companies one and a half to two times the annual salary to replace an exiting worker.

Studies of customer defection (churn) indicate the financial impact of having to acquire a new customer versus keeping an existing one is significant; some say by as much as 500%!

In a 2004 study it was estimated that the average American company lost 6 percent of its annual revenue to some sort of fraudulent activity.

Regarding trust creating increased value, the data points are compelling. In a Watson Wyatt 2002 study, high trust organizations outperformed low trust organizations in total return to shareholders (stock price plus dividends) by 286%. Additionally, according to a 2005 study by Russell Investment Group, Fortune Magazine’s “100 Best Companies to Work for in America” (in which trust comprises 60 percent of the criteria), earned over four times the returns of the broader market over the prior seven years.

Research clearly shows that customers buy more, buy more frequently, refer more, and stay longer with organizations and people they trust. Plus, these organizations actually outperform with less cost.

Forbes highlighted this “collaboration as opportunity” trend in 2006, pointing out what they call the “bedrock” of collaboration: trust. Without trust, collaboration is only cooperation (or worse, mere coordination), which fails to achieve the benefits and possibilities available to true collaborators.

The Warwick Business School study confirmed that partnering relationships (such as outsourcing deals) that are based on trust experienced a high trust dividend of up to 40% of the value of the contract.

High trust companies elicit far greater loyalty from their primary stakeholders. The evidence for every one of these relationships is clear:

· Suppliers and distributors stay partnered longer with high trust organizations.

In summary, we can’t solve a problem we don’t understand. For too long, trust has been a problem we haven’t understood. A significant reason why this has been the case is because we haven’t measured it, or have only measured it at the first domain, when, in fact, trust can be effectively measured in these three domains or categories:

As we become better at measuring trust, we also become better at increasing trust. As we do this, we turn this so-called intangible into a hard-edged, economic driver, enabling us to increase the dividends in our companies while decreasing the taxes, validating the twin phrases, “Nothing is as fast as the speed of trust.” And, “Nothing is as profitable as the economics of trust.”

Strategic Planning for 2009

Hopefully the Christmas and New year period will provide you with some quality time for reflection and also with opportunity to think about next year and beyond.

Traditionally, January provides a great opportunity to also sit down with your teams and key personell to estabish clarity of vision, business objectives and focus areas for the coming year. Remembering the saying that "if you fail to plan... you plan to fail" probably has more truisms than ever before in the current economic climate I would like to suggest that quality time should be put into your strategic planning activities early in 2009.

Key points to establish should include individual and team performance goals, how success will be measured and who is accountable for what outputs! If you would like an obligation FREE consult of how TRAC Consulting can provide you with a proven framework and an objective and neutral facilitated planning session that will ensure an actionable strategy is developed for your business, send an enquiry to admin@tracc.com.au and we will liaise with you early in 2009.

Christmas Closing Times & Wishes

TRAC Consulting will be closed for XMAS and New Year returning on the 12 January 2009 (approximately 3 weeks) for a very well deserved break.

We are sure that you all deserve a decent break over the holiday season as well to spend quality time with your families and loved ones. Remembering that one of TRAC's key buisness development philosophies is that you have to maintain a work-life balance in order to grow your business on the path to sustainability please take some time out just for you!

In closure, we wish you all a safe Christmas and prosperous 2009. We look forward to catching up with you all some time in the near future. Until then...