Troy Waugh

Trust: The Leadership Imperative

Dimensions of trustworthiness revealed.

November 21, 2011
by Troy Waugh, CPA

The CPA has long been the United States’ most trusted business adviser, but inside many of the best accounting firms, there is rampant mistrust of each other. We can attribute the mistrust to the backgrounds of the staff members who’ve lived or worked in low-trust environments, the skepticism that we teach and encourage, or the actions of people in leader roles. Trust can be selective. For example, you can trust me to accurately prepare your tax return, but you may not trust me to compensate you fairly. Trust can permeate our relationship.

Mutual trust is a shared belief that you can depend on each other to achieve a common purpose. Businesses, teams, and accounting firms operate more effectively when there is a high-level of trust among all the staff members. Yet, we see a severe lack of trust across departments, generations, genders, and various levels of staff. It is the leader’s primary role to model the development of trust.

A culture of trust in your firm can become a major competitive advantage. Trust allows your firm to both function and serve your clients better. Trust is rare; few companies truly have a trusting relationship between leaders and employees. Trust is a capability that is difficult for your competitors to observe and imitate.

The first and foremost quality to be a leader in any situation is trust. If people don’t trust you, they will not follow. Second, you’ve got to be there for them. Early in my career, I witnessed what I would call some pathetic leadership where a senior or a supervisor would make his people work on Saturday but he wouldn’t come in! Third is just brutal honesty in all situations. Here at BKD, we call it “putting the moose on the table.”

Terry Harris, managing partner of McKonly & Asbury LLP in Harrisburg, PA, believes trust is the core component of a successful organization. With trust comes alignment, and with alignment comes a team that all rows in the same direction, resulting in enthusiasm as the team succeeds. Trust is something that is earned over time, with decisions that are consistently focused on what is best for the organization and not for any one individual. Trust is also built by having a culture of mutual respect for individuals within the organization at all levels. It is aided by transparency of the firm leadership. Open communication and dialogue on issues within the team enhances trust.

If I were to describe a person of integrity, it would be a person that keeps his word. When leaders fail to keep their word, trust is eroded. Trust, much like a good reputation, takes a long time to develop but only a very short time to lose. Honesty over time is the only way to repair trust when it is lost. When mistakes happen or errors in judgment are made that erode trust, an apology from a leader goes a long way toward the reestablishment of trust.

Dimensions of Trustworthiness

Want to build trust in your organization? I recommend that you begin with yourself by reviewing the ways that you intentionally build trust with others. Do you exhibit integrity — do what you say you’re going to do — all the time or some of the time? If you find yourself always making excuses for why you didn’t follow through with your promises, then trust will elude your mutual relationships. Next, examine your perceived intent. Do your direct reports believe that you are in business for them or only for yourself? If people mistrust your intent, you will have difficulty establishing mutual trust. Lastly, you must exhibit competence and results in what you do in order for people to trust you.

Trusting goes with competence, intent, and integrity. The more we observe these characteristics in another person, the higher our level of trust in that person. Competence is an assessment of the other’s knowledge, skill, or abilities previously demonstrated to us.

Intent is our assessment that an individual we trust is concerned about our welfare. Your perceived intentions or motives are central. Honest and open communication, delegating decisions, and sharing control indicate evidence of one’s intent.

Bob Bunting, former CEO of the mega-regional firm Moss Adams LLP in Seattle, WA, says, “Some high-potential people don’t trust some partners when they perceive that the partners’ self-interest trumps everything else. They aren’t going to share credit; they will pass blame and keep praise.”

Integrity is the degree to which your actions integrate with your words. Integrity leads to trust based on consistency of previous actions, credibility of communication, and commitment to standards of fairness: the congruence of words and deeds.

Dave Sibits, president of the national firm CBIZ Financial Services in Cleveland, OH, believes the most damaging thing in terms of developing trust is when leadership says one thing and does another. I had a partner who would say, “The fish stinks from the head.” If the people at the top aren’t living what they are asking the others to do, you have a lack of integrity that causes degradation of the success of the whole firm.

To me, integrity is doing the right thing. We had a situation a few years ago where we had to put two of our offices together as one. We believed that all the proper steps had been taken and that proper communication had been completed. But we were surprised because we had a jail break. By jail break, I mean we found out that a major part of one of the offices was leaving with their client records in the middle of the night. It was the result of that group lacking trust in the leadership that we were doing the right thing.

Oftentimes, the top leader lives in a bubble. Many people tell the top leader what they think he or she wants to hear, rather than what he or she should hear. Whether people are intentionally misleading the managing partner, simply being politically correct or dropping hints, the effect is the same: the leader is not getting factual information on which to make decisions and take actions. When the leader is surprised by the consequences of one of his or her decisions, it is usually an indication that the leader hasn’t been getting truthful information from those around him or her.

Tony Morgan, founder and managing partner of the local firm Gollob Morgan Peddy & Co., P.C., in Tyler, TX, says, “People are going to pay much more attention to what you do than what you say. We can’t espouse a set of core values unless we partners live and model those values.” John Wright, managing partner of the top-100 firm Padgett Stratemann & Co. of San Antonio, TX, adds, “A leader’s imperative is doing what you say you’re going to do, giving team members the freedom to do what they’re going to do, and let them do that in their own way.” Ray Strothman, managing partner of the local firm Strothman & Company, PSC, in Louisville, KY, believes, “Integrity is basically doing what you say you are going to do, just basically walking your talk.”

This article has been excerpted from Leading an Accounting Firm: The Pyramid of Success. The publication is available on CPA2Biz.

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Troy Waugh, CPA, MBA, is the author of three books and one of the 100 most influential people in the accounting profession for eight years in a row by Accounting Today magazine. He is a leading consultant to the accounting industry.