Trust in the Workplace: The Key to Business Success

“In God we trust, all others pay cash.”

No doubt you have heard this phrase before.  I certainly have seen it in advertising, in retail shops; well, really all over during my lifetime. Apparently, its origination is unknown, but it was a common phrase bandied about in the last century and its use brought it to nearly the status of a proverbial pronouncement. I say nearly proverbial because try as I might I cannot find it in Proverbs, a place where it might fit in just fine.

It is even the title of a book by the author Jean Sheppard. You may remember Jean Sheppard as the creator of “A Christmas Story” the perennial holiday movie featuring Ralphie, his little brother Randy, his quirky family and friends, and multiple warnings to Ralphie not to put out his eye with the infamous Red Rider BB gun.

Sheppard’s story is very funny (at least to me and my family), and certainly casts this era through a big round lens, in the shade of rose, through which Ralphie sees his innocent world.  Trust is certainly a theme of the movie, trust placed and trust misplaced.   Lack of trust in the advice of his parents and teachers almost costs Ralphie his eye as it turns out. But then again in a figurative way does lack of trust not cost us all?

But I digress.

Trust is a central issue of our world today though, isn’t it?  Whether government, religion, the press, business, and even in personal relationships, it is increasingly hard to know who we can trust.  Fake news?  Shaping the narrative?  It does seem that while we are witness to, and participants in, the battles to win trust, every day that goes by seems to undermine many of our hard-held beliefs.

And yet I find myself trusting those closest to me, and I believe that they trust me.  When there is a trustworthy relationship in place, doesn’t that feel just great?  When it is shattered, does that also, conversely, feel proportionality just as bad?

So, what does trust have to do with business success? Well, just pick up the business news every day and it seems the ‘do whatever it takes and clean up the mess later’ finds another victim.  Would it not be best just to do things right in the first place and have customers and employees trust in what the business is up to?

I know, rose colored glasses again, but there appears to be significant evidence that there is a huge benefit to companies considered to be trustworthy by their customers and employees.

Recently I came upon an article in the Harvard Business Review titled “The Neuroscience of Trust” by Paul Zak, (Harvard Business Review January–February 2017; read it here).  Zak is “is the founding director of the Center for Neuroeconomics Studies and a professor of economics, psychology, and management at Claremont Graduate University.” So, he knows from which he speaks.

Zak, in his research, set out to find what was the key factor in driving workplace engagement.  Was it perks (as he says like “karaoke Fridays”)?  Other so called “golden handcuffs” that lock employees into long term commitment to an enterprise?

Surprisingly he found (my emphasis added): “…that building a culture of trust is what makes a meaningful difference. Employees in high-trust organizations are more productive, have more energy at work, collaborate better with their colleagues, and stay with their employers longer than people working at low-trust companies. They also suffer less chronic stress and are happier with their lives, and these factors fuel stronger performance.”

So how did he determine this?  As the title of the article suggests, he actually engaged in a neurological study to see the effects trust has on us.  I won’t go into detail on his methodology here (the article is definitely worth the read), but he focused on the chemical in our make ups called oxytocin.  Apparently, research using animals had identified that this chemical was responsible for making animals more approachable, and his question became did it do the same in humans?  Taking it a bit further, is there a relationship between our own oxytocin levels and how it actually can cause us to trust?

His research showed that there in fact is a relationship there.  As he writes: “Oxytocin appeared to do just one thing—reduce the fear of trusting a stranger.”

Is this an endorsement to shoot everyone up with oxytocin so we trust more?  Of course not, but it did lead him to several conclusions about what things inhibit trust and what things encourage it.  For example, he notes that high stress inhibits oxytocin.  He went on to develop a framework of management behaviors that encourage oxytocin production, are measurable, and can be managed to improve performance.  They include the following:

  • Recognize excellence.
  • Induce “challenge stress.”
  • Give people discretion in how they do their work.
  • Enable job crafting.
  • Share information broadly.
  • Intentionally build relationships.
  • Facilitate whole-person growth.
  • Show vulnerability.

Does developing trust really work?

Zak writes: “Compared with people at low-trust companies, people at high-trust companies report: 74% less stress, 106% more energy at work, 50% higher productivity, 13% fewer sick days, 76% more engagement, 29% more satisfaction with their lives, 40% less burnout.”

Further: “The effect of trust on self-reported work performance was powerful. Respondents whose companies were in the top quartile indicated they had 106% more energy and were 76% more engaged at work than respondents whose firms were in the bottom quartile. They also reported being 50% more productive—which is consistent with our objective measures of productivity from studies we have done with employees at work. Trust had a major impact on employee loyalty as well: Compared with employees at low-trust companies, 50% more of those working at high-trust organizations planned to stay with their employer over the next year, and 88% more said they would recommend their company to family and friends as a place to work.”

That is pretty powerful stuff.

In summary, Zak says “Ultimately, you cultivate trust by setting a clear direction, giving people what they need to see it through, and getting out of their way.  It’s not about being easy on your employees or expecting less from them. High-trust companies hold people accountable but without micromanaging them. They treat people like responsible adults.”

At A. Alliance  trust between our leadership, our customers (clients and consumers alike) and employees is critical.  We do not take it lightly, and we structure our business to solidify and earn that trust every day.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 14 years

Image provided by:  http://www.flickr.com/photos/lynellshooks

 

Are Americans Arrested and Jailed for Owing Money?

I want to be very clear here. The answer is an unequivocal resounding NO!

A couple of months ago, the ACLU came out with a report which asserted,   “….Thousands are arrested and jailed each year because they owe money.”

Oh, please! I am pushing the BS button on this one. “There is not one consumer in this country that was put in jail for the failure to pay a debt. Our court system simply does not work that way.”  You don’t have to take my word for it.  The above statement is a direct quote from the National Creditors Bar Association’s response to the ACLU report.

The ACLU’s assertion that thousands of consumers are arrested and jailed each year because they owe money is displayed prominently in the first paragraph of their 97 page report. Later they actually get to the truth by writing, and I quote, “Laws in states and federal rules of civil and bankruptcy procedure expressly authorize debtors to be arrested and incarcerated for contempt of court.”  Wait, what? It’s not because they owe a debt, but because they were in contempt of court? BIG DIFFERENCE!

In the National Creditors Bar Association’s response, they said, “The ACLU’s report was not only factually inaccurate but was conveniently lacking in relevant truisms in an attempt to sensationalize unfortunate circumstances for individuals who fail to comply with court orders.” Yada, yada, yada…”Members of the NCBA as well as attorneys across this country know that in order for a court to send someone to jail in a civil matter, as opposed to a criminal matter, a complete and utter disregard for a court’s order must have occurred. Judges use this power sparingly otherwise the penalty for contempt would become superfluous.

Litigation is the path of last resort for a creditor.  The process is expensive and time consuming and results in a judgment only and not necessarily the payment of the debt. However, what the ACLU fails to recognize is that the courthouse can be the safest place for consumers if consumers chose to avail themselves of the ability to participate in the system. In court, a judge can supervise the conduct of an attorney and also ensure that the consumer, especially a self-represented consumer, has the required access to the protections the court can provide.”

Do you know what’s funny, ironic even, about the ACLU’s assertion that if you don’t pay your debt you will go to jail? If I said it I would be breaking the law!  That’s right, the Fair Debt Collection Practices Act (FDCPA) that was approved way back in 1977 explicitly prohibits debt collectors from making any threat that the nonpayment of a debt can result in arrest or jail.  Why? Because it is not true!

Each quarter our sister company, United Credit Service, Inc., puts out a newsletter. The 2018 1st quarter newsletter (vol. 6 issue 1) that went out in March was entitled: Fake News or News facts. Can you tell the difference? In it we discussed urban myths and false news stories, and how they pertain to us in the collection industry. As stated in the newsletter, some urban myths and false news stories are told to be entertaining, others are cautionary tales and still others are meant to control a narrative. Which category do you think the ACLU’s report falls into?

I think the NCBA said it best, ”The ACLU’s lack of understanding of the legal debt collection process including its failure to acknowledge federal and state laws which govern debt collection activity, court rules of procedure and the regulations imposed both at the state and federal level result in a report that lacked fundamental credibility, but more importantly hampers the ability of legitimate debt collectors to communicate with consumers to fairly and efficiently resolve their financial obligations.”

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 12 years.

image provided by: CC: Pierre Lecourt

 

Debit Cards: Friend or Foe

I remember when debit cards first came out in the mid-1990s. Our bank mailed my husband and I each a card and we were on our way.

At first we thought it was great. Well, to be clear, it was my husband who thought it was great. You see I was in possession of the checkbook, so I already had access to the money in our checking account whenever I wanted it. But now, with his new debit card in hand, my husband now had immediate access to the funds in our joint-checking just like I did.  Perfect, right?!  Well, not so much.

Let me explain. Whenever I went shopping or wrote a check for cash, I immediately wrote the debit in the register and subtracted it from our balance.  You gotta remember back then there was no internet banking, so there was no way to know exactly what your balance was until your bank statement came in the mail at the end of your cycle—unless, of course, you kept meticulous records by tracking every debit. But here’s the thing, my husband, knowing perfectly well how these things worked saved each and every receipt whenever he used his debit card so he could give them to me to put in the register.  The problem was, he didn’t always hand them over in a timely fashion.  That led to a couple of overdraft charges from our bank and merchants alike—yikes! Don’t you hate double-dipping!  It didn’t take long for us to put a kibosh on the debit card thing.

Fast-forward a couple of decades and we both are back to having debit cards (and yes, I’m still writing my debits in the checking register) but internet banking has given us the ability to keep better tabs on money coming and going. But that’s not always the case for a lot of people.  I read an old New York Times article by Ron Lieber and Andrew Martin called “Overspending on Debit Cards Is a Boon for Banks” that talks about how lucrative debit cards are for banks.

You see banking institutions have their debit cards set up with a nifty feature they market as “overdraft protection”.  In an effort to save you, the consumer, from embarrassment by having a debit card rejected, let’s say, while you’re out on a dinner date, they will pay the debit (oftentimes ‘floating’ you money from your own savings account!) while charging you a fairly steep fee for the convenience.

The NYT article tells a story about a bank customer that was stunned when his bank charged him seven $34.00 fees to cover seven purchases he didn’t have cash in his account to cover. For example, they charged him $34.00 to cover his $4.11 Starbucks purchase, and didn’t notify him of the problem until after they covered these seven expenditures at $34.00 a pop.

The fees generated from the marketed overdraft protection have become an important source of income for the banking industry. In fact, according to that article, banks make more covering overdrafts than they do on penalty fees from credit cards.

“Banks will let you overspend on your debit card in a way that is much, much more expensive than almost any credit card,” said Eric Halperin, director of the Washington office of the Center for Responsible Lending.

There have even been claims of banking institutions manipulating the order in which they pay purchases, running larger purchases first so more fees are incurred.

Federal regulators have acknowledged problems since 2001, they have done little to curb the explosive growth of overdraft fees.

In 2017 alone, Americans paid $34 billion in overdraft fees.

The sad truth is that people need to qualify to get a credit card, but are handed a debit card when they open a checking account.  What we all need to understand is that the convenience of having a debit card comes with responsibility.

Please stay on top of your accounts. You’ve worked hard for your money, don’t let your bank ‘protect’ it with their overdraft fees.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 14 years.

Image provided by: wikimedia.org