Visualizing the Ratchet Effect

Trust is similar to a bank account. Between two people, there is a current “balance” of trust that is the result of all their transactions to date. When there is interaction (whether online, in a meeting, or with body language) there is a transaction—either a deposit (increasing trust) or a withdrawal (reducing trust). The magnitude of the transaction is determined by its nature.

It is easy for a leader to make small deposits in the trust account with people. Treating people with respect and being fair are two examples of trust builders. While making small deposits is easy, making a large deposit is hard. As a leader, nothing I say can make a large deposit in trust. It has to be something I do, and it often requires an unusual circumstance, like landing a plane safely in the Hudson River.

Under most circumstances, the trust balance with people is the result of numerous small deposits (like the clicks of a ratchet) made over an extended period. On the withdrawal side, with one slip of the tongue, an ill-advised e-mail, or a wrong facial expression, a leader can make a huge withdrawal. Because of the ratchet effect, a small withdrawal can become big because the pawl is no longer engaged in the ratchet. It can spin backward to zero quickly.

Here is an example of the ratchet effect in a typical conversation: “You know, I have always trusted George. I have worked for him for 15 years, and he has always been straight with me. I have always felt he was on my side when the chips were down, but after what he said in the meeting yesterday, I will never trust him again.” All trust was lost in a single action (and it will take a long time before any new deposits can be made). The trust account went from a positive to a negative balance in a single sentence.

It would be powerful if we could prevent the ratchet from losing all of its progress by reinserting the pawl back into the ratchet during a serious withdrawal so that it only slips one or two teeth. Reinforcing candor inserts the pawl and provides a magic power that has unparalleled ability to build trust. When leaders reinforce people who make candid remarks when they see disconnects between stated intents and daily actions, it goes a long way toward reducing fear and building trust.

All leaders make trust withdrawals. Most people don’t feel safe enough to let the leader know when they have been zapped, and so trust plummets. It may even go to zero or a negative balance before it can be corrected (over much time and incredible effort). Contrast this with a scenario where the individual knows it is safe to let the leader know he or she has made a trust withdrawal. The individual may say, “I don’t think you realize how people interpreted your remarks. They are mad at you.” If this candor is rewarded by the leader, he might say, “I blew it this time, Bill. Thanks for leveling with me.” Such an exchange stops the withdrawal in the mind of the employee, and enables the leader to stop the withdrawal for the population. Here is a fascinating part of the equation. It makes little difference if the leader reverses his or her stance on the issue at hand. All that needs to be done is for the leader make the person feel glad he or she brought up the issue.

As a leader, you try to do the right thing (from your perspective) daily. If an employee asks why you are doing something, you tend to become defensive and push back, which becomes a withdrawal. Reinforcing candor requires you to suppress your ego, recognize the trigger point, and modify your behavior to create the desired reaction. This is difficult to do because you usually justify and defend your action.

It takes great restraint and maturity to listen to the input and not clobber the other person. The more you practice, the easier this gets. You can quickly build a culture of trust and multiply the benefits threefold by focusing on your behavior. Once you learn to reinforce candor rather than punish it, something magical happens: you gain greater power to build trust.

2 Responses to Visualizing the Ratchet Effect

  1. What an interesting subject but here is a story which is simplified for the sake of of you (dear readers).

    Once our global banking system was based on trust and the maxim that my word is my bond.

    Then 20 years ago greed became good and the smart people said banks are build on Money not trust.

    Then 10 years ago we started to believe that instead of trusting people we should trust processes and so personal responsibility evaporated like a spell in Harry Potter and no one was responsible.

    So what if they didn’t understand the risks and they build a new economy on the magic logic that turns debt into revenue and loss into profit. As long as we agreed it made sense to someone it was ok to trust a process.

    Turned out we didn’t trust the money!

    Now the world is in a global financial mess involving hundreds of trillions of dollars of poisoned debt which is not being sorted out because no-one trusts any institutions to have integrity.

    Finally in a survey we did 98% of consumers thought that big corporations lie regularly they don’t trust politicians banks or retailers and 70% said they didn’t even trust customer feedback because they thought it was rigged.

    Trust is more important than due diligence but does not replace it. When things go wrong you need to trust the people you are working with to sort out problems.

    Wisdom to me is knowing who to trust and how far. There are many people I trust to act in their own interest alone and fortunately some people who I can trust the word of. The highest compliment in my world is that he does what he says. (OR SHE).

    So is trust important …..I think it cost us a banking system and a global economy so I vote yes.

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