One Thing Improves Speed and Reduces Cost in Business. What Is It?

...it impacts speed, reduces costs, and increases decision velocity by creating a foundation of credibility and competence!

Organizations constantly strive to improve their speed and agility in today's fast-paced business environment. The ability to make timely decisions, respond to market changes, and execute strategies effectively can often be the difference between success and failure. Trust is one of the most powerful yet frequently overlooked factors that influences the speed of decision-making. Stephen M. R. Covey, in his seminal book The Speed of Trust, asserts that trust is not just a social virtue but an economic driver that significantly accelerates organizational performance. Trust impacts speed, reduces costs, and increases decision velocity by creating a foundation of credibility and competence.

This article explores how organizations can boost their speed and decision-making velocity by improving trust, the dual components of trust—character, and competence—and why training leaders to build and maintain trust is essential for long-term success.

The Impact of Trust on Organizational Speed

Trust Increases Speed In low-trust environments, decisions get bogged down by bureaucracy, redundant checks, and excessive oversight. People second-guess one another, and communication slows as individuals seek to protect themselves from potential fallout. In contrast, high-trust organizations enjoy streamlined processes. Decision-makers can act quickly because they have confidence that their colleagues act with integrity and competence. Trust reduces the need for layers of approval and extensive documentation, leading to quicker execution of ideas.

Covey's "trust tax" versus "trust dividend" concept explains this dynamic perfectly. In a low-trust environment, organizations pay a tax on their performance—slow decisions, higher costs, and inefficiencies. In a high-trust environment, however, organizations earn a dividend from the speed and efficiency of trust. Projects move forward faster, teams collaborate seamlessly, and resources get used more efficiently, resulting in a competitive advantage.

Decision Velocity and Agility In today's market, agility is critical. Organizations must be able to pivot quickly in response to changing market conditions, emerging technologies, and shifting customer demands. Making fast, accurate decisions is essential to maintaining competitive advantage. Trust is the foundation of this agility. When trust exists, leaders can delegate more effectively, allowing decisions to be made closer to the front lines where information is freshest. Teams operate with more autonomy, and feedback loops become more efficient, enabling the organization to adapt and iterate rapidly.

Without trust, decisions stall as people wait for approvals, consult multiple stakeholders, and cover themselves against the potential for blame. Trust allows decisions to be made quickly and effectively without unnecessary bureaucratic drag, which is particularly important in industries where timing can mean everything.

The Two Components of Trust: Character and Competence

Covey defines trust as comprising two essential elements: character and competence.

1. Character Character is the foundation of trust. It is rooted in integrity, honesty, and transparency. A leader's ability to inspire trust begins with ethical conduct and consistency in aligning actions with words. Character-based trust is built when people feel confident that their leaders are fair and transparent and act in the best interests of the team and the organization.

Character is critical in creating an environment where employees feel safe to take risks, share their opinions, and engage in constructive conflict. In such an environment, decision-making is accelerated because individuals are not bogged down by fear of political gamesmanship or blame.

2. Competence While character is necessary, it is not sufficient for trust. Leaders and teams must also demonstrate competence. Competence refers to the skills, expertise, and knowledge required to perform a job effectively. Competence-based trust is built when leaders and employees consistently deliver results, demonstrate expertise, and confidently handle challenges.

Individuals may be high character, but without competence, their ability to lead or execute decisions will be questioned. Conversely, an extremely competent individual who lacks character may be feared or distrusted, resulting in inefficiencies and slowed progress as others question their motives or try to safeguard against potential missteps.

To build high-trust organizations, both character and competence must be present and cultivated.

Why Training Leaders to Build and Maintain Trust is Essential

1. Trust is a Leadership Skill Building and maintaining trust is not simply a matter of being a good person or having the right technical skills. It is a leadership skill that requires ongoing effort and self-awareness. Leaders must be trained to demonstrate character and competence actively in daily interactions. Training can help leaders develop the skills necessary to communicate transparently, resolve conflicts constructively, and align their actions with their stated values.

Leaders must also be trained to create trust within their teams. This training includes fostering open communication, recognizing contributions, and encouraging a culture of accountability. A lack of training in these areas can lead to unintentional breaches of trust, which, once eroded, can take significant time and effort to rebuild.

2. Trust Enables Effective Delegation In high-trust environments, leaders can delegate tasks confidently, knowing that their team members have the character and competence to handle them. Delegation, when done well, significantly increases the speed of decision-making, as decisions are made at the appropriate levels of the organization. Training leaders on assessing and building trust within their teams is critical to developing a culture where delegation is not just possible but expected.

Without proper training, leaders may either micromanage their teams or abdicate responsibility, harming trust and slowing down decision-making processes.

3. Trust Enhances Collaboration One of the hallmarks of a high-trust organization is seamless collaboration. When individuals trust one another, they are more willing to share information, provide feedback, and work together toward common goals. This level of cooperation enhances decision velocity, as teams can reach a consensus quickly and without fear of ulterior motives.

Training leaders to build trust across teams and departments is essential to creating a culture of collaboration. This learning includes teaching leaders how to resolve conflicts, encourage open dialogue, and foster a sense of shared purpose. When leaders prioritize trust-building, they create an environment where teams are more cohesive, engaged, and innovative.

Practical Steps to Build Trust in Your Organization

1. Lead by Example Leaders set the tone for trust within an organization. Leaders can model the behaviors they expect from their teams by demonstrating character and competence in their actions. Consistently acting with integrity, keeping promises, and showing accountability for decisions builds a foundation of trust.
2. Communicate Transparently Clear, open communication is essential to building trust. Leaders should share information openly, admit when they don't have all the answers, and ensure their teams understand the rationale behind decisions. Transparency builds confidence in leadership and reduces uncertainty.
3. Develop Competence Leaders should continuously invest in their development and the development of their teams. Offering ongoing training and development opportunities increases competence and demonstrates a commitment to growth and excellence, further enhancing trust.
4. Recognize and Reward Trustworthy Behavior Recognizing individuals who demonstrate character and competence reinforces the importance of trust within the organization. Leaders should celebrate team members who act with integrity, deliver results, and foster collaboration.

Building trust is one of the most potent ways to increase organizational speed and decision velocity. By fostering a high-trust culture, organizations can reduce the friction that slows decision-making, enhance collaboration, and respond more quickly to market changes. Leaders play a pivotal role in building and maintaining trust, and investing in their ability is critical to long-term success. Training leaders to prioritize character and competence accelerates organizational performance and creates a workplace where people feel valued, empowered, and engaged.