Cost of Distrust
Could you imagine the people and products you rely/use in your life and why? This is not because they are good but because you can have trust on them. Trust simply mean confidence and opposite is distrust or suspicion. When you trust people, you have confidence on them their integrity and abilities when you distrust people you will doubts on their ability, integrity and hidden personal agenda. Let me ask you “Would you like to invest your money in Satyam Computer Services or Tata Consultancy Services”? Undoubtly your answer would be Tata not the B. Ramalinga Raju who has done the financial fraud of more then Rs. 7,000 crore, utilized the people money for personal use, ditched million investors, staff, customers, governments etc. The other brand has lost 2300 crore in Singur, West Bengal for Nano Car (dream car of low and middle class Indians) project just to stay committed and trusted. Wow what a difference in their intentions and actions.
Mahatma Gandhi has said” The moment there is suspicion about a person’s motives, everything he does becomes tainted”
How a person can build or destroy the image of nation. How Raju has destroyed the image of INDIA. Is it simple possible to rebuild it? The answer would be no, it will take twice the efforts and cost to reach even at the same level of trust. It is not the only Satyam which will be affected but the whole industry has to pay the cost. Now every Chartered Accountants will not simply rely the Chairman or CFO statements but go into details to verify the facts, every banker would not simply provide funding unless certify the details. Investor would not put the money easily. Regulator and government agencies will introduce more stringent law to not to repeat the same fiasco; it could be Indian version of Sarbanes Oxley Act (SOX) made after Enron Scandal in 2001 in United State to re-instate the public trust. And to meet out these increased compliances business has to bear the cost.
“Self-trust is the first secret of success. Distrust is very expensive” - Ralph Waldo Emerson
Now every person has to pay tax of low trust or no trust (It is not like income tax or Vat which has to be paid in tangible form but to bear it in intangible form). It could be by delay of work or incur more expenditure by way of third party certificate to prove what you say. Distrust increases the cost of business but on the other hand trust reduces the cost. You will find the direct correlation between trust and cost.
Trust ----- Low Cost and less time
Distrust ------ Higher Cost and more time
In financial term the opposite of tax is dividend. Tax is paid but dividend is received. When you have low trust you pay the tax and when you have trust you get the dividend, again not in the tangible form but by way of reduce time and cost of doing the business, the ultimate saving is your dividend. When people trust you, they are not going to verify what you say or do. They will follow you like all the vendors who were associated with Tata at Singur for nano car. All are now shifted to Gujarat along with Tata and production is going to start soon within a span of six month.
You can see the trust how effective it is to reduce the cost of doing business and distrust increase and the ultimate effect come on economy and people. When you live in trusted relations you feel more satisfied, your entire emotional are meet out, you live long and healthy. You create good social environment in turn society. You are able to do the things effectively, easily, fulfill the dreams of all & more. People would like to work with you, to have relation with you. The Opposite is Satyam computers where CFO, auditors, lawyers, independent directors everyone want to get rid off distrusted Raju and Associates.
In the time of recession when everyone wants to reduce cost it is TRUST which can make magnificent magic at every level of business and relationship. Just build it through integrity, capability, commitment and competency.
The leaders who work most effectively, it seems to me, never say "I." And that's not because they have trained themselves not to say "I." They don't think "I." They think "we"; they think "team." They understand their job to be to make the team function. They accept responsibility and don't sidestep it, but "we" gets the credit. This is what creates trust, what enables you to get the task done. -- Peter Drucker
CA. Vijay Gupta, B.Com(H), FCA.
V C & Co., Chartered Accountants.
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