Tom Andel

Trust costs guts, but returns results
May 6, 2008

I was tempted to blow off Stephen M. R. Covey’s talk on “The Speed of Trust” at this week’s Warehousing Education and Research Council (WERC) Annual Conference in Chicago. How mushy can you get? But this was a luncheon talk and I was hungry. 

Turns out, there was more nourishment in Covey’s message than I expected. In fact, what he said resonated through every session I attended—even the ones preceding it, upon reflection.

There’s a mythology about trust that causes you to ignore it, he said. Many write it off as a soft social issue. Not Warren Buffet, whom Forbes magazine calls the world’s richest man. Covey told the story of how Buffet acquired McLean, a $23 billion Wal-Mart subsidiary, after only a two-hour meeting and 29 days of legal paperwork. No time wasted on due diligence. That’s the speed of trust. The transaction affected 192,000 people working at 42 locations. The number of executives at headquarters overseeing all these people? Seventeen. These executives dole out trust to these employees, assuming they deserve this allotment until they prove otherwise.

Covey admitted there’s risk in trust, but the risk is greater without it. An absence of trust leads to redundancy, bureaucracy and fraud. High-trust companies outperform low-trust by more than 200 percent, Covey said.

Trust. I reflected on the conversations I had prior to Covey’s talk and realized that trust was a key component in the stories behind each of them. Geoff Sisko, for example, whom I’ve known for years as a partner with the consulting firm of Gross & Associates, told me his company was acquired by TranSystems, a firm specializing in engineering, architecture, real estate and supply chain consulting. By acquiring Gross, TranSystems adds considerable materials handling expertise to its capabilities as well as the trust clients have invested in people like Geoff Sisko for many years.

I had this conversation about trust with Geoff while we were both in the audience waiting to hear Randy Lewis tell us about hope. Lewis, senior vice president of distribution and logistics for Walgreens, explained how the trust his company has placed in the disabled workers employed at its Anderson, SC, distribution center results in hope and therefore, 20 percent greater productivity than other DCs in their network. People with physical and cognitive disabilities are expected to perform to the same standards as their more able-bodied colleagues, and they do—after preparing for this level of performance with a year’s worth of training. They earn the trust invested in them and pay back with exemplary productivity and by inspiring colleagues to raise their own game.

Trust. When Whirlpool purchased Maytag in 2006, it involved not only a combination of trusted brands but a consolidation of supply chain networks. The board of the newly configured company set an aggressive performance goal for all employees to strive for: $400 million in savings via three years of efficiencies. But they also had to rebuild the trust of retailer customers by being up front about these plans. Up to that point the Maytag brand had been struggling.

The strategy included trading partner collaboration, call center consolidation, private fleet elimination, DC consolidation and new 3PL relationships. These are scary changes for employees, so trust had to be shored up. Rich Gorbett, senior manager of supply chain operations for Whirlpool, referred back to Randy Lewis’s powerful presentation earlier in the day and urged his audience to optimize its human resources by celebrating key milestones in accomplishing lofty goals. “Individuals must be part of the process,” he said. “You have people working 12-hour days, six and seven days a week. They need to be on the radar screens of senior executives.” Again, the trust thing.

Going to conferences like this can also be a trust builder, for both warehouse employees and the senior managers. I’ll conclude with something WERC’s incoming president, Mark Cleveland told me between sessions. He was recalling how he ended up on the logistics career track. It started in the purchasing department at Allstate Insurance, where he was tasked with finding a more efficient way to distribute all the company’s paper forms. The process of benchmarking an office supply company, with the help of his local Chicagoland WERCouncil chapter, helped him learn logistics in a way he couldn’t have done by staying in his purchasing cubbyhole. He is also bringing something back to WERC as its incoming president: a new emphasis on experiential learning.

“Leverage the talent in your shop,” he advises. “Ask more out of your team and you’ll get more.”

It starts with trust.

Posted by Tom Andel on May 6, 2008 | Comments (0)