Creating a Trust Economy

Creating A Trust Economy

How do you build a culture that supports trust and how do you restore trust if it is broken? Our all star panel identifies the key ingredients to build trust robustly in real estate businesses and the personal leadership skills and business processes required to restore and support it.

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Dr Sarah Bell:

So the conversation that we're going to have today is about creating a trust economy. And in the briefing and in our conversations that preface this 1 1 of the things that we found interesting is that the concept of trust is in line with a change in contemporary kind of belief and values. Right? So once upon a time, there was this belief of predeterminism, and certainly in the Western Judeo-Christian culture that we didn't really need trust because we had faith, and if anything went wrong or anything bad happened to you.

It was because God did it. If it was good, and the devil did it if it was bad, and we didn't have any responsibility. And so, as that way of thinking changed, 2 kinds of words emerged, and we became responsible for our own actions and our own choices in who we trusted, and the words trust and risk emerged in language around about the same time. So if we're responsible for what happens.

We're also kind of accountable for the risks that we take when we trust people. And I think it's important not to walk away from that threat or that vulnerability in trust. And so one of the things that we talked about guys and Avi were, what are the factors that protect trust and insulate us from risk when we're relating to other people? How do you know if someone is trustworthy?

Avi Khan:

How do I know if someone's trustworthy, I think it goes back to what trust actually is in my books. It's doing what you said you're going to do. It's almost like an invisible currency. Isn't it like this? It goes without saying. And it's what you do when people are not watching.

So I think like when I look at trust. If someone said something to me, I'm going to do this. Are they doing it in your business? Is it something that I have to constantly like, be aware of what they're doing, what they're not. So for me, trust is like trusting someone that what they're going to do is what they've said to me. So that's how I kind of look at trust in my business.

Dr Sarah Bell:

I think there's a notion of predictability and reliability, and one of the things that we talked about also is probably this, this factor of benevolence, right? A belief that people are good. You think?

Avi Khan:

Yeah, 100%. I think. So. I always say in my business, like, when you look at people that are bad actors, it happens in every business as the team kind of tells you already. It's not working, or these people. We can't trust them and things like that. So it's not coming from the top. It's coming from everyone together. So if you build that culture of that, people are so protective of it, then it all works. If it's if you haven't built that culture. Then it's going to fall apart.

Dr Sarah Bell:

Thanks. I think, when we're talking about trust as an economy, and I love that you use the word currency earlier when we're talking about it's like a network of trust risk relationships, right? And in economies we talk about things in chains, don't we, Lisa? So, in terms of our real estate, trust economy. What are some of those links in the chain where trust matters.

Lisa Pennell:

Well, I think at every level, obviously, we've got the regulatory bodies in our industry bodies. We've got in some cases, franchisors, or perhaps in an independent business, a director. We've got team members we've got, then the end customer. So there's a whole linkage of relationships that need to be based in trust.

Dr Sarah Bell:

Do you think along that line of trust, and feel free to kind of, you know, expand on any of it between? Like, if I think about that chain, you've got government and industry, and then you've got franchisor and franchisee, and you've got business owner and agent. You've got customers and real estate practitioners. Where do you think that those things really, really nexus on that point of trust being important for this economy to work.

Lisa Pennell:

I don't think there's 1 answer, Sarah. I think you know we're all human beings. I think we all have different jobs to do different titles, different responsibilities. But you know, coming back to the good person aspect, we're all good people at our hearts. I don't believe in good or bad. I believe in levels of awareness. And I think it's incumbent upon all of us at all levels to attempt to increase our awareness. Our self awareness, in particular, takes responsibility for our part in any interaction. It's very easy to point the finger at anybody from franchisee to franchisor franchisor to franchisee customer to agent, but the reality is that the more we can take on that responsibility ourselves, the more the ripple effect of trust increases. And there's incredible power in this room, because we're all leaders to have enormous influence on that. And I think in that respect we probably have the biggest part to play. In some ways.

Dr Sarah Bell:

Avi, when we think about the gravity of trust. I think one of the great outcomes of Milo's presentation was, you know, understanding work as an environment of wellness or well-being. When somebody joins your team actually, in any of your businesses, your serial sucker for this punishment. But when anyone chooses to join your business, what do you think that contract and that balance of trust and risk looks like and how do you consider gravity?

Avi Khan:

I think going back on Lisa's point to answer this question like, we have to understand that everyone's got different drivers. Everyone goes a different way. Everyone got their own self-belief. What they want to achieve. So 1st thing you need to do is understand what their drivers are, and if you understand that, then there's no misalignment into what you're going to do. If it's a franchisor, if it's an employee. So the 1st thing we want to know is, why are they joining us like where they want to go with their career. What do they want to do? Is it like a lifestyle choice? Is it like an income solution that they want to get from us? Or they have leadership aspirations. I think if you don't understand that, then the trust can be broken or not established. So the 1st thing for when we hire people is like, Hey, what are they doing here? What do they want to achieve? And that's the basis of building that trust between us and them. So that's the point where we start with when we employ people.

Dr Sarah Bell:

And Lisa, I think in some of the things that Milo talked about when that's applied in our offices in our shops around the country. What do you think are some of the symptoms that trust is present in an organization?

Lisa Pennell:

The outcomes that you'll see if there's trust. I think a high performing, trusting team will have openness to other teams. I think when teams become insular, that's actually a sign that there's fear. And this is my personal belief. It's not scientifically backed. But I do believe that that's a symptom of fear in an organisation or insularity. That's when the Kool-aid, you know, cultish vibe comes into a business. I think, when there's trust, there's relaxation, there's safety. And so that safety allows interaction with other teams, interaction with other businesses, and that reasonableness and self-awareness. You know, psychological safety brings out the very best in people.

And you know I loved Milo's presentation, because, you know, putting science behind some of the things that instinctively feels true is a wonderful proof point for me, and I think it's fantastic that if we go back 30 years ago, people were not even thinking about psychological safety or any of the neurological differences in thinking in gender differences in these filters we develop through the experience of our lives. And I think if you look at someone's behaviour, you need to understand that if you had their life experience, you would have exactly the same behavior. You know you operate with the filters that you've collected through your life and our job as a leader, in my opinion, is to help people unpack those filters if they're resulting in negative outcomes. You know, we create a lot of our own suffering. We create a lot of suffering around us if we act without awareness.

Dr Sarah Bell:

That's a long answer. I think it's good. And, Avi, I'm going to ask you the inverse question. What does? What are the symptoms of distrust?

Avi Khan:

Yeah, wow. There's a lot of symptoms of that. I think, firstly, to go on Lisa's point, you have to create an environment where people can challenge each other, and it has to be like great things happen from uncomfortable positions. So when people go and say, I'm going to create a culture where everyone's sort of agreeable to each other. Everyone's Kumbaya, that's when it falls apart. So the inverse of that is like, I think they are people that will run their own race. You've got to allow people creativity. You've got to allow people to grow. You've got to allow diverse opinions, I think if you don't do that transparently, and you're not consistent with it, then the trust will fall apart, because when people hide things from you, you go on a different path.

I know it's a cliche, but you have to have a good moral compass, whether it's your staff, your leaders, or yourself. If you don't establish that yourself, then what are they going to do? They're going to go out there and do wrong things, and that's what we're seeing in the industry at the moment, right across the board, like we see all these new news articles. We don't know who it's about, but you see it everywhere. So it comes from the top. But it has to be. Your middle leadership. Have to believe in it, and you have to have transparent conversations in your business for those things to occur.

Dr Sarah Bell:

I think the realness of that answer speaks to both what it looks like, and like you say, awareness, Lisa, what it looks like when trust is there and when trust isn't there. And we, you know, I think most of us in the room somehow are connected to Chris Hanley, and I think his wisdom around this is that when you don't have trust in an office, it feels like an ill-fitting suit is what he says. It's palpable, and you can feel it. You feel uncomfortable. And I think when we talk about belonging. That kind of very tactical, practical sense of my clothes don't fit, and I don't fit in here. And sometimes, you know, at one end of the spectrum that can look like personal attacks, and it can be very overt. But on the other end of the spectrum, and perhaps more dangerous is this notion of ill-fitting suits where everybody's nice, right this artificial harmony, where everything's awesome, and people are too afraid to challenge an idea. And you know, if the revenue is rushing out the back door. But everything is awesome, right? And you're not allowed to sit in reality.

There's an absence of trust there.

When we talk about an absence of trust. It's not necessarily the opposite of trust, and that's 1 of the funny things about language. The opposite of trust is actually betrayal.

Do you have an anecdote, Lisa, about in a business life, or anything where you think I trusted you in this transaction because I felt there was predictability and reliability, and thought you were benevolent, and you risked it, and you trusted and ended up betrayed?

Lisa Pennell:

Absolutely. And one comes to mind that's directly related to our industry, which is our family home in Sydney. I've recently relocated for this role in the last couple of years to Melbourne, and we leased out our family home through the agent that we'd purchased it through, trusting that they would look after our home. Unfortunately they were using offshore people to do reference checking, and the application form for the property was completely fraudulent.

This was not picked up at the application stage, which should have been had there been correct processes, and this person turned out to be a Con man and so in high property, with a very high mortgage with the lovely Rba decisions. In the last few years, it put us in a really difficult position. Now I understand mistakes can happen. So you know, they happen in our business, so happen in every business, and so I worked patiently with them to try, and, you know, was patient with them while they tried to rectify the situation, believing all along and in comments with the head property manager that they would not leave me hanging out to dry at the end, because it was actually their error in the 1st instance. And I had never spoken to the director of this business just dealt with the head property manager on this particular scenario, and when Push came to shove at the very end, and I was facing significant financial loss, and I asked for a conversation with the director to figure out what the fair resolution would be that director message came back through the Head property manager that he would not have a conversation with me, and that if I had an issue that I could send a letter from my lawyer.

Dr Sarah Bell:

The lack of benevolence in terms of one of those factors.

Lisa Pennell:

and, you know, for an industry player who's in a senior level, you know, to have that response from somebody. I just actually exploded my brain that morning. At that moment, as you can probably imagine, the lovely Leanne has taken over my team, has taken over my property now, should have had it with you in the 1st instance. She's solved all of my problems, which is wonderful. But again, this is where I probably tend to give trust rather than seek for evidence that I should give trust. First, I think there are 2 different sorts of people. There are people who are, you know, won't do that, or tend to be more suspicious, and look for the proof points. Perhaps they're the smart people I don't know. I tend to be the sort of opposite, and I think that you know that's important to recognize as well that this is segueing a little bit. But there are certain people that will never give you trust. They'll always be, for whatever reason, whether it's personality, disorder, or conditioning, or whatever. So you can be the best person that you are and still get a negative outcome is reality.

Dr Sarah Bell:

Yeah and sometimes, you know, people don't necessarily have to be like you, or your best friend, or someone that you would trust with a particular thing to be able to trust them in an instance, if they're going to be at least predictable, or at least reliable. Do you know what I mean? Like you can probably get away on a transactional basis with lending a smaller degree of trust to someone. If there was at least faith that there was some reliability on a promise or or some ownership of it. And so there's there's degrees of trust. But when you have that baseline that's destroyed, I think that's when we kind of enter that for us. 

Lisa Pennell:

As an industry. When individuals behave like that, there's an impact on all of us. That's why customers don't trust us. And in the digital age these messages fly around very quickly. So you know, incumbent on all of us, as I say, particularly for those in groups that have the larger brands that you know, there's a real impact on your behaviour. It does impact the entire industry.

Dr Sarah Bell:

It's a great Segue. Rv. To in terms of germinating and nurturing trust between ourselves and our consumers. Do you reckon are we good at that as an industry?

Avi Khan:

Look, I think it's what I'm generalizing here. It's probably the 10% that's boiler for everyone else. I think, as an industry we're pretty good, but it's like, when I see all this shit about. Sorry I'm not going to swear. I look at my GCI of 5 million dollars this year. I'm 6 million like that sort of stuff, like, you know, like it just irritates me. I think that's where we're losing trust with our clients. It's like this perception that real estate agents make so much money, and some of them do. But there's so many people that are out there doing it for the right reasons. They're working hard, they’re grafting, especially the people that start, you know, 0 to 2 years, the agents that started at the beginning of their journey. Some of them are working 16-18 hours a day. The clients don't see that, because it's a bias to sensationalism where they see. Oh, my God! Look at how much money I made! I've sold, you know, this property for over 300k of a reserve, you know. I'm sure they've moved to reserve 10 times that day. But you know those sorts of things. I think that's where the trust sort of goes in. The industry and sort of clients. Consumers generalize the industry based on the bad bad performers out there that cry about money and all the other stuff online and the digital age. They could put it up straight away. And there's 5,000 people viewing it within a second, and then all the screenshots are going around all the negative threads and news.com starts happening. So I think that's where we're losing trust as an industry because of probably the 10% that do that stuff.

Dr Sarah Bell:

Yeah. And I think you know, in the sense of applying trust in an economy. There's certainly a trust signal that you could submit right. And so the idea of my work is about my material gain would not be that that would feel like an explosive signal.

Avi Khan:

And as a consequence, I think if we look at buyer's agents. It's on the rise, right? Like everyone wants to deal with buyers agents now, because the perception is they can trust them more. It's 1 of the fastest growing industries in Australia apparently. So, people just don't want to deal with the real estate agents, because of that real tension that we have.

Dr Sarah Bell:

And so this kind of fiscal bragging and stuff potentially, we're giving our shareholder pitch to our customer and asking them to trust us. So there's a lack of alignment there in sense of purpose through that trust chain, through that economy.

Lisa Pennell:

And if I can add Sarah, I think we need to trust each other first, as you know, we've got people agents sitting at the appraisal table who undermine competitors to get the deal. We've got people who will, you know, and this is rampant in our industry. We know this, you know, at the appraisal table the vendor is predisposed to believe the biggest liar, because they want the highest price, and their perception is, we're valuers, not marketers, you know, brands throwing money to try and pull offices away from brands, you know all of this infighting behaviour. No wonder we're not trusted. No wonder.

Dr Sarah Bell:

Yeah. Whereas other professions do behave in a way that's much more collegiate. I would say that being said, we're in a room with the finest example of, I think, collegiate practice in the industry.

You know the generations of Rise that have created this legacy have often been from fierce competitors in the same market who have come together around this table to create this for the benefit of the industry, and I think everyone in this room can be enormously proud of that and share that mission in this space together.

With trust signaling, it's really interesting how you know how the kind of trust conversation, particularly with consumers, is framed and real estate agents, because I think of that signaling around. Oh, I made 7 million dollars this year, which is what a nice teacher might make in 100 years. That's not going down well. And it leads to this almost stigma of the industry.

And we've talked about this Edelman trust barometer and the similar Roy Morgan research that real estate agents are, you know, the least trusted profession and things like that. And I have some issues with that research because I think it's set up to perpetuate stigma. So the question that is asked is, “Do you trust real estate agents?” And from our stigma, and perhaps our 8 year old children's stories, when you know, we're predisposed to know because of this brand of real estate agency, and what that means? And perhaps the partisan representation in acting for sellers. Right? That's not well understood. But I think if you were to ask the question differently. And who would you trust to sell your house? The answer for the overwhelming majority of consumers is a real estate agent. Right? We're not seeing skyrocketing levels of for sale by owner. And so at some point when you need a real estate agent to go and have that taboo conversation about money to do that dirty work, and have that negotiation, and represent you and your house and your family and market. A real estate agent is who you're sending out to do that.

What do you make of that kind of stigma, Lisa? Around consumers and agents, and that uneasiness?

Lisa Pennell:

I reflect on being a child and driving around with the local real estate agent as he took my family as a small child, to see different houses and what was going to be our next home. I do think it's really important for people to realise that this is something that's developed in recent times.

I don't remember the negative perception of agents when I was young, in the way that it is now, and I think it's getting worse, being honest. And I think again, this is really exciting, this collaboration, and you know, wonderful initiative to support. We've seen industry collaborations over the years. Some have been successful, some have not, but I think you know it is up to us to change it.

It is up to us.

Dr Sarah Bell:

Yeah. Like I said, we're kind of perfect villains in a way, I don't think there's a telethon to help people feel better about real estate agents coming anytime soon from the outside.

Lisa Pennell:

It's a change in behaviour, though, isn't it? We have to change this perception as an industry. There's something that's happened to trigger that. And I think again, we need to take responsibility for our part in it.

Dr Sarah Bell:

Again, one of the little nuggets of wisdom I carry in my life from Chris Hanley is. You can't hate anyone when you know their story is one of the things that that he said to me once that lives with me, and I think it kind of segues in that you know, trust signalling. We're maybe not helping ourselves. What are the stories that you think that we should be telling to our marketplace, to our consumers, to our regulators that that will lift, trust and and will create trust.

Lisa Pennell:

I think the biggest problem is that people still believe we're valuers. And so inherently. The relationship starts from a position where, as I said before, the vendor is predisposed to believe, the biggest liar. I want to believe my house is worth more than what it is. So if I get the smooth talker who's willing to, you know, and and then we get the conditioning, and then we get the, you know, it's a predictable journey. So how do we change that in the 1st instance would be my question.

Dr Sarah Bell:

There is some greater transparency around pricing methodology, valuations, all of those sorts of things.

Avi Khan:

I'm from Ray White. We never give a price. You're not allowed to give a price. Oh, goodness, I think Lisa's right. I think agents misunderstand their role, sometimes. They think they're valuers. Everyone goes and promises a price, and this is where we go wrong. In fact, most times they know they're not going to get that. So that's probably where we have to start with some place.

Lisa Pennell:

I think there's also a big inconsistency in the way the States operate. And that may be an unsolvable problem. Well, there obviously is, you know, that's probably an unsolvable problem. But there are real issues between regulators and industry. And I know we're making some progress in Victoria. You know, the new CEO down there in the REIV, with our executive team with Jacob is. You know, they're doing a tremendous job. So we're quite hopeful. It's probably the most difficult environment in Australia at the moment, though, so there's a lot of work to be done there.

Dr Sarah Bell:

Interestingly, when you study trust and levels of distrust as they're distributed through the population, it is a perfect bell curve and in the lower court quadrant, the most disenfranchised, the most vulnerable people in a society will actually trust in their government institutions, and will actually trust people, and part of that is because they have less to risk. There's a dependency there, and there's no greater choice. And then at the other end of the bell curve, you see high levels of trust because they have power over, power to navigate. They've got access and resources to be able to do that. And what normally happens is in the middle of that bell curve. There's higher levels of distrust because that negotiation is going on, which is a long way of kind of leading into probably my final question and point is, I want to look at that lower end. So the consequences of betrayal of trust become most intensified with the people that have the least resources to mitigate the impacts of it. And that's why they must trust and are most vulnerable. So we're moving the conversation away from the kind of sales agents and the Maseratis and things into property management, and our relationship with tenants and how we deal. The conversation's often phrased, and we represent owners and their investment property, but we also are gatekeepers of some very vulnerable people's access to a home to live in, and with that trust signaling in our work practice. How do you think that we signal around our treatment of tenants?

Lisa Pennell:

Victorian legislation probably overcompensates to protect tenants at the moment. Being honest. So I'm more concerned about the mental health of our property managers and ensuring that they're, you know, in a safe, psychologically safe environment. So that's probably my honest answer to that one, Sarah.

Avi Khan:

I think the regulators, the legislators have tried to change the definition of property ownership. I think it's getting more skewed towards the tenant side. I think it's sometimes getting too skewed on the tenant side because they're trying to solve this issue that you just came up with. But you know, at the same time, are we going to ask investors to leave the market because we're telling them it's going to be harder for you to own a property. So the debate is full on. And I agree, like it's the property managers that we need to take care of, because they're just sitting there trying to make things work. And all this legislation keeps changing every 3 months every 6 months, you know. When can you enter the property? When can you kick someone out like in Queensland? If someone's doing the wrong thing. You can't even kick them out now, like it's crazy. And how are property managers?

Dr. Sarah Bell:

That's my curiosity, right? This is a murder past that our property managers are living in.

Lisa Pennell:

It really is.

Dr. Sarah Bell:

There's a lot of vulnerability there and there's a reaction to potentially people doing the wrong thing, and I don't think we can walk away from, you know, from an industry that there’s been troubles, and a lot of that legislation is in response to something, right? Perhaps it's over-corrected. So how can we help our property managers? And we're talking about an economy of trust. How can we build greater trust between regulator industry, property manager, tenant owner? When I think we've been given the murder pass? What's the role in the economy that we can all play?

Avi Khan:

I'll answer it with a question. Are we too combative with the legislators? Are we at the table after the fact? Are we at the table before it happens? That's my question. I don't know. I think different States have different answers to that. But do we get to a state where all the state bodies have the same legislation when it comes to tenants rights, landlords rights. I don't know something for Leanne, maybe. But ..

Dr Sarah Bell:

Is anyone talking to you?

Lisa Pennell:

You don't want the Victorian Set. Trust me.

Avi Khan:

No but I think they need to go the other way, right? So, I think the State boundaries are broken down. Now, people from New South Wales are buying in Brisbane and vice versa, like 60% of our buyers in our areas are from Sydney and Melbourne. So that's confusing for them as well. The legislation from Melbourne, Victoria rather than New South Wales and Queensland. So maybe there's a conversation around. You know.

Lisa Pennell:

I mean they're big big boulders to move, I'm going to say. And I think industry collaboration, you know, working effectively and collaboratively, I don't think being combative works. I agree with that. I can tell a personal anecdote that I make a point. You know. I think, in a lot of businesses. Still, property management is not valued as much as sales, because it's not sexy, it's not high profile, it's not, you know. It's a grind. Let's be honest. It's the hardest job, in my opinion. So for me personally, I always take the time to go to our property management conferences, and if I'm in an office, go and see the property managers, and I think it always surprises me how much that means to them. And I think, as leaders, it's really important to understand that taking that time is important because again, that'll be the knock-on effect to customers in terms of building trust.

Dr Sarah Bell:

Amazing. Well, I think we have covered the remit from macro levels of trust in some very controversial industry topics trust between brands and businesses.

Trust is an industry trust between consumers and us.

And you know, one of the things I think that we finished our conversation on was ultimately as someone acting within this trust economy. You have to have trust in yourself that you will do the right thing that you will be, you know, sleeping straight in bed at night, sort of thing. And so I just want to thank you both for your time, both in the lead up to this which I enjoyed, and today, and look forward to spending more time with everyone.

Lisa Pennell:

Thank you, Sarah.

Avi Khan:

Thank you.