How Much Does It Cost Your Company Not to Know Whom to Trust?

Trust is one of the most valuable assets within any organization. It allows people to delegate, collaborate, innovate, and make decisions without creating unnecessary layers of control. However, when trust is based exclusively on intuition, a good interview, or an impressive résumé, it can also become a significant business risk.

The question companies should ask is not whether they should trust their people. The real question is whether they have enough information to make well-founded decisions about whom to hire, promote or place in positions of responsibility.

Because not knowing whom to trust has a cost—and that cost is rarely limited to one bad hire.

The Hidden Price of a Wrong Talent Decision

When organizations calculate the cost of an unsuccessful hire, they often focus on recruitment fees, onboarding expenses and the time required to find a replacement. These costs matter, but they represent only the most visible part of the problem.

A poor talent decision can also affect productivity, team morale, customer relationships, confidential information, and organizational culture. In positions involving money, sensitive data, inventory, critical infrastructure, or employee safety, the consequences can be even greater.

Occupational fraud illustrates the scale of this exposure. According to the Association of Certified Fraud Examiners’ "Occupational Fraud 2026: A Report to the Nations," organizations are estimated to lose approximately 5% of their annual revenue to fraud. The median loss among the cases examined was US$104,000, while the average exceeded US$1.45 million. One in five cases resulted in losses of more than US$1 million.

The same report found that a typical fraud scheme continued for 12 months before being detected. Cases discovered within the first six months generated a median loss of US$40,000, while those lasting more than five years produced median losses exceeding US$1.1 million.

These figures reinforce an important lesson: the longer an organization takes to identify a behavioral risk, the more expensive that risk can become.

Trust Is Not the Same as Blind Confidence

Talking about integrity does not mean assuming that every employee is potentially dishonest. Nor does it mean replacing trust with surveillance or creating a culture based on suspicion.

It means recognizing that trust is stronger when it is supported by evidence.

Companies routinely use financial analysis before approving an investment, cybersecurity assessments before implementing new technology and due diligence before entering a partnership. Yet some of the most consequential talent decisions are still based primarily on personal impressions.

A candidate may have the right technical experience, provide convincing answers during an interview and present excellent references. Nevertheless, these elements do not always reveal how that person might respond when facing pressure, conflicts of interest, access to company resources or an ethical dilemma.

This is particularly relevant today. Digital tools and artificial intelligence can help candidates improve their résumés, prepare interview responses and present highly polished professional profiles. Organizations therefore need more structured ways to understand the behaviors and risks that conventional recruitment methods may not reveal.

The Warning Signs Often Exist

One of the most important findings from the ACFE’s 2026 report is that 84% of occupational fraud perpetrators displayed at least one behavioral red flag. These signals included financial difficulties, living beyond their means, unusually close relationships with vendors or customers, and excessive control issues or an unwillingness to share responsibilities.

The problem is not always the absence of information. Frequently, organizations have fragments of information distributed among managers, colleagues, compliance teams and HR systems, but they lack the processes to interpret them or act on them.

This is why integrity and behavioral risk should not be evaluated only after an incident occurs. They should be considered throughout the employee lifecycle: during recruitment, onboarding, internal mobility, promotions and appointments to positions with greater levels of authority or access.

From Intuition to Evidence-Based Trust

An evidence-based approach to trust combines several sources of information. These may include structured interviews, reference validation, integrity and behavioral assessments, clear policies, reporting mechanisms, ethical leadership and ongoing analysis of organizational risk.

No single tool should make a talent decision on its own. The goal is to build a more complete picture of the individual and the context in which that person will operate.

Organizations can begin by asking five questions:

1. Which positions represent the greatest financial, operational, reputational or safety risk?
2. What behaviors and integrity-related competencies are essential for those roles?
3. Are these factors evaluated consistently, or does the decision depend mainly on the interviewer’s intuition?
4. Do managers know how to identify and address behavioral warning signs?
5. Does the organization reassess risk when an employee receives new responsibilities, access or authority?

These questions help move the conversation beyond whether someone appears trustworthy and toward whether the company has sufficient evidence to make a responsible decision.

Trust as a Business Capability

Trust should not be treated solely as a cultural value displayed on an office wall. It is also an organizational capability that influences how quickly people collaborate, how safely leaders delegate, and how confidently companies grow.

When employees trust their leaders and organizations trust their people, decision-making becomes faster and teams can operate with greater autonomy. However, that trust must be supported by transparent expectations, ethical leadership, reliable information, and consistent processes.

This is especially important for companies expanding into new markets, operating remotely or scaling rapidly. As the organization becomes more complex, senior leaders can no longer know every employee personally. Trust must therefore be embedded in the systems used to select, develop, and promote talent.

Technology and behavioral science can help organizations identify potential risks earlier, but their purpose is not to label people as “good” or “bad.” Their purpose is to provide additional evidence, reduce blind spots and support fairer, more informed decisions.

At MIDOT, we believe that organizations do not need to choose between trusting their people and managing risk. The two objectives can reinforce each other.

The real cost of not knowing whom to trust appears in the decisions companies make without sufficient information: the employee who should not have been placed in a sensitive role, the warning sign that was ignored, the leader whose behavior damaged an entire team, or the incident that could have been prevented.

Trust will always involve human judgment. But in today’s business environment, judgment should not have to operate without evidence.