Building Trust Is an Art
by Michael Maccoby
Published in: Research Technology Management, Vol. 40 No. 5 September-October, 1997. pp. 56-57.
In the Age of Learning, business success depends as much on soft factors like loyalty and trust as on hard factors like technology and finance. The ability to trust ia a major difference between a bureaucrat and an entrepreneur. Bureaucrats minimize risk. Entrepreneurs risk failure and trust associates. Profitable partnering relationships between companies, are cemented by building trust, not by contract.(1)
Furthermore, the effective use of information technology requires trust, not only of the information communicated, but also between faceless communicators. We fully believe the complex and subtle messages we receive by telephone or e-mail only when we know and trust the senders. In a sense, psychological bandwidth varies directly with the degree of trust between people.
Trust cannot be decreed. The willingness to trust is a combination of values and evaluation, attitudes and interests. National culture influences how and whom we trust. But within and across cultures, trust depends on who we consider trustworthy and how well we create trust in others.
The thesis of Francis Fukuyama's insightful book Trust is that a nation's prosperity depends on the values that support trusting relationships:
"The degree to which people value work over leisure, their respect for education, attitudes toward the family, and the degree of trust they show toward their fellows all have a direct impact on economic life and yet cannot be adequately explained in terms of the economist's basic model of man... For example, certain societies can save substantially on transaction costs because economic agents trust one another in their interactions and therefore can be more efficient than low trust societies, which require detailed contracts and enforcement mechanisms," (2)
Fukuyama shows that different cultures shape trust differently. In Confucian cultures, full trust is reserved for family members. In Taiwan, when a Chinese entrepreneur runs out of sons and sons-in-law, corporate growth stops. These companies lose talented managers who see their way to the top blocked, because they are not members of the owner's family. Taiwanese technical managers told me they were working for an international company for this reason.
Japanese entrepreneurs who also practiced Confucian teachings expanded their companies by adopting promising young managers into the family. Japanese institutions, like the keiretsu system of interlocking companies, and practices, such as reciprocal obligations, also build the trust essential for growth. Within large companies, employment security and peer pressure form a family-like culture. However, as Peter Drucker has pointed out, the Japanese find it hard to trust foreigners, and this has limited their global growth.
In Germany, participation in cooperative groups and adherence to high technical standards build trust. Swedish managers spend a great deal of time learning to know each other, building consensus, and strengthening shared values. They reward and protect those who put the company ahead of short-term self interest. Wage differences are narrow, thus dampening envy which corrodes fellow feeling. This investment in trust pays off in the ability to delegate and to expand. A small country, Sweden is notable for its large companies and international management competence.Where trust is low, as in many less developed countries, corruption erodes efficiency. Leaders rule by fear, there are huge differences in wealth, and people become cynical. What teamwork exists takes place largely in mafia-like families or in semi-feudal, authoritarian groups.
Trust and Partnering
The initial trust required for partnering between companies or between management and unions depends on both a shared vision of economic gain, mutual understanding and respect for each other. Inevitably, there will be disappointments as well as successes. Working through the misunderstanding will either strengthen trust or dissolve it.
Some years ago, I was asked to direct a program to improve quality of product and working life at a well-known company. Although the need was great, the program never got off the ground, because there was such deep distrust between management and union leadership. Neither trusted that the other would not take advantage of a partnership, and the union leaders did not trust each other.
In contrast, despite wrenching change in the telecommunications industry, the development of trust between AT&T management and CWA (Communications Workers of America) leadership has resulted in better quality, higher productivity and improved worker satisfaction. By understanding business logics, union leaders are better able to represent their members in designing process changes, while managers have learned to respect union values of democracy and solidarity.
At Saturn, the level of union (UAW) and management (GM) partnership and trust is even greater, a major reason why Saturn is one of the most profitable auto companies in America, with J.D. Powers customer satisfaction ratings surpassed only by cars costing at least $20,000 more (e.g. Lexus, Infinity) and the highest wages, including profit sharing bonuses, in the industry.
Despite their success measured both economically and in attitude surveys, many at AT&T and Saturn feel that trust is fragile, overly dependent on a few creative leaders. They have seen trusting relationships disintegrate, at work and in the family.
Americans have reason to be concerned about the erosion of trust in their society. In 1960, surveys reported that 58 percent of Americans believed "most people" could be trusted. In 1993, the percentage had fallen to 37 percent. Furthermore, the institutions that develop trust are weakening: family, churches, and voluntary organizations. And loyalty and trust in companies are diminished by downsizing anxiety and resentment of huge salary differentials between executives and lower levels of the organization. As trust disappears, employees put their own interests ahead of the company.
As trust disappears, employees put their own intersts ahead of the company's. Scott Adams' Dilbert touches the raw nerve of the engineer's distrust of management. Younger professionals believe they can trust only themselves, their competence, ability to learn and develop relationships, even brief ones, based on shared values and interests. Both as customers and employees, they believe in giving value not loyalty which, in any case, is not rewarded.
How can management build the trust essential for operational excellence? Within and across organizations, we trust people according to shared goals and also how we evaluate their competence, reliability, honesty, and above all, their attitude to us.
Increasingly in America, trust within organizations depends not on family-like ties, but lasts only so long as goals are shared. As in professional sports, good management makes a huge difference, in three ways:
2. Fukuyama, F. Trust. New York: The Free Press, 1995. pp. 351-2.
3. Maccoby, M. The Leader: New York: Simon & Schuster, 1981.[an error occurred while processing this directive]