Trust and Productivity
When two people trust each other, their relationship is productive. When two organisations have trusting relationships and interactions their relationship is productive. When trust is violated, relationships are unproductive and organisations and individuals suffer.
by Kevin Dwyer
The definition of trust does not include any element of good or bad. Two criminals may trust each other. It does not have any element of right or wrong. Two people with diametrically opposing views believing each is wrong may trust each other.
Trust is a personal issue. It indicates a willingness to become vulnerable to another person or organisation based on positive expectations of their conduct.
In their article posted on beyondintractibility.org, Lewicki and Tomlinson describe two types of trust; Calculus-Based Trust (CBT) and Identification-Based Trust (IBT).
The former is the style of trust which builds early in a relationship. CBT is the trust calculated as a result of the impact of incentives to stay in or leave the relationship.
IBT is the trust developed later in a relationship. IBT is the trust developed when individuals have a deeper understanding of each other through repeated interactions.
When Identification-based trust is developed, goals and values become shared. Meetings are required less frequently. Audits of processes become a shared and welcome responsibility. Developing and adhering to specifications becomes a less time consuming task. Differences in opinion created by low levels of understanding of corporate philosophy and culture are reduced substantially.
Procurement practises in the better managed auto-manufacturers is an example of building trust and improving productivity.
Calculus-based trust developed between manufacturers and suppliers as manufacturers shared their plans with suppliers and asked suppliers to open their books and accept a declared return on investment or percentage margin in return.
Many suppliers were unwilling to open their books and take advantage of the planning certainty being offered. They did not trust the auto-manufacturer enough to open their books.
Many auto-manufacturers were not willing to commit to their plans, placing the risk on the supplier and therefore losing the trust of the suppliers.
The few manufacturers and suppliers who got past this early calculus-based trust development were able to go further. Suppliers were invited by the auto-manufacturers to be directly involved in research and development, not only in car/parts design, but also in manufacturing processes at the auto-manufacturer and the supplier.
Those suppliers and auto-manufacturers that were able to move through the calculus-based trust on to the identification-based trust were able to increase productivity dramatically by sharing not only common goals but common values.
The resultant integration of supplier's strategies and tactics into the auto-manufacturer's strategies and tactics brought increased productivity, lower costs, improved flexibility and increased profits to those organisations that could establish the required level of trust.
Trust, however, is not static. Trust is destroyed when the positive expectations of conduct which underpin the willingness to open oneself to vulnerability are not forthcoming.
In the early stages of building trust, small deviations from the expected positive conduct can destroy trust. In established identification-based trust, repeated infringements or a severe break in delivery against expectation is required to destroy trust.
Trust is personal. It is between two people. When organisations "trust" each other it is a result of trust between individuals in the organisation. Hence, trust and its benefits in productivity are destroyed when the expectations of an individual in an organisation is not met by an individual in another organisation.
When new individuals enter an established relationship is when the risk of destroying trust is the highest. Unfortunately, not many people recognise the benefits of trust and consequently, do not rate the impact of trust being destroyed as being high.
Therefore, to maintain the benefits of trust between organisations it is incumbent upon the individuals currently involved in the relationship to bring the new person into the fold, building their trust and their belief that trust has economic benefits.
Organisations that recognise the value of trust and actively discourage activities which would destroy trust, whilst actively encouraging activities and a culture which values trust, reap a significant competitive advantage.
Kevin is the founder of Change Factory, a company which helps organisations who do not like their business outomes get better outcomes through changing people's behaviour.
To find out more about Change Factory and see more articles visit http://www.changefactory.com.au
Kevin Dwyer may be contacted at http://www.changefactory.com.au or email@example.com