Paradise Lost? Trust and big business 1

Karen DruryGuest blogger: Karen Drury, Consultant, fe3 consulting.
 
This content first appeared on HRZone, an online HR publication dedicated to bringing science, opinion, analysis and insight to bear on the rapidly-developing HR function.
 
Trust, like love, makes the world go round. Academic writers and practitioners alike believe that it has significant benefits.

Trust can lower costs, as it removes the need for significant monitoring and controls.  It encourages customers to return and can give companies ‘the benefit of the doubt’ – and often precious additional time – when they make mistakes.  In the workplace, trust can make for a more co-operative workplace, leading to more altruistic behaviour, not to mention an attachment to the company itself.

Trust Image

There are a lot of claims for the impact of trust in the workplace, not many of which are unequivocally supported by hard data, but studies have shown an association between trust and increased effectiveness, lower turnover and – that Holy Grail of organisational effort – successful change management.

The subject is currently at the forefront of the UK psyche.  In recent years, we have had the parliamentary expenses scandal and the ‘sexed’ up dossier that led to war. We have seen the police changing witness statements to the Hillsborough disaster, financial institutions fixing the Libor rate, and members of the Metropolitan Police Service accused of fabricating evidence to force the resignation of a democratically elected politician.  This doesn’t even touch the sex scandals to come out of the Catholic Church in recent years, or the furore of pharmaceutical companies accused of marketing products illegally, or the newspapers hacking phones.

The key institutions of society – church, politicians, business and the police – have all played their part, their actions chipping away at the fragile structure of trust.

The Edelman Trust Barometer, a global study through 26 countries and which surveys more than 30,000 people, provides some evidence of this conclusion.  Although trust as an aggregated concept is apparently on the rise globally, it’s not that surprising that only slightly more than half of the respondents trust business and the media, and less than half trust in government.   Perhaps more interestingly, business is not trusted because it is seen as corrupt, supported by ill-conceived incentives which drive corrupt behaviour.  Governments, on the other hand, are not trusted because they are perceived as incompetent.

This echoes one of the (many) academic definitions I have come across – which considers the elements of trust to be benevolence (or concern for others), integrity (a form of morality) and competence – or being capable of doing something.

So according to the theory, the Government is seen to lack competence and business is seen to lack integrity, so trust is, if not impossible, highly unlikely.

A recent mindstretch® event, held with Lansons Communication, pulled together senior leaders from a range of organisations, including some of the financial big-hitters.  Their response from a corporate perspective was that yes, of course, trust is essential to organisations and for many, it’s absent.  Ask about their perceptions as consumers and customers and the picture becomes a bit more complicated.

While few people might put their trust in the institution or company, many who have personal contact with the organisation feel differently. So although you might not trust the bank, you would certainly place trust in your personal banking manager.  And because of that relationship, you’re unlikely to move banks, regardless of reprehensible behaviour elsewhere in the organisation.

Many academics believe that trust comes from social interaction – face to face, phone, or through correspondence or email. This seems intuitively sensible and it might lead you to wonder why banks are cutting back on so many front line staff.

This interaction has to be natural, according to our mindstretch(R) participants; and those representing the organisation have to be able to help you.  This brings us right back to the need for competency to develop trust.  Someone speaking to a script is enough to engender scepticism in the most generous of customers, because most of us can spot a practiced line at a hundred paces.  This is where you might assume that the person speaking on behalf of the company doesn’t really have your interests at heart because the script was written by the organisation – thus showing a lack of benevolence, essential for a trusting relationship.  Ironically, scripts also demonstrate a fundamental lack of faith between the organisation and their staff – they can’t be trusted to even speak their own words.

The shining exception to this is of course, First Direct, who at least TELL you when they’re about to go on script – but otherwise, their customer service staff are exemplars of what you really need to develop trust between customers and companies – real human beings.

This positive, human interaction might also help when things go wrong. One of our participants told a story about a department store who got things very badly wrong – but said that she remained a loyal customer because the organisation was “so nice”. As a First Direct customer, I feel rather like that myself.

However, when we get to the online environment, this fairly intuitive state of affairs seems to fall apart.  For here we have an environment where none of the verbal or visual cues on which we would judge someone’s trustworthiness are available to us – there is no personal interaction.  But millions of us will place huge amounts of trust and money in online retailer Amazon without thinking twice.  When you envisage the emotional investment in an occasion like Christmas, the delivery of a particular item to a family member or loved on, the very idea of entrusting that to a faceless, wordless transaction on a computer seems absurd. Yet we do it, year after year.  And here, the compensating factor is delivery – or competency. It’s no hassle to order, no hassle to return, and there’s a series of emails which manage your expectations at every stage of the purchase.

Looking at how trust is created in organisations between management and employees, the literature indicates that communication is crucial.  It is a major element of creating perceptions of procedural justice, which reflects perceptions of the fairness of how decisions have been reached. Procedural justice relies heavily on communication both outwards from the firm, and back to the firm in the feedback of employees, or their voice.

If you believe that trust is based on beliefs about the other party, then it’s obvious that those perceptions can be shaped through information.  The quality of communication by an organisation or manager – that is, that information is useful, relevant and timely – can have a positive impact on how trustworthy employees believe their organisation is.  Yet I’m constantly surprised at the low priority given to communication by senior leaders.  Many do not believe this is a management responsibility, they think it’s too time-consuming and leave it to someone else – either the internal communication department, or HR.  Yet their very lack of effort here could be undermining trust between the organisation and its employees because it undermines perceptions of organisational justice.

As for consumers – I wonder if we get the organisations we deserve.

For example, I wouldn’t leave my bank unless it really did something appalling to me. It may be that the financial sector is particular in this – it is easier to buy groceries elsewhere,  if one of the major supermarkets treated you badly, less easy to swap bank accounts, where standing orders and direct debits are woven through our lives like a very sticky spider’s web.

But really – do we have such low expectations of our financial institutions – banks in particular – that it would take something MAJOR to happen before we’d move? Perhaps we ought to be more demanding.  Customer inertia cannot be helpful when we simultaneously suck our teeth when misdemeanours come to light and tut disapprovingly.  If we are unhappy with the way in which business acts, then as customers we too need to act.  Being “good” in business needs to have both reward and consequence.  I’m not sure it does at the moment.

One comment

  1. Pingback: Management Now trend report & webinar « Business Perspectives

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