The trouble with trust

If mutual confidence among management and staff is lost, performance is affected

by Richard Reeves is director of Intelligence Agency, an ideas consultancy; e-mail:
Last Updated: 31 Aug 2010

Trust me, I'm a journalist. Doesn't work, does it? And it is no better if the occupation is replaced with politician or company director. Across swathes of public life, levels of trust are in terminal decline. We don't trust companies, so we establish regulators and watchdogs. Then we don't trust the politicians not to fill them with their cronies. The media encourage us in our distrust - but then we don't trust the press either.

When Gordon Brown allegedly told Tony Blair that he could 'no longer believe a word he said', he was merely expressing the general sentiment of people, not just to Blair (although his trust scores have nosedived since Iraq) but to leaders in general. And the corrosion of trust has implications for political culture and for the structure and ethics of the media.

But the sharpest drops in levels of trust have been in the corporate world - and here the impact is arguably the most dramatic, undermining job security and employee loyalty, the quality of working life and potentially Britain's future economic prosperity.

Those at the very top of organisations are the ones with the most work to do. According to MORI, only one in 10 people think company directors 'can be trusted to tell the truth'. And although high-profile misdemeanours have clearly been a factor, the decline of pension schemes and the inflation of board-level pay packets have contributed to a growing sense that the (mostly) men running our business are liars, cheats and thieves.

Does this matter? After all, democracy seems to be ticking along despite the low esteem in which practitioners of that art are held. On the face of it, so long as the wheels of capitalism keep turning, it may not matter that CEOs are losing out in the popularity stakes. Unfortunately, lack of trust does matter. In the first place, firms that are not trusted will have to be regulated more rigorously, which pushes up their costs as well as adding to the burden on taxpayers.

More importantly, if business leaders lose the trust of their own employees, a number of negative consequences are felt. And the news is not much better here. According to the annual survey of the Chartered Institute of Personnel & Development, only one in four employees trust senior management to look after their interests. We don't trust them with our working lives. This obviously poses problems for employee motivation and retention.

But the lack of trust has a deeper implication too. There is good evidence that employees who are trusted are more likely to be trustworthy; and that they will remain so even after they leave the firm. Jessica Cohen, an economist at the Brookings Institution in the US, has shown how firms can create 'reciprocal' relationships based on trust and that these leave a permanent positive 'mark' on the employees. She concludes that we need to improve our 'understanding (of) the potential role of the work environment in shaping values, norms and personality'. Trustworthy people are not just hired; they are made.

'Trust is a function of a relationship, not an immutable quality that one person has and another can discover,' point out Don Cohen and Laurence Prusak in their book on social capital in business, In Good Company.

While much of the rhetoric in corporate life is about empowerment and 'letting go', levels of supervision and surveillance have in practice often been rising. CCTV cameras, e-mail checks, phone monitoring, swipe cards recording movement, drug testing - all the equivalent of large, lurid banners above the entrance to the office saying: Hi! PS: We don't trust you.

Close supervision can communicate an absence of trust that the employee can do their job. As all managers know, striking the right balance between under-supervision ('she doesn't take any interest') and over-supervision ('why can't he stop looking over my shoulder all the time') is tough, but it goes to the heart of what good management is about.

This is profit-making or breaking stuff: companies with trusting cultures are more efficient, both because information flows more freely and because less management time and effort is devoted to surveillance and conflict resolution. Within teams it is possible to build trusting relationships on the basis of experience. We quickly learn whether our team-mates and manager keep their promises. This experience-based 'thick trust' can be contrasted with 'thin trust', which spans teams, departments or even firms. One of the most important indicators of the culture of a firm is what Cohen and Prusak call the 'span of trust'.

Do you trust only yourself, the members of your team, your department, or the whole firm? When you encounter a fellow employee from a different division whom you have never met before, is your default assumption to trust them or not? When people describe a firm as 'political', what they often really mean is that the span of trust is narrow.

The double trouble with trust is that it is more noticeable by its absence than its existence, and that it is much easier to lose than to acquire.

While it may take some time to establish a trusting relationship, it takes only one incident - an infidelity, an illegal war - to disestablish it.

Rather like wages, trust takes years to earn, but you can blow it all in a day.

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