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Trust and Business Relationships — Some Common Pitfalls


09Feb 2010

Recently, in a variety of settings I am observing the issue of trust impacting business relationships.

Obviously, trust is at the foundation for business transactions — that the vendor will provide the goods or services purchased, that the goods or services will be at the quality level described initially, and that the customer will pay for the goods or services in the time frame agreed upon.

Another area of business where trust is impactful is in the employer / employee relationship — where the employer follows through on commitments communicated to the employee and the integrity level of employees to be trusted to access to information and resources.

This past week I was talking to a business owner who described a situation where he had hired a sales manager (in early 2008, prior to the financial crisis hitting) who in turn started hiring a fairly high cost sales staff. Whenever the current owners or management team raised issues or asked questions of the sales manager, he reported replied, “Do I have to earn your trust or earn your mistrust?” (implying they should trust him until he proved untrustworthy.)

I replied that this was the wrong question. And, in fact, I find much communication around the issue of trust is not laid out properly. I do not believe that the question is: “Do I trust you?” (or “Do you trust me?”). This is too broad.

Trust is situation specific. The more appropriate question, I think, is:  “For what do I trust you?” Or, “What am I willing to entrust to you?” (responsibility, privileges, resources). I may trust you to hire staff within a budget amount but I may not trust you to have total access to all of the company’s financial data. Or, I may trust you to pay bills with appropriate procedural checks and balances but I don’t trust you to have total access to the company’s financial resources without monitoring.

Think back to common family situations. Teenagers often complain to their parents, “You don’t trust me!” But again, the real issue is “trust you to do what?” I do trust you to choose good friends and to tell me the truth about where you are going, but no I don’t trust you to drive three hours late at night in a car with four of your friends on a snowy night.

Generally speaking, trust is earned — either from prior behavior with other individuals (that is why we trust professionals who have gone through training and certification in their profession, but we often also check references of people with whom they have worked) or in their behavior with us. We trust others (in the defined areas of responsibility) based on previously demonstrated responsibility in similar areas.

[I do admit that in many daily interactions we confer trust to others when we have no specific basis to do so, other than assuming most people are trustworthy in daily life transactions. However, this level of trust varies greatly across individuals’ own personal history and life experiences.]

I find that people (both business owners and parents) tend to get “burned” when they give more trust and responsibility to others when the person hasn’t demonstrated a basis for that trust.

A second area where I find business owners and managers tend to get taken advantage of by others in the business world is when they ignore early warning signs of mistrust. Partly due to the self-reinforcing tendency that we don’t want to admit that something may be wrong (and that we made a mistake in hiring this person), and sometimes partly due to people’s propensity to want to believe the best of others – we wind up overlooking early warning signs of a person not being trustworthy. As a result, we continue to entrust responsibilities and resources to the individual and find out later they weren’t trustworthy in how they handled the responsibilities – digging a deeper hole and creating more problems for the business.

So, where do we go with all of this?

First, I would suggest to accurately define the parameters of trust in relationships. Using a framework such as, “I am willing to trust you to…” Sometimes, it may be appropriate to say, “I am willing to trust you with… because you have shown yourself responsible by… ” Additionally, sometimes you may need to add, “…but I don’t feel comfortable yet in giving you the responsibility to …” Finally, it is helpful to clarify what responsibilities need to be demonstrated in order for you to trust the individual with more areas (this is really helpful in dealing with teens – versus the arbitrary “when I feel comfortable”.)

Secondly, I would strongly encourage each of us to pay attention to early warning signs of problem behaviors. This can take many different forms, including:

*the facts just don’t add up

*you are getting reports from clients and customers and other trusted team members, about some problems in a team member’s behavior

*the team member responds to questions and challenges with a “don’t you trust me?” type of response

*the team member is quite adept at making excuses, blaming others or circumstances versus admitting they made a mistake or error in judgement.

How should you respond to early warning signs?

a) talk to the individual about your concerns; often your concerns may be due to misperceptions or miscommunication;

b) obtain verifying information by an independent third party;

c) set up processes and procedures to monitor transactions

d) document the issues and behaviors which are creating concerns for you. Often the weight of evidence over time becomes significant, while no one specific incident is that large.

I think it would be wise for each one of us to consider the following old saying,

“Wise individuals see danger ahead and avoid it, but fools keep going and get into trouble.”

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