Trust and Corporate Change

Close your eyes and make a mental list of models for corporate change.

There are models of “what is needed.” One such model posits three needs: pressure, vision and first steps.

There are models of “types of change.”  For example, linking participative management to incremental change, and directive leadership to transformative change.

There are models of tools to leverage for change: a favorite of mine is People, Structure, Systems, Culture.

There are "how to" models.  One  emphasizes leadership; another, vision or intent; a third, alignment.

Then there are descriptive models—they use OD frameworks, or industrial economic models, to classify and distinguish types, levels and genres of corporate change.

But you don’t hear much about linking trust to corporate change. Nor is corporate change the first thing most of us think of when we think of trust in business.

Which is curious, because the presence or absence of trust within an organization can greatly affect a company’s ability to change.

Let’s say you need to make an acquisition; or enter a new business; or up your growth rate by four percentage points. How would a low-trust organization go about it?  How would a high-trust organization go about it?

Low-trust organizations are typically run on the basis of either consensus, fear, or contracts. All three have their problems.

—Consensus-based organizations can be very thorough, but slow to adapt—since trust doesn’t exist between parties, it has to get re-created by consensus each time.   If fast change is required, that’s a drawback.

—Fear-based organizations can be efficient at implementing change, but there is a big burden on the few fear-drivers to be right—they are deprived of the value of direct input from others, who fear them. The more complex and fast the change, the greater the risk of the leader getting it wrong.

—Contract-based organizations substitute a market in place of consensus. For any given transaction it may be more efficient than consensus.  But there get to be an awful lot of contracts and transactions made, all of which require time and people to track them.  It’s an expensive model to maintain, and even more expensive to tweak.

Then there are trust-based organizations. In such an organization, if your partner says he’ll do something, that’s it.  You don’t need a consensus session. You just trust he’ll do it. And your partner  will do what he said, because that’s how you get to be trusted.

You also tend to trust your partners’ judgment—because you trust they will tell you if they don’t know something. You take their word at face value.

Unlike a fear-based organization, you trust that you partners will raise issues that need raising; and they won’t raise issues not worth it.

Best of all—unlike a market-based organization, you trust that everything your partners think and do will have your interests at heart for the long run; they will not be distracted by the short-term transactional commissions, bonus points or other "incentive" schemes based on the improvement of an individual’s own short-term self-interest.

In such organizations, you don’t need nearly as many contracts to make sure your partner will do what he says. You don’t need so many measurement systems to track and distribute agreed-upon incentives and outcomes.  And the whole organization is not hostage to the judgment of a few people.

Which kind of organization will most easily change on a dime, and get it right? The answer is pretty clear.

Trust pays off when it’s time to change.

 

2 replies
  1. Scot Herrick
    Scot Herrick says:

    While trust is absolutely needed to facilitate change, it also requires management teams and their employees to actually respect their work and views as to what would work best.

    Managers who say they listen to their employees but don’t implement anything suggested are not really trusting people.

    Trust requires a very mature person to facilitate change — and I don’t mean their age.

    Reply
  2. Alex Todd
    Alex Todd says:

    I agree.  Trust is an important condition for successfully managing change.   In fact, one could argue it is the single most important factor.   People need to know that they will get sufficient value from their efforts to change and conversely that they will not pay an exceedingly high price (i.e. look incompetent, become redundant, etc.).

    Persistent community interdependence is an important condition for trust.  You have it in a partnership.   However, it may be less prevalent in large corporations.  A good analogy is the levels of trust in a village versus a city.   People in a village can easily rely exclusively on personal relationships and word of mouth reputation (that’s why it may take 20 years for a new family to be socially accepted in a village).   People in a city need formal structures (there is also more need to establish fast trust, over high trust, because they can mitigate risk through easy substitution).  Most such structures serve to protect from a loss of trust (i.e. laws, regulations, contracts, etc.), but some help to develop trust (i.e. community institutions and functions, neighbourhood businesses, etc.).  However, much more could be done.  For example, the Internet could be used to facilitate communication between neighbours and thereby help people feel connected and even become more interdependent (think of finding a babysitter you can trust).  I believe there is an opportunity to provide more structures that facilitate trust in organizations undergoing change.  This is an area that may warrant more attention.

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