Trust and the bottom-line

Intangible and Important

I find it really interesting that in our contemporary, complex business environment there are still question marks about the value of measuring 'intangible' relationship criteria, such as Trust.

Trust is obviously a crucial element in successful, strategic (high involvement) business relationships where both parties are relatively powerful and able to influence each other's fortunes.

A key characteristic of trust is the belief that the future actions of our business partners can be predicted. And that they will act to the mutual benefit of our both parties.

Trust leads to Disclosure

A second characteristic of trust in commercial partnerships is the likelihood of deeper levels of disclosure, due in part to greater confidence that the information being disclosed will be properly treated.

I feel that disclosure is an important driver that impacts on directly measurable aspects of the business.

Disclosure drives business outcomes

So how does disclosure drive tangible business outcomes? Two examples spring to mind; innovation and resource allocation.

If I am prepared to disclose aspects of my business that otherwise I would keep internal, then the other party is in a better position to generate innovative ideas sparked by this information. So the better they understand my underlying business issues, the better able they are to respond with interesting and appropriate ideas.

On a more pragmatic note, disclosure also allows my business partners to align their resources to meet my needs - so they can deliver the right effort in the right area and simultaneously improve their ROI from the relationship.

Risk reduction

A third characteristics of greater trust in business relationships is risk reduction. If I do not have complete trust in my business partner, I am less likely to disclose the elements of the relationship that are bothering me, because I am less likely to believe they will take positive action based on that feedback.

Often this means early, remedial actions are not implemented leading to a greater likelihood of the relationship breaking down completely.

On the other hand, where trust exists both parties are more able to disclose issues in the relationship and to readily engage in early interventions.

Who do I trust?

A further point to consider is this: 'who is it that I trust?'

Is it: 

• The Company
• The People

Strategic Relationships are likely to be driven by a combination of the two, so it is important that both aspects are addressed in a relationship management program. Don't assume that because the relationship between the business entities is healthy and trusting that this is true between the people working daily at the 'coal-face' of the organization.

The only way to identify where trust exists in a relationship, and where it doesn't, is to ask the people themselves!

If you find this topic interesting please read an article by Doug Hudgeon's on his Vendor Management Blog entitled "Prisoner’s dilemma in long term supplier relationships". It is worth noting his comment at the bottom of the article "However, if the game goes on for an infinite number of rounds then strategies other than always defecting result in higher payoffs"

Author: Richard Benyon, Decideware