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Leadership & Organisations

Bridging the Trust Chasm

Bridging the Trust Chasm

Whoosh and it’s gone! Trust can evaporate in an instant and organisations are notoriously poor at recovering it. But it doesn’t have to be this way.

Greg (not his real name), the Project Director for a major international utility project, experienced a breakdown in trust.  After bumping into technical difficulties, his project was in free-fall.  Results were not happening.  The client was unhappy and the “integrated team” that had been rigorously hand-picked was descending into chaos.  Greg was rapidly losing the trust of his stakeholders.

Recovering trust is a daunting task.  It is often associated with an overhaul of governance structures and processes, with a detailed review of work practices and with the occasional product recall.  Moreover, reputation needs to be rebuilt with customers, investors and key stakeholders.  Even with all these efforts, progress is expected to be slow. 

An Uphill Battle

Tyco struggled to regain its credibility after its CEO, Dennis Kozlowski, was arrested and charged with fraud. Despite the subsequent conviction and the drastic actions by Ed Breen, his replacement, to overhaul the leadership team, governance structure and relationships with stakeholders, Tyco struggled to recover. In the end, the company was dismantled into 3 separate businesses.

This difficulty to deal with a lack of trust is not isolated.  For example, the Edelman Trust Barometer indicates that the financial crisis of 2007-2008 shattered public trust in the corporate sector.  Three years later, less than 50 percent of the population was placing trust in corporations.  In spite of a massive regulatory overhaul and management action, “banksters” are still regularly pilloried in the press.  How ironic for a sector relying on trust!

Despite the odds being against him, Greg bounced back from his trust downfall, creating a solid 110% increase in productivity within a matter of weeks. At the heart of the dramatic shift was an intense focus on identifying and dismantling the cognitive and behavioural mechanisms damaging trust and severely impeding performance of the project.

The results were spectacular and everyone noticed – the client, the consortium partners and, perhaps more importantly, his team.  Many leaders duck the subject.  They worry.  They worry about the potential fall-off that may come from a straight conversation.  They worry about the sentiments that arise by questioning people’s sincerity or reliability.  Greg was different.  He did not worry.  He led the turnaround by addressing the issue of trust head-on.

Recovering Trust – The Framework

Fostering an atmosphere of candor and openness was central to Greg’s success.  He followed a structured approach around 5 powerful principles.  Experience has taught us that they can be extremely helpful in restoring trust in times of crisis:

1. Talk authentically. Be open and straightforward in your communications with nothing hidden – people have a very acute radar for double-talk. A lack of authenticity shows up as an incongruity between the words that come out of a person’s mouth and their body language.

2. Restore communication. Establish an Amnesty Agreement where people can speak openly without reprisals. Allow people to speak. Listen for underlying upsets, disappointments, resentments and anger. Acknowledge and address the experience and emotions.

3. Understand the explicit promises made between the parties as well as the implicit ones the other party would have taken for granted.

4. Separate the Facts of the situation or circumstances from the assessments, opinions and stories. This enables people to see the data for “the data”.

5. Take ownership of the whole outcome rather than just your part in it. Be a leader and address the “elephants in the room”. Explicitly state what you, your team and the organisation can be counted upon for in the future and your expectations of others.

Look for the Upside

Although the principles may be straightforward, the practice of using them requires courage, grit and vision. It requires that leaders go beyond their comfort zone and it brings a level of authenticity that is very often missing.

Trust is a time-critical phenomenon.  The more you dodge the issues the wider the chasm and the worse it gets. Tinkering around the edges may feel more comfortable, but it generally fails to recognise the urgency of the problem.  When employees suddenly realise that they are working for a discredited, or even vilified, organisation, the effect can be devastating.  Naturally, this, in itself, has consequences on productivity and client satisfaction.

But, in every crisis, there is an opportunity.  Done well, a significant improvement occurs as a consequence of people aligning their attention, effort and focus on playing a much bigger game. A leader who can rally the troops in times of doubt is fondly remembered.  Just ask those who worked at Apple when Steve Jobs turned it around.

Gilles Hilary is a Professor of Accounting and Control at INSEAD and The Mubadala Chaired Professor in Corporate Governance and strategy. He is also a contributing faculty member to the INSEAD Corporate Governance Initiative.

Vip Vyas is the Managing Director of Distinctive PerformanceHe is a thought partner and advisor to boards and executive teams. He can be contacted at [email protected].

Hartly Mignon is an Executive Consultant.

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About the author(s)

About the series

INSEAD Corporate Governance Centre

In a rapidly changing business environment disrupted by increased regulatory reforms, digitalisation, societal demands, capital markets and geopolitical shifts, much of the pressure and scrutiny is putting boards under the spotlight. The INSEAD Corporate Governance Centre (ICGC) has been actively engaged in making a distinctive contribution to the knowledge and practice of corporate governance. Our vision is to be the leading centre for research, innovation and impact in the area of corporate governance globally. Through our educational portfolio and advocacy in fostering sustainable high-performance governance practices, the ICGC hopes to build greater trust within the public and stakeholder communities, so that businesses today are a strong force for improvement, not only of economic markets but also for the global societal environment.

The ICGC combines INSEAD’s institutional visibility and exceptional faculty in developing thought leadership and a global educational platform in the area of corporate governance. The centre’s mission is to develop world-class teaching content, promote latest research using innovative scholarly materials and enrich public discourse on corporate governance through forums, conferences, peer-to-peer exchange and expert-to-practitioner dialogue.

Our activities harness INSEAD’s expertise in multiple disciplines across areas such as strategy, risk-management, decision making, finance, economics, family governance and corporate social responsibility for in-depth insights and sustainable responses to the challenges facing directors in today’s increasingly complex and volatile environment. The ICGC brings an unmatched international viewpoint to its activities thanks to INSEAD’s position as The Business School for the World, with its footprint across the Europe, Asia, and Middle East campuses.

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The INSEAD Corporate Governance Centre, launched in 2010, undertakes cutting-edge research and teaching tailored to the needs of boards.
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(3)

Anonymous User

07/06/2015, 01.03 pm

It was heart warming reading this article. I was in a dilemma about how to solve issues that would have affected my business sponsors. But thanks to this article, I am confident about my next steps to maintain or hopefully improve the trust we have with our clients.

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Anonymous User

05/06/2015, 10.05 pm

Communicate early, solve collaboratively goes a long way in restoring trust.

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Anonymous User

28/05/2015, 05.10 pm

Having cleared the smoke of the past show a clear road map forward and start with some quick positive strokes that are visible and tangible to a larger section. Slowly the old replaces the new and trust starts building in when hope starts becoming a reality .

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