Twelve Practical Ways for Leaders to Build Inter-organizational Trust – Week 12: Twelve Weeks to Trust
Since April, the Twelve Weeks to Trust Series has taken readers through fundamental facts about trust, benefits, downsides, formal and informal governance mechanisms that build trust and, I hope, quite a bit more. This final post in the series – though certainly not my final post on trust – is not a summary of the series but a summary of some of the recommendations gleaned in my readings in economics, marketing, ethics and business strategy.
While focused on building trust between organizations, these recommendations apply on an inter-personal or inter-departmental level. For instance, choosing the right partner can apply to a joint venture partner or supplier but it can also apply to hiring. And while it’s important to remember that trust is strongest when relationships are by choice and parties have other alternatives (week 2), these tactics can help foster trust even if you inherit a partnership that is less than ideal. So…
- Choose the right partner. For the best outcome, select partners with similar values, purposes and expectations but distinctive or complementary competencies (Argandoña, 1999; Barney & Hansen, 1994; Bhattacharya et al.,1998; Dyer & Singh, 1998; Jap, 1999; Kumar, 1996).
- Signal your own, and your organization’s, trustworthiness. Your reputation, being open to outside auditing of the exchange relationship, being prepared to invest in Transaction Specific Investments (TSIs) before that exchange is actually in place (Barney & Hansen, 1994), being willing to customize investments (Doney & Cannon, 1997; Ganesan, 1994) and not requiring lengthy and detailed contracts are all ways to signal trustworthiness.
Implement formal and informal governance structures in which inter-organizational trust can flourish (Argandoña, 1999). Formal governance mechanisms include: hierarchy, monitoring & contracts and Transaction Specific Investments. Informal governance mechanisms include aligning values, norms and goals; joint planning and problem solving; communication and reputation.
- Ensure appropriate resourcing (Currall & Inkpen, 2006). You need to put your money where your mouth is and show a tangible human, technical and financial resource commitment to the success of the joint project. Conversely, an under-resourced collaboration is destined to fail and erodes trust from the outset. In their book Smart Trust, Stephen M.R. Covey & Greg Link call “false trust” giving people responsibility but not authority or resources (p.208).
- Select and support the right boundary spanners based on the complexity of the exchange and the level of collaboration/trust required (Saban & Luchs, 2011). As you’ll recall in Week 9, trust can change based on levels within the organization. “Strategic-level trust” exists at the executive level and is driven more by calculation due to the focus on organizational strategy and objectives. Your boundary spanner at that level is usually another executive who is in a position to make high level decisions based on mutual strategies. “Operational-level trust” exists at the daily transactional level where boundary spanners trust one another to the extent to which it allays personal risks and anxieties (Janowicz &Noorderhaven, 2006, p.273). At this level you are looking for highly competent individuals who can deliver on the organizational commitments and who are adept at inter-personal relationships. Check out Week 9 for more on the role of boundary spanners as agents of your organization and critical ambassadors.
- Give counterparts “a trust advance… by acting as if trust were in place” (Sydow, 1998). Stephen M.R. Covey and Greg Link call this “leading with trust”. This sets the tone for benevolence, the key ingredient for trust and invites reciprocity.
- Invest in Transaction Specific Investments. If there is one finding that is consistent across the marketing, economics, business strategy and ethics literature, it’s that transaction specific investments (training, infrastructure, marketing campaigns, locations, equipment, etc.) build trust between organizations. Lots more on this Week 6.
- Structure incentives to support trustworthy behaviours, e.g.: group compensation schemes (Bhattacharya et al., 1998; Fang et al., 2008).
- Continually signal your benevolent intent to eliminate feelings of suspicion and to clarify communications (Girmscheid & Brockmann, 2010).
- Communicate constantly! Communication creates shared meaning (Hardy et al., 1998), helps to achieve role clarity (Dyer & Chu, 2004, Girmscheid & Brockmann, 2010; Saban & Luchs, 2011), goal congruence (Jap, 1999) and to engage in joint problem solving from the outset to develop goodwill trust between partner firms” (Das & Teng, 2001). Communication is vital to signal your intent. Check out Week 7 for specifics on how communications build trust.
- Provide ongoing training that helps employees understand how to develop trust, convey expertise and the importance of maintaining contact (Doney & Cannon, 1997; Doney et al., 1998). Training contributes to an organizational culture that values trustworthy behaviour and fosters inter-organizational trust.
- Model trustworthy behaviour (Argandoña, 1999). Lead by example. Be trustworthy to be trusted. Be transparent. It’s the golden rule. Enough said.
As we saw in Week 2, trust is an incredibly complex construct that changes based on each new piece of information in the relationship, on the organizational level of the boundary-spanners, on a unique history through time and many other factors. So, I don’t pretend that this list is complete and invite you to add your suggestions and to check out all the Twelve Weeks to Trust posts for additional tips, research and context.
If you’re new to this blog you may be wondering why so many names and dates are in parentheses. I just like to cite where I found the information and provide you with the full reference at My Trust Bibliography in case you want to find out more. I’m also always looking for new articles and sources on trust and welcome your recommendations.
I hope you’ve enjoyed the series and that it’s been helpful in building trust in your professional relationships.