Would you say you can trust 95 percent of your customers, employees, and suppliers?
The answer to this question defines everything about your organization. It establishes the engagement platform for your employees. It defines the relationships you have with your customers. And it defines the quality of work you do with your suppliers.
If the answer to the question is yes, then your processes and procedures should demonstrate that. Your processes and procedures should assume that customers are not liars and your employees are not cheaters. These processes should focus on empowering the majority of customers and employees and making them feel part of a respectful, trustworthy, and therefore long-term relationship. They will act accordingly, demonstrating their long-term commitment.
If the answer is no, your processes will reflect that too. They will be riddled with exceptions and warnings that will demonstrate your deep-seated doubts to employees and customers. They will respond with short-term transactional relationships that focus on price, refusing to invest in long-term relationships.
Most leaders don’t take the time to think about this question. They never really think about the issue and what it means.
Discovering the truth about trust in organizations
How do you find the answers to the questions above? The answer is simple: just rethink your process.
When you ask this question of organizations, senior management usually can't answer it clearly. They assume they're based on trust. But when you ask front-line employees, they're the epitome of that. Employees point to restrictive policies, excessive need for approval by senior management, and low levels of approval. Travel expense reports are a prominent example. To what extent do they have to itemize, and to what extent do you trust them?
As I argue in my book, Challenge the author!Organizations are not a collection of numbers and facts. Organizations are stories. Your processes and procedures tell the story of how you want to be productive and perform. These stories tell the story of how you want to relate to your customers and employees.
Yes, but…
But you need policies and procedures. This is a common objection I get. Of course you need to set guidelines. Now, think about expenses that require senior management approval. What percentage of these requests are approved without changes? If the answer is 95 percent or higher, then the employee who requested approval was clearly responsible enough to request a valid expense. So why do we need higher, time-delaying approvals?
But what about cheaters? Good question. There will always be cheaters. If they are less than 5% then don't punish all your employees for being cheaters. Treat cheaters as exceptions and manage them individually. Just because one employee decides to expense a spa treatment as part of a business trip is no reason to punish all your employees and the cheaters.
There is a huge cost in implementing reliable processes within an organization. Aside from the actual time it takes to create and enforce the process (reviewing detailed expense reports takes time and many people to complete), the real cost is employee commitment and productivity. Employees who are subject to rigid and unreliable processes will “ignore” their efforts and hide behind the process. Employees feel that the company is trying to “catch them” and avoid any deviation from the rules.
Customers who are forced to follow strict “gotcha” procedures react accordingly. They reduce relationships to a series of transactions and are less willing to invest in long-term, profitable relationships. Instead, they focus on price and are much less forgiving on social media.
So, what should you do?
No organization starts out unwilling to trust its employees and customers, at least that I know of. Otherwise, there is no point in staying in business. Over the years, bad experiences shape the perception of trust, and a few bad actors cause an organization to view everyone with suspicion. This is a common mistake, easy to understand, but should not be tolerated. This erosion of trust comes at a high cost in mutual cynicism and lack of trust, leading to lower productivity, higher turnover, and lower customer retention. No one wants to do business with an organization that treats them as liars, not trusted, unless proven otherwise.
Here is a 10-step approach to building trust within your organization.
- Conduct focus groups with employees across departments to identify processes and procedures that erode trust
- Review your approval process to identify unnecessary escalations
- Redesigning processes to limit trust
- Create a new empowerment toolkit for your employees
- Identifying the perpetrators who abuse your trust
- Have an honest conversation with your abuser and either let them go or guide them down the path of trust.
- Announce the changes to all relevant stakeholders
- Monitor the new process to ensure that you are not dealing with any anomalous behavior.
- Review and monitor for anomalous behavior and act quickly
- Identify new ways to empower your employees
Outliers are not representative of the majority of your customers, employees, or suppliers. If the majority of your customers or employees are deceiving you, then there is something fundamentally wrong with your business. But if, as I suspect, they are not, then you need to leverage the power of trust to achieve higher levels of performance and profitability. Trust will only come when you build business relationships with the purpose of building trust, not destroying it.
As for the outliers, either train them or eliminate them. Find a way to hire them on trust or fire them. They will be better off than your competitors.
It's tempting to solve the problem by designing restrictive processes, but the cost is the erosion of long-term trust. That's a price you don't want to pay. Trust is the foundation of business. Make sure you have it with the right people and don't let a few bad actors ruin all your relationships.
Trust is not an opaque concept that only appears when you see it. It is present in an organization's processes, procedures, approval pathways, and most of the ways in which it makes and executes decisions. Trust is real and it drives business in more ways than you may realize. Trust is a two-way street. If you are not willing to give it, don't expect it in return. If you build trust with your customers and employees, it is more likely to be returned. The choice is yours.