Navigating the risky business of trust

Trust is a complicated concept.

Trust is necessary because it helps us to rely on or depend on others. But, involves the risk that people we trust may not come through for us, thus trust is risky. What we risk while trusting is the loss of precious things we entrust others. Thus trust is dangerous.

Let's review the three cases:

Case 1: An international company sets up a subsidiary in India through an MD they trust. After three years, they discover the MD has committed fraud. Was trust justified?

Case 2: A manufacturing unit was set up in partnership with an Indian MD as a minority shareholder. The business was doing well until the pandemic hit and sales took a dip. After implementing tight liquidity controls, the team discovered several discrepancies in expenses, putting trust online. Was trust reasonable?

Case 3: An Indian Subsidiary of an international company was plagued by issues for three years, leading to a whistle-blower coming forward. The MD, who was the trusted partner from the start of the business in India, was found to be part of the kickbacks received through channel partners. Was trust warranted?

When is trust justified and plausible?

1. It is justified when it is based on good evidence and involves a trustworthy person
2. Trustworthiness or characteristics that make a person trustworthy is determined
3. It is justified, even when the person is not trustworthy if you know how to assess trust and its value
4. It is plausible if the conditions required for trust to exist are present.

One can appreciate that Trust needs trustworthiness, pre-conditions, and an ability to assess the value of trust - else, we are in the realm of danger. In the context of the cases, trust was risky and dangerous.

But, this is not always the case if we can draw distinctions on concepts that help us sustain and build trust. Here is my attempt to simplify.

Trust and Trustworthiness are related but distinct concepts. Trust is an attitude we have towards people we hope will be trustworthy and trustworthiness is a property (characteristic) that trustworthy people possess. Trust involves reliance, and trustworthiness involves competence, motive, and willingness to do what they are trusted to do. When trust is placed in a non-trustworthy person, then mistrust arises.

These are the attributes of a trustworthy person,

1. Competence is the presence of the necessary skills and knowledge required to perform a job effectively. Dimensions to assess - expertise, skills, knowledge, experience
2. Integrity is the alignment between words and actions. Dimensions to assess - Honesty, commitment, and credibility
3. Benevolence is the intention to act in the best interest & with genuine concern for the company & team.?Dimensions to assess - Goodwill & considerate

The reason these attributes are difficult to assess is that some dimensions are inert, while others take much longer than 1 meeting to be assessed. On top of this, the attributes of the assessor also play a big role in assessing trustworthiness! There could be some tools that such as MBTI, Cubiks PAPI, DISC, etc. that could give additional insights on a candidate.

For me, the concept of trust is incomplete unless we discuss this another layer - preconditions or (in the context of the cases) a structure required to nurture trust* and prevent a breach-

• Organizational culture of transparency via a governance model
• Remove imbalances of power optimal org. structure and internal controls set early on
• Set clear procedures, especially the decision-making process with a clear delineation of decision-making authority
• Set clear expectations around business practices, especially the code of conduct, Compliance monitoring, and reporting mechanism?

These are some guidelines, one needs to re-adjust the extent of deployment based on the team structure in consideration. Have reviewed some excellent methodologies such as agile projects, and competence-based hierarchical models used to organize teams in India successfully. Could such models build a positive environment for transparency and trust?

What are your thoughts on trust and trustworthiness in business? How have you built trust in your own professional relationships, and what strategies have you found to be effective in preventing breaches of trust? Please share your experiences and ideas with me.