Lecture 8 Flashcards
Goals of Lecture 8
Goals:
Understanding how trust is built and repaired in organisations
Explain the mechanisms that sustain trust and its dynamic structure
Illustrate on the basis of cases how trust can be restored in an organisational context
Case study : COVID [on why TRUST matters ]
During the COVID-19 pandemic, millions lost their jobs.
Those who staid in their organization were relying on managerial decisions. Data shows that when managers did not follow the rules dictated by national disease prevention centers, employees felt more angry and less grateful for their work, which impacted the trust they had in their organization. Similarly, it was shown that trust in the organization in which they worked in was a facilitator for good well-being during the pandemic. In other words, trust matters in the organization.
TRUST AT WORK
Trust is a complex phenomenon to study in the workplace:
It can happen at various levels (interpersonal, group, organizational)
It can therefore have various referents (the colleague, the organization, the boss, etc.)
And various sources (the colleague, the organization, the boss, but also the internet…)
But all these forms of trust rely, at their core, on the belief in the referents’ assessment of
trustworthiness in a corporate setting:
Their ability to perform a specific task (goal-oriented competencies)
Their benevolence (care)
Their integrity (moral principles)
Example of the supplier-buyer relationship
DYNAMICS OF TRUST
Trust is inherently dynamic, and depends on the trustee perception one has.
Example of inter-organizational relationships (IOR), where trust is double:
Competence-based trust:
How do the technology, economy, and partnering competencies of the trustee affect our relationship? (e.g., professionalism, results, etc.)
Goodwill-based trust:
Does the trustee share a common system of values and reciprocity, have regular contacts, and a good reputation?
In terms of interpersonal trust, three forms of trust components can be found (Zucker, 1986):
Characteristic-based trust : individual characteristics
Process-based trust : past exchanges, possible future exchanges
Institutional-based trust : structures that facilitate interpersonal trust
Factors for perceived trust
Ability, benevolence, Integrity
Trust model insights
But all three (Ability, benevolence, Integrity) dimensions of trustworthiness are not built that the same time:
- Ability and integrity hit first when assessing whether one can be trusted
- Then, in the long run, benevolence plays are more important part
Trust also leads to risk-taking, which is indicative of how much entities trust one another.
** If the risk is too big, trust might not be sufficient to jump the gun. **
- This is why management can use control systems that allow to reduce the perceived risk
- But of course, those control systems can also have a negative effect on trust. How? -> Levels, time
But other factors are important, such as the history of the firm:
Geographic history (e.g., the electric car industry)
Industry history (e.g., Volkswagen)
Economic history (e.g., Amazon)
RECIPROCITY
Humans are, generally, reciprocal (GT). The tit-for-tat perspective on trust.
Reciprocity reduces perceived risk and facilitates commitment.
But which came first: the trusting another entity, or the action towards that entity? And how is reciprocal trust different from mutual trust?
Analyzing the results from the study about recprocity (look at the exam prep notes model)
Does trustworthiness predict how much we trust people?
(Development -> Management)
- Integrity
Not important at T1, but positively predictive at T3. - Benevolence
Negative predictor at T1, not important at T3 - Ability Important for all throughout
(Management -> Development)
- Integrity
Important immediately, and throughout the whole project - Benevolence
Important immediately, and throughout the whole project - Ability
Important for all throughout
So trustworthiness, through time, predicts trust.
Does trust involve risk-taking behavior? (Development team)
- Formalizing
Trust does not involve more formalizing from the development team - Scoping
Yes, development teams tried to structure the scope (i.e., the requirements, the time, the resources, etc.)
Does trust involve risk-taking behavior? (Management team)
- Monitoring decrease
No observed effect of trust - Delegating
Yes, delegating was positively predicted by trust
Does risk-taking behavior affect one’s trustworthiness? (Development team)
- Formalizing -> Benevolence
Yes, at T2, but not later. - Formalizing -> Integrity
Yes, at T2, but not later. - Formalizing -> Ability
Not at all
. Does risk-taking behavior affect one’s trustworthiness? (Development team)
- Scoping -> Benevolence
Not at T2, but well negatively at T4. - Scoping -> Integrity
Well at T2, but not really at T4 anymore. - Scoping -> Ability
Not at T2, but well negatively at T4
Does risk-taking behavior affect one’s trustworthiness? (Development team)
- Scoping ->Benevolence
Partly. - Scoping -> Integrity
Not at all. - Scoping -> Ability
Partly.
Does risk-taking behavior affect one’s trustworthiness? (Management team)
- Delegation -> Benevolence
Negatively - Delegation -> Integrity
Negatively - Delegation -> Ability
Negatively
Does risk-taking behavior affect one’s trustworthiness? (Management team)
- Monitoring -> Benevolence
Negatively - Monitoring -> Integrity
Negatively - Monitoring -> Ability
Negatively
Conclusion form the reciprocal test study
So what can we say?
Changes in trust are indeed dynamic and affected by previous iterations of trust.
It is also a large part of interpretation of what is observed and when.
For instance, the developers’ risk-taking behavior of scoping the project at T4 (i.e., close to then end) was predictive of a decrease in perceived ability and benevolence.
Similarly, delegating based on trusting the people to do the job correctly may be perceived as an
abdication of responsibility.
The six strategies to restore trust :
Sense-making
Relational
Regulation and controls
Ethical culture
Transparency
Transference
SENSE-MAKING
Definition: This strategy involves understanding the root causes of trust breakdowns and creating a coherent narrative to explain what went wrong.
Implementation: Engage stakeholders in discussions to gather diverse perspectives, analyze the events that led to the loss of trust, and communicate a clear, consistent story about these events. This helps stakeholders make sense of the situation and understand the steps being taken to address it.
problem : This strategy can take considerable time and resources to execute, potentially delaying the restoration of trust. In situations where quick action is needed to regain stakeholder confidence, the time required for thorough sense-making can be a significant disadvantage.
Relational
Definition: Focuses on rebuilding and strengthening relationships between individuals and groups within the organization.
Implementation: Foster open communication, empathy, and mutual respect among stakeholders. Activities such as team-building exercises, regular meetings, and feedback sessions can help rebuild interpersonal trust and repair damaged relationships.
Problems: can reveal horrible things, and lead to scapegoating.
Regulation and Controls
Definition: Involves implementing or reinforcing policies, procedures, and controls to prevent future breaches of trust.
Implementation: Introduce stricter compliance measures, enhance oversight, and ensure that there are clear consequences for unethical behavior. Regular audits, monitoring, and enforcement of rules can help reassure stakeholders that the organization is serious about maintaining trust.
Problems: cultural, symbolic often, and therefore can sound fake.
Problems: relocation of firms, suffocation of economic growth, internal controls might not
be a good sign for employees, mostly competence-based trust.
Ethical Culture
Definition: Establishing and promoting a culture that values ethical behavior and integrity.
Implementation: Develop and enforce a strong code of ethics, provide ethics training for employees, and lead by example. Leadership should demonstrate a commitment to ethical standards and encourage employees to act with integrity and accountability.
Problems: It rarely is about a “simple” reminder if you are already in a negative ethical
culture.
Transparency
Definition: Ensuring that organizational processes and decisions are open and visible to stakeholders.
Implementation: Share information openly, including both successes and failures. Regularly update stakeholders on progress, decisions, and changes within the organization. Transparency helps build trust by showing that the organization has nothing to hide and is willing to be held accountable.
Problems: Some say that transparency is replacing trust, and that it can reveal
trustworthiness or the opposite.
Transference
Definition: Leveraging the credibility and trust of third parties to restore trust in the organization.
Implementation: Partner with trusted external entities such as regulators, auditors, or respected industry figures. Endorsements, certifications, or independent audits from these third parties can help reassure stakeholders that the organization is committed to restoring trust and adhering to high standards.
Problems: If the societal pillars are perceived themselves as untrustworthy, well…
If the third parties themselves have credibility issues or if they are perceived as not being entirely independent or competent, this strategy can backfire.
