Page 245 - Performance Leadership

234 • Part IV Implementing the Performance Leadership Framework

Trust

Within every organization there should be trust. Employees should
trust the management and vice versa. Without a basic level of trust,
there would be no productivity at all. The same kind of trust, and prob-
ably even more, is needed between organizations. All relationships,
even the most transactional ones, require trust. However, there are mul-
tiple levels of trust between stakeholders. 10
Contractual trust is the most basic form of trust. It occurs when all
parties involved believe that contractual obligations will be met. In
most societies this is a prerequisite for doing business, and it’s a key ele-
ment of transactional relationships. Competence trust is displayed when
parties believe that their partners will not only meet the minimum con-
tractual obligations, but also have the right skills, technologies, and
other resources to do the job well. Competence trust is needed within
added-value relationships, when organizations rely on processes and
systems that are managed by other organizations. Lastly, there is good-
will trust, where parties know others will represent them fairly and will
make the same decisions as they would when representing them. This
can only take place when the parties involved share the same norms
and values. Goodwill trust involves joint-value relationships, where
organizations share intellectual property and resources such as capital,
staff, information, and facilities, and materials flow freely between the
organizations—an intrinsically vulnerable situation.
Trust, more than control, fuels the performance of the relationship.
In more strategic relationships, too much accountability hurts. An
atmosphere of strong accountability does not fit well with the creation
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of trust, whereas an atmosphere of open commitment does. Without
an open commitment between parties, the relationship can be termi-
nated at any moment because at all points the accounts can be settled.
This leads to lower switching costs and, in general, to more transac-
tional behavior. It doesn’t mean there should be no control and no
measurement. The aim of performance indicators and management
processes should be to build that trust, lowering the transaction costs
within the relations.
Trust and transparency have a complex relationship. For instance, an
increase in trust may sometimes lead to an increase in transparency,
when more information is shared voluntarily. In other cases, however,