Monday, 20 April 2009

What's your balance in the Trust Bank?

There’s a strange phenomenon happening at the moment in organisations around the globe.

As the financial crisis first took hold, people gathered together and supported one another. It seems that the usual response to an external threat was taking place, “We’re being attacked. We're in this together and we can support one another through the difficulty.”

The human instinct of fight or flight has taken over. For example:

- There is more sharing of information and knowledge to ensure everyone is “being kept in the loop”

- People go out of their way to find out what others are doing and how they can help

- People are loyal to one another and particularly to those who might not be there at the moment

- People get together more at a social level (for example, business lunches are back in, although now much shorter and far less expensive as people themselves are paying)

That type of behaviour is still the case in many organisations. However, there’s a change that takes place at a particular point. And that change seems to occur once there are lay-offs. As soon as people are laid off, the mood and the response from those that stay, changes:

- People become less sociable – lunches are definitely out, no matter who’s paying

- At the lower levels, staff start to emphasise (publicly) what they are achieving (sometimes even at the expense of colleagues) – people also *spin the truth” to their advantage

- On the other hand, some staff retreat into themselves and hope "that it will all go away soon"

- Managers become less visible and remote. They are always in meetings. When asked about "What's happening?", very little of the real story emerges

- There seem to be many things that are “undiscussable”

On the commercial front, organisations are cutting their marketing and training budgets – two of the most important items on any balance sheet. Some have cut their marketing budget by 70%. One wonders how much market share they will have lost by the time the market starts to pick up again.

Marketing brings in the business. Training helps to keep the people motivated and skilled, particularly on how to handle the business in these difficult times.

When dealing with external issues, organisations that are retreating and being negative rather than attacking and attempting to grow their market share, also seem to be:

- Communicating with customers, suppliers and other key stakeholders more by email or text rather than phone or face-to-face. This is even more prevalent when they have bad news to give. And that’s the worst way to give bad news.

- Treating suppliers and even customers, as somewhat alien rather than as business partners.

This approach hit home to a colleague who has been a trusted supplier to a firm for over 10 years – he even had his own log in code to enter the building for meetings. When he went to enter his code last week, his code did not work. He was told that “An instruction had gone out to the effect that no external providers be allowed direct access.” As he said, “Having been around for many years, we’ve now seen the pendulum swing from contractors being considered business partners to then being viewed as recalcitrant, money-hungry, self-interested capitalists. We await with interest to see when the pendulum will start swinging back again!”

The problem is, when the pendulum does start to swing back, will it have any impact? Will people trust what others are saying?

Steven Covey, in his “7 Habits of Highly Effective People” first introduced the notion of trust, not as a soft social virtue, but as a hard edged economic driver that can be deposited and withdrawn from one’s emotional bank account. He suggested that it takes a long time to build up the trust balance by way of small deposits and this balance can be quickly depleted with just one withdrawal, such as in this example.

Trust is a critical resource at the moment. As Niklas Luhman (1979) found in his famous study on trust: “Trust reduces the feeling of uncertainty. Trust makes a person feel more secure with regard to his or her acting or not acting. With trust, the person has the feeling of knowing what will happen in the future.” And finally, “Trust is used to lower the uncertainty regarding other people’s behaviour”.

So, managers - what to do in the current situation? How to maintain trust with staff and other key stakeholders?

We know that in tough times, people strive to satisfy their basic needs - food, shelter, security. It’s been suggested that adults have little awareness of their security needs except in times of emergency or periods of disorganisation. As adults however, we continually look for these needs in our children. Children often and openly display the signs of insecurity and the need to be safe and we readily respond. Perhaps as we do with children, we also need to be more proactive and look for these signs in ourselves and others, and readily respond to the need for food, shelter, security.

So, when managing staff, whilst it's very important to share critical company information (which appeals to our higher needs of achievement and self-actualization), it's also very important to cater for people’s basic needs. More socialising, interacting and even physical contact such as hand shaking, hugs etc are needed. Some of you may have seen the news item recently of a man giving out “free hugs” in New York. Many people were sceptical, but you could almost feel the positive energy from the people who were interviewed after experiencing a hug.

As an example of effective socialising, one colleague who works in the construction industry, took his four direct reports to the football - a first for him and the firm. The mood and particularly collaboration within his team, has improved dramatically since.

And the same is true for other stakeholders such as customers and suppliers.

Will you do more face-to-face or phone communication rather than email? Cost pressures have led to many face-to-face meetings being replaced with teleconferencing, with varying degrees of success. Teleconferencing can be extremely effective for discussing the key business issues. However, how do you handle the necessary social interaction? How do people build the essential social and emotional bonds required to cement lasting deals? How do you have a virtual meal, drink, tea/coffee together? And what happens after the meeting? Experience suggests that there are often “meetings after meetings” where small local groups gather (generally over tea or coffee) to discuss what was really said or meant in the meeting and by whom.

How will your product or service (or perhaps the way you deliver these) help satisfy your key stakeholders basic needs for safety and security? You may recall my earlier story of how Hyundai has dramatically increased their market share in the US by applying this basic principle of catering to people’s need for security rather than thinking of their own drive to increase sales.

The message? As a manager working with staff and other stakeholders:

- Look for ways to increase social contact

- Search for options that will satisfy people’s need for safety and security

- Be prepared to spend more face-to-face time with key people

- Be prepared to discuss the “undiscussable” (if you don’t, others certainly will, and often negatively)

People can only do their best work when their basic needs are catered and cared for. Customers and suppliers can only be true business partners when they feel safe and secure working with you. In these times, it's important to stress security, food, and shelter before talking about business performance. It’s important to build your level of trust deposits with the people that are important to your success.

Guest writer Bob Selden is the author of the newly published “What To Do When You Become The Boss” – a self help book for new managers – see details at He also coaches at the International Institute for Management Development in Lausanne, Switzerland and the Australian Graduate School of Management, Sydney. You can contact Bob via

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