The front page of this week’s The Economist displays the headline “Trade without trust…” referring to the recent developments with China and Huawei. The piece goes on to suggest that a “…new trade regime is needed that acknowledges China’s nature…”. China’s ‘nature’ is not defined, but the article refers to its authoritarian behaviour and flouting the rule of law, particularly in relation to events in Hong Kong, so the reader can opine on the kind of nature that is implied.
Notwithstanding the obvious lack of trust – indeed presence of mistrust – the relationship with China is recognised as essential to the UK’s growth and therefore an issue we must work around in order to assist our economic development. The article references ‘fencing off flashpoints’ – in other words, creating parameters around the relationship; recognising where the risks exceed the benefits of the outcomes and avoiding those elements of business. In short, we need to find a discourse that will enable trade in the absence of trust – drawing lines around matters in which we will engage and those we will not.
I recall from early years of studying business that trust formed the very foundation of commercial relationships. The exemplar being the London Stock Exchange’s motto – Dictum Meum Pactum or ‘my word is my bond’. Trust has to be at the heart of this, so it is curious that we are facing this question about whether that essential ingredient can be put to one side or somehow redefined in intergovernmental relations.
The Economist article made me think whether this approach in the macro context – nation to nation – would work in our daily – person to person – business interactions. Would we be willing to do business with someone we didn’t trust? Alternatively, rather than looking at it as a binary decision, if we were to imagine a trade-off of non-trust versus reward, what kind of pay-off would we require before we would do business with an untrustworthy individual?
On reflection, in the person to person world, I can only imagine a binary outcome. In the absence of trust, we would either walk away, irrespective of the reward or we would engage and hold our nose! Unlike the China example, we probably wouldn’t try to delineate the relationship to ringfence those aspects where we would be comfortable with less trust.
As with culture discussed in previous blogs, trust is a measure that is largely perceived and difficult to define so I was interested to find, when researching this post, an equation to calculate it. The ‘Trust equation’ is outlined in the book Trusted Advisor. According to the authors, Trust is formed of four variables: credibility, reliability, intimacy, the sum of these then divided by self-orientation. Although this adopts a formulaic approach, the variables are broadly defined, so the framework is very dependent upon interpretation. The first two variables (credibility and reliability) are considered rational because they can be observed objectively. Credibility includes elements such as expertise – which can be tested via qualifications, etc – but also confidence and believability. Reliability can also be determined by objective measures such as how often did the individual deliver on task, on time, etc. Intimacy, however, is more challenging to measure and refers to the sense of openness an individual brings to discussions; their ability to facilitate a willingness to share or how empathetic they are. Interestingly, but perhaps not surprisingly, this variable is the most strongly correlated with the overall score of trustworthiness.
The denominator to the equation is self-orientation and unlike the numerators, where a high score is positive to the overall trustworthiness, this variable needs to be as low as possible. But what does it measure? Self-orientation is assessing the perception of an individual to care; are they paying attention to what we are saying; are they curious about our concerns and listening or, conversely, are they obsessed with self-interest and winning irrespective of the client outcome?
Last week my post discussed how we can use psychometric testing to better understand ourselves and our roles in teams. It would seem that a similar process can be applied to determine how trustworthy we are – or are at least perceived to be. Perhaps another tool in the management kit to improve our collective engagements.
Returning to the central theme of the post, I do not believe we can successfully operate in business without trust and I struggle to understand how our relations with China could meaningfully progress without trying to address that element of the relationship. To quote the final sentence of The Economist article, perhaps it is “Time to start again.”