Updated: Jan 18
In one of April’s posts we explored the topic of stakeholder engagement. Your business and its activities don’t exist in a vacuum. They require interactions with multiple stakeholder groups who may have competing expectations of your business. You can’t hope to engage those groups effectively if you don’t know what their needs, wants, interests and motivations are. To know your stakeholder groups, you need to create, keep, and enhance relationships with them. And what is the basis of any good relationship? Trust. Today's blog post will explore just that. We’ll be exploring dimensions of b2b relationships, organisational trust, and building/rebuilding trust in this post. If you’re keen to find out more than just keep reading.
Defining Organisational Trust
Developing trust is something that takes time. It’s a “psychological state of accepting vulnerability by expecting positive behaviour and intention of others” (Rousseau et al., 1998 in Melewar, Foroudi, Gupta, Kitchen, 2017, p.580). With trust employee, client, and various other interactions go more smoothly because both parties expect constructive and mutually beneficial results. Trust builds a desire to cooperate, commit, share knowledge, and motivates individuals to actively support the relationship. There are three ways in which trust is given when the organisation is thought to have integrity, is acting with benevolence and carries out its business activities in a transparent manner.
Figure 1. The process of trust development (Nikolova, Möllering, & Reihlen, 2015, p. 241)
When we talk about integrity on an individual basis we are often referring to things like behaving with honesty, behaving ethically, behaving in a consistent manner, being accountable for one’s words and actions, being true to one’s word and honouring our commitments (Monga, 2016, p. 336). Trustworthy people act in this way because we assume that they do what they say and say what they do. We perceive them as open and fair. When we apply this to a business, we might say that organisational integrity is the “general tendency (or propensity) to act fairly and ethically” (Pirson and Malhotra, 2011, p. 1092) towards internal and external stakeholders.
On an individual basis when we talk about benevolence we may be referring to an individual’s ability to express emotions that “reflect goodwill, compassion, care, altruism and kindness” (Ogbeibu, Senadjki, and Gaskin, 2018, p. 335). A benevolent individual will espouse beliefs of “humane, supportive, comfortable, trusting, and respectful” (Ogbeibu et al., 2018, p. 335) behaviour being necessities, not optional add-ons. When we apply this to a business as a whole we are referring to “the organisation’s concerns for their stakeholder’s well-being” (Pirson and Malhotra, 2011, p. 1092) and their desire to act in accordance to the “common good of organisational members” (Ogbeibu et al., 2018, p. 335).
When we say that an individual is an open book what we are often referring to is that individual’s openness and whole-heartedness. We perceive them as clearly communicating information about themselves, their thoughts, their feelings, their intentions, and so forth. They don’t have hidden agendas or secrets. When we apply this to a business what we mean is the intentionally sharing information with stakeholders in general but more specifically external to the organisation (Schnackenberg and Tomlinson, 2016, p. 1788).
But it’s not simply providing information. Stakeholders judge the quality of the information also based on the following three factors:
- The relevance, timeliness, and availability of disclosed information - The interpretability or clarity of the disclosed information - The reliability or accuracy of the disclosed information
Supplying the information too late means stakeholders can’t make an informed decision. Supplying information that is vague, out of context or open to interpretation results in the sender seeming duplicitous (i.e. as if they’ve got something to hide). Supplying information that leaves out critical data puts into question the accuracy of this information. What, how and when information is supplied therefore is critical to an astute stakeholder.
Dimensions of Relationships
Stakeholder relationships require interest from both parties to develop and flourish. They must be mutual benefits and reciprocation for them to last the test of time. It’s the intensity and duration of these relationships that give us a sign of the quality of them.
Figure 2. Relevance of trustworthiness dimensions across stakeholder types (Pirson and Malhotra, 2011, p. 1099)
The frequency of interactions between two parties and the duration of the relationship are key indicators of the depth of the relationship. Weak or strong, these two factors are critical in that assessment. It’s what we are referring to when we talk about the “extent and intensity of a stakeholder’s interaction with the organisation” (Pirson and Malhotra, 2011, p. 1091).
The motivation behind an organisation's actions has its part to play in whether stakeholders trust a business or not. Stakeholders want to know if the business intends to act in their favour. The perceived intentions of the business are important but so too are the perceived abilities of the business. These competencies are twofold, managerial, and technical. Managerial competencies refer to the business’s “ability to make strategic decisions and manage stakeholder relationships” (Pirson and Malhotra, 2011, p. 1092). Technical competencies, on the other hand, refer to the businesses “ability to deliver high-quality products and services” (Pirson and Malhotra, 2011, p. 1092).
Building trust isn’t a straightforward process and its one that can take quite some time to achieve. It’s a process that is often “characterised by high ambiguity, complexity and interdependency of actors engaged in the production and consumption of a service” (Nikolova, Möllering and Reihlen. 2015, p. 232). It is for this reason that once lost it is hard if not, at times, impossible to rebuild.
So, how do we go about building trust? We build trust when we manifest authentic behaviour, show empathy, prove our commitment to the relationship and display an ability to deal fairly with tricky situations. When we clearly express a desire to ensure that the relationship is reciprocal, we confirm that we will act with integrity, benevolence, and transparency.
How do we end up losing trust? We end up losing stakeholders trust when we have a sense of entitlement. We think we are “superior” or “special” and above the rules that others must abide by. It’s often coupled with poor communication skills, problem-solving skills, and a sense of responsibility. When we blame-shift, do not communicate when problems arise and/or systematically take the easy way out we are shooting ourselves in the foot. We can’t complain about our “foot” hurting (i.e. stakeholders losing trust in the business) under those circumstances.
The question then is, how do we go about rebuilding trust? It’s a lengthy process and requires a lot of work. It requires critically evaluating what went wrong and making a conscious decision to handle things differently. It requires profound change not just a cosmetic change and it needs to be permanent. If there is an improvement only in the short-term and then things revert to “how we’ve always done things” then the stakeholder relationship may, in fact, cease to be workable permanently. Acknowledge, document, and look to continuously improve and trust may yet be regained
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This post has explored the sometimes-difficult issue of organisational trust. We’ve defined it its dimensions which are integrity, benevolence, and transparency. We’ve explored the stakeholder relationship dimensions of depth and locus and its connection to managerial and technical competencies. We’ve also delved into how organisational trust is built, lost, and rebuilt again. Hopefully, this has given you some insight into organisational trust and how you best manage the relationships you have with stakeholders.
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