Regaining Lost Trust

I’ve written a few times about the importance of trust in business relationships and also about what to do in the absence of trust.  It is worth now looking at what to do if trust is lost.

Loss of trust can come about for a range of reasons.  Perhaps one party has engaged in opportunistic behaviour and given their trading partner good reason not to trust them.  This type of behaviour is clearly intentional and is likely to result in an immediate and large reduction in the levels of trust.  Trust can also be eroded unintentionally.  In these circumstances there may be an unintended breach of one party’s expectations; for example, a continuing failure to meet deadlines or other promises.

In the case of opportunistic behaviour the other party comes to believe that they cannot rely on their partner to actually do what they say they will do.  This is a loss of what is known as ‘affective’ trust.  With unintended failures, there is a loss of ‘competency-based’ trust.  Both types of loss of trust can cause the affected party to reconsider their dealings with their trading partner.  Actually exiting the relationship can occur in both cases but is more likely to occur after opportunistic behaviour.  In the case of unintended failure the response may be to reduce the level of business rather than outright exit.  At best, arrangements may continue with increased governance and controls, with a corresponding increase in transaction costs.

So, how can trust be regained if it has been lost?  In the case of unintended failures and ongoing business, the party that needs to regain trust must show exemplary performance on an ongoing basis.  Stephen M.R. Covey in his book ‘The Speed of Trust’ suggests following and living by the following 13 key behaviours:

1 Talk Straight 7 Get Better
2 Demonstrate Respect 8 Confront Reliability
3 Create Transparency 9 Clarify Expectations
4 Right Wrongs 10 Practice Accountability
5 Show Loyalty 11 Listen First
6 Deliver Results 12 Keep Commitments
    13 Extend Trust

 

By following these tenets you can both regain lost trust or build trust in an emerging relationship.

But what to do if you have acted opportunistically and lost the trust of your trading partner?  Assuming that you want to maintain the relationship, then the task is more difficult than with unintended failures.  One suggestion is to make an extraordinary commitment that binds you,  the promisor, to a very significant loss if you fail to meet your commitment, the business version of offering up hostages!  The concept being that the promisor has made a commitment that only a trustworthy and honest person would make.  Obviously the promisor would need to be sure that no ‘unintended’ failures could intrude on their promise!

 

If you would like to know more about how to manage your business relationships or how to recover from a low trust situation then don’t hesitate to contact us on +61 (0)419 581 705 or email andrew.downard@adsupplychain.com.au .

This entry was posted in Supply Chain Best Practice, Supply Chain Collaboration, Supply Chain Relationship Management. Bookmark the permalink.

Leave a Reply