The Importance of Trust in Business

The Importance of Trust in Business by Amber Hanna

Trust in an organisation will be based on trust in the people who make up that organisation. Trust is necessary for effective communication and cooperation without which an organisation could not function. Trust can reduce complexities and costs of exchanges in a more efficient manner than alternative means of managing organisational life.

Corporate communication is the main mechanism for fostering this type of trust. Organisations can be the objects of their employees’ trust, as people generally trust an organisation to behave in a responsible manner and regulate the intentions of its employees to serve its interests.

Research has demonstrated that trust in an organisation can reduce the need for hierarchical controls and formal contracts, as well as reducing the occurrence of opportunistic behaviour. Trust in people and trust in organisations are connected by the functions and positions people have, and the roles people play within the organisation.

This view of trust has been strengthened by research findings indicating that trust and job design are complementary constructs in understanding important organisational outcomes such as job satisfaction and intention to quit.

Trusting and being trusted

Trustworthiness and trust are separate things, trustworthiness is a quality that the person we put our trust in (or trustee) has, while trusting is something that the trustor does. This suggests that characteristics of the trustee will lead to them being perceived by others as more or less trustworthy. The characteristics of the trustor that influence perceptions of their trustworthiness according to research are their ability, benevolence and integrity.

As a relationship progresses and trust develops, both parties gather experience, and a growing body of trust-relevant evidence on which to base their assumptions develops. As this happens different levels of trust may develop across the facets of trust, so within a relationship an individual may trust another with respect to some areas but not others.

An advantage of this approach to trust is that it can lead us to a better understanding of working relationships. In a business setting it is quite possible that a leader may be trusted according to their competence but not trusted in terms of their reliability or openness. This provides a useful tool for managers or leaders in organisations as it is possible to locate which aspect of trust they are deficient in and provides recourse to improve this.However as people we can never be fully sure of another’s motivations, intentions or even actions.

Often trust comes down to a decision to trust or distrust. The inherent vulnerability that we accept when we decide to trust someone causes us to constantly doubt whether our decision is right. Reducing this doubt can help us determine whether the decision we make regarding someone’s trustworthiness is the right one.

Roderick Kramer recently described in the Harvard Business Review (June 2009) seven concrete tips to reduce this doubt and achieve what he calls ‘temperate trust’

1. Know yourself

Think back on your experiences with people you have mistakenly trusted or distrusted, is there a pattern where you have trusted too easily? Or are you the type of person who guards their trust too closely, assuming the worst and holding back?

2. Start small

There is no avoiding the risk that is entailed in trusting, however if you are trying to develop an atmosphere of trust in your business start small. Give your employees opportunities to show they are trustworthy that entail little risk for you. If you begin to meet people halfway by reducing red tape you will foster trustworthy behaviours.

3. Write an escape clause

If people have a clear way out of a situation if things don’t go the way they planned they will be more likely to trust fully and give more commitment.

4. Send strong signals

Your own trustworthiness may be obvious to you but those around you may still need more evidence.  It is important to send strong signals regarding your own trustworthiness, at the same time react purposefully to breaches of your trust to show trust is an important value to you.

5. Recognize the other person’s dilemma

While you are struggling with the decision between trust and distrust the other person in the scenario may be experiencing the same thing. To build good relationships it is essential to assuage feelings of anxiety and concerns you colleague may have.

6. Look at roles as well as people

A given role may provide evidence of a person’s expertise and motivation. But be aware that a position does not automatically confer trustworthiness.

7. Be vigilant and question everything

When we engage in a relationship we think about a person’s trustworthiness, however after that decision has been made we often don’t question it again until our trust has been breached.

It may be psychologically uncomfortable to remain vigilant and question our decisions to trust but it may prevent abuses of trust occurring in the future.


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Amber Hanna is a trainee Organisational Psychologist at DavittCorporatePartners – Corporate Psychologists