IN THE MODERN business environment, how much trust is necessary for companies to be successful? When you end the prolonged negotiations with a potential business partner, invariably you feel more comfortable when a contract is signed--just in case one party breaks the promise.

In the olden

A Japanese general trading company founded in 1858, Itochi Corp, runs an advertisement with the headline: "A merchant's personal business philosophy". It goes on to explain that "above all else, merchants should always be honest," Itochi's founder, Chubei Ito, was a merchant all his life and he steadfastly believed that the most important thing to do in one's business activities is to be honest with other people, and most important of all, with oneself.

Trust has the meaning of worthiness, confident expectation resting on integrity and friendship, and anything felt to impose moral obligations. Thus, we have trustees, unit trusts, real estate investment trusts where the word "trust" gives the meaning that when you leave your money with these firms, they will not abscond with it.

Trust is very important in the workplace. Management must trust that its employees are working for the good of the company at all times. Employees must trust that their leaders will help them in times of need and not abandon them at the weakest excuse.

According to a Watson Wyatt study, the attitudes of British employees towards senior managers are significantly more negative than those of their counterparts in the United States, with fewer than a third expressing trust and confidence in their leaders.

Watson Wyatt's WorkUK and WorkUSA surveys showed that while 51 per cent of workers in the USA had trust and confidence in the job being done by their organisation's leaders, just 31 per cent of British employees felt the same.

Andrew Cocks, European head of employee research at Watson Wyatt, said that there is a clear need for better dialogue between management and employees and the development of a real climate of openness and trust, especially if Britain is going to compete effectively with the US in the new 'cheap dollar' world.

Whereas Watson Wyatt found that workers' ratings of senior managers in the US had risen from a low of 44 per cent in 2002 (following Enron and other high profile corporate scandals), there was no evidence for a similar upward trend in the UK survey.

"Lack of confidence in senior management does not just make for a difficult atmosphere at work," said Cocks. "Our research shows that it can hit the bottom line hard. In an employee survey we recently conducted for a major European company, belief in senior management proved to be the strongest leading indicator of new product sales and was their top business performance indicator."

When the British Airways cabin crew threatened to strike between 29 and 31 Jan 2007 over sick leave, pay, and staffing issues, it showed that there is lack of trust between the employees and management. Union members knew that the company was not doing well and the strike will cost millions of pounds in cancellations. In December 2006, when fog prevented domestic flights for three days from Heathrow, it cost the company as much as 15 million [pounds sterling]. The August 2006 terror alerts cost BA about 40 million [pounds sterling]. Although the strike was eventually averted, the firm still suffered a huge loss in cancelled bookings.

When there is trust between management and employees, in bad times employees will agree to a temporary cut in their take-home pay to help the firm tide over the poor business climate. They know that when good times return, the firm will reward them by sharing the profits in the form of better bonuses.

Corrupt Practices

Many multinational companies are not allowed by their majority shareholders or government to make payments to corrupt officials to secure a contract. Without such payments, it is almost impossible to win any contracts in certain countries, so the regional manager takes a risk and authorises such payments to third parties such as distributors, for example.

Senior employees understand that such breaches are necessary for the companies to win contracts but if there is no trust, the distributors could conveniently keep some of the money for themselves as no receipts are given for such payments. Or a manager may report the wrong doing to headquarters as he feels that the firm should be honest in all its business dealings.

In the many recent cases of chief executive officers of large international companies overpaying themselves or siphoning off money to a slush fund, the public perception of such companies decline. They think of such CEOs as "chief executive offenders". A recent case involved the chairman of Hyundai Motor Company, one of South Korea's biggest firms, who was sentenced to three years in jail for embezzlement and breach of trust. Chung Mong-koo, 68, was accused of amassing a multi-million dollar slush fund for personal use and to pay lobbyists and politicians.

Workers' Engagement

It has been observed that companies with higher levels of employee engagement have high productivity, good safety records, and lower turnover of staff. Managers who trust their subordinates will not question them about their tasks unnecessarily. They know that the workers will deliver on time and with good quality. Workers who trust their managers will be loyal and will take on new tasks willingly even if they are not part of their job description.

To build up mutual trust, managers must stand behind their subordinates when things go wrong. They must shoulder the bulk of the blame as when subordinates make mistakes it means that there is insufficient supervision or poor management. Some managers are quick to defend themselves in front of their bosses thus ensuring that their livelihood is always protected. They leave the employees to fend for themselves. Being members of the same work family, they must succeed or fail together.

A good manager spends time with the employees both during and after office hours. He gets to know the employees' family members well and is able to empathise with them when they have problems. Remember that we spend more waking time with colleagues at the workplace than with members of our family.

We trust people who speak honestly and are sceptical about those who are quick to praise but do not deliver on their promises. It is good for human relationship to praise someone who has done a great job. But if you often praise with insincerity then over time, the other party will learn not to trust you.

Always Communicate

To build trust, communicate honestly and openly with co-workers. When you see a mistake being committed by a worker, coach and counsel the person. Value the experience of the staff, over the years, they have developed skills which cannot be learnt overnight or from manuals. They are prepared to help you solve a problem with their skills provided there is trust that you will appreciate their work.

Be prepared to listen to others, don't cut them off when they are saying something which you think is irrelevant. Listen patiently, you don't really know if what they say is valuable information or not unless you allow them to complete their speech.

Chairpersons who act like dictators by virtue of their seniority are often surprised when there are few suggestions at a meeting. When the meeting participants refuse to give their views it means that they do not trust the leader. Some leaders tend to steal their ideas and put them up to top management as their own ideas. How often have you noticed that excellent reports by subordinates are submitted to the top by managers but somewhere along the way, the names of the report's committee members are erased?

You can build trust by leading by example. You must follow all the company's rules and regulations if you expect employees to trust you. Senior and junior staff must abide by the same rules without exception.

Cannot be Trusted

If the manager keeps on changing his instructions, opinions, and beliefs, employees will learn to mistrust him. Some managers purposely provide unclear instructions to different groups. Or they withold important information from certain groups. To them, information is power and they use this tool to divide and rule.

There are other managers who are afraid to put sensitive orders in writing so that should anything go wrong, they can deny ever giving the instruction to proceed on such a risky venture. Such managers have an allergy to E-mails and will use the phone to give instructions. They may be able to survive long in a company but as there is no trust in them, they have very few friends and are often lonely.

Trust is a two-way street. Mutual trust takes much time to develop and when there is trust between two parties, it is like epoxy resin bonding--so strong that it is nearly impossible to separate.