When companies or politicians break trust, it takes three equally important steps to repair it. As a professor of management practice at Harvard Business School and co-writer of the book “The Power of Trust: How Companies Build It, Lose It, Regain It”, (PublicAffairs, July 2021) Sandra Sucher takes us through some examples of apologies after broken trust that were ineffective, causing tremendous harm. UBER is a very competent company, yet they are losing customers due to a lack of trust, Volkswagen had its trust failure after rigging emissions test of their diesel cars, for which the CEO apologized, but did so unconvincingly, with great consequences.
But there are examples of successful trust repair. Who remembers Japanese-based platform business Recruit Holdings, who after a scandal showed how to repair broken trust, or the PWC gaffe from 2017, where employees mixed up the winner’s envelope, as a result of which La La Land was announced the Oscar winner, instead of Moonlight. Both did a remarkable job in restoring trust. In the interview, she explains what it took to restore those trust failures.
She talks about a study by Kurt Dirks who found that the NCAA basketball team won the most games due to the trust they had in their coach and about the way politicians can restore broken trust, about creating a trusted work environment for women, and the four attributes of trust repair.
In the book, Sandra Sucher and Shalene Gupta examine the economic impact of trust, and the science behind it, to prove that trust is built from the inside out.
In the TrustTalk interview, we talk about the four elements of trust repair: competence, motives, means and impact. About the last one Sandra says:
This is the sort of it doesn’t matter what the company intends, it’s really what’s the actual consequence of their actions. So I’m going to tell you a brief story about a female reliability engineer, her name was Susan Fowler, and in 2017 she wrote a blog post about what it was like at UBER after she left, and she recounted many really awful tales of sexual harassment not being followed up by the company. Now that’s not actually why I’m telling you this story is awful, as that was. She mentions in passing in this blog post that when she started in her division, women were 25 percent of all the reliability engineers. And when they left, when she left, they were three percent. Now, UBER didn’t set out to say, let me create an environment in which women are not happy to work, but the consequence of its practices, its policies, it’s the culture that they had, meant that this was a place that no woman worth her salt wanted to be involved with. And so that’s what it means to care about company impact. It’s the unintended impacts that worry us as much as the intended ones. And you can see this in all of the concerns that we have about climate change and the consequences of company actions. Companies don’t intend to pollute, but they do, and that’s what we expect them to take care of. We don’t care that their intention was not to do it. What we care about and trust them for is how well they actually try to remedy the effects that they have.
So there are different kinds of competence. Of course, I’m an academic at this point in my career, so forgive me for this, so you can think about two kinds of competence, at least, that organizational scholars look at. One is technical competence. So am I good at the UBER stuff, right? Can I create that ride-hailing app? The other is managerial competence, and that’s my ability to adjust to changing circumstances and to manage relationships with different groups to accomplish my goals. Now, UBER is notably bad at that. It’s in the crosshairs of regulators and literally every country where it does business and for good reasons because they don’t like how UBER does business. And so thanks to some information you had shared with me, I’m aware of the fact that the Court of Amsterdam ruled in September that UBER drivers are not independent contractors. That ruling actually came out in the UK earlier in 2021. And it is something that the EU is now proposing, which is to classify gig workers as employees. So this is a very good example of unfair means, right, UBER treats these people as employees, but actually doesn’t want the financial consequences of owning them, having to give them benefits, having to give them vacation pay and things like that. And so that’s why it is that we think that they may not be competent in all the ways that they think they are.
About trust repair for politicians:
So I don’t actually think that repairing trust is going to be different for them. And what I mean by that is they would follow the same three steps, so the first thing they’d have to do is to acknowledge the harm and apologize for imposing restrictions that people have suffered under. People would want to hear that the politicians know that this has been hard and that they are really sorry for the fact that they’ve had to make these efforts to try to stop and limit the effect of the virus. The second thing is they should explain why it is that they were doing what they did, what trade-offs they faced, and why it is that they came down on the side of this versus that. People want an explanation of what it is that’s occurred. And if you can explain your reasoning, it builds confidence and trust that you have a process for thinking this stuff through and that it’s not random or something that you didn’t give very much thought to. And then in terms of an offer of repair, this is a question where I think politicians need to become more specific about the conditions under which they would allow the restrictions to be lifted. So that’s what people are looking for. They understand, you know, this is highly contagious, but reports are coming out now that this actually doesn’t make people as sick. So that’s going to require kind of a different calculus as people try to balance what it is of exposure to this virus versus actually having people get sick from it. But in any event, in my own university at Harvard Business School, my school has actually been quite good about this, they just came out with an announcement yesterday that said, week by week for the first three weeks in January, here’s exactly what we’re doing. Here’s why we’re doing what we’re doing, and here’s when we will be making the call as to what we’ll be doing the next week. And so if I’m teaching, which I’m not in that particular period of time, I would at least have the confidence in if I’m a student of knowing, OK, I get it. I know what I’m going to find out what’s going on. Now it is much easier in a controlled environment like a business school for people to do that, but I think the governments can actually at least help people understand the data that they are looking at to help them understand when it is that they might be able to lift restrictions so when case counts get below a certain level perhaps we could do that and I think that’s the kind of offer of repair of a transparency that I think we haven’t had to date.
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You may also like Author Talks, where McKinsey Global Publishing’s Raju Narisetti chats with Sandra J. Sucher about her new book, The Power of Trust: How Companies Build It, Lose It, Regain It (PublicAffairs, July 2021).
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Transcript of the interview
Here is the full transcript of the interview:Transcript-interview-Sandra-Sucher-FIN-versie
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