TRUST AND ITS SIGNIFICANCE II:Advantages of high trust level, Building of trust

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Conflict Management HRM624

Lesson 19

TRUST AND ITS SIGNIFICANCE II

Quotations

"A verbal contract isn't worth the paper it's written on".

Samuel Godwyn

If you'll believe in me, I'll believe in you.

Lewis Carroll (1832 - 1898) British writer and mathematician.

Believe in yourself, but do not always refuse to believe in others.

Joaquim Maria Machado de Assis (1839 - 1908) Brazilian novelist and short-story writer

In this lecture we will discuss the following points regarding the importance of trust.

· Trust can be built between and among disputants or parties i.e. individuals, companies, or countries

· High levels of trust carry distinct advantages.

· High levels of trust are not always attainable.

· That a "business relationship" can protect disputants when trust is low or distrust is high.

· Low levels of trust can be promoted into higher levels of trust.

Advantages of high trust level

Why high level of trust is given importance, it has certain advantages, such as:

· Less guesswork

· Fewer formalities; greater efficiency

· Pleasant feelings and comfortable work environment

· Fosters cooperation

· Better quality of life for every one

Origins of trust

Calculus-based trust can come directly from provisions in contracts that give people incentives not to harm

one another as when an agreement specifies penalties for breach.

Since a contract is all that is needed to create this form of trust, it is relatively easy to establish. It can be

created even between hostile adversaries using a penalty system.

Calculus based trust can also come from the course of dealing itself: in a continuing relationship often each

disputant can count on the other disputant to preserve the course of dealing because of its intrinsic

advantages for those involved.

Knowledge based trust comes from any situation in which people become well and so on.

Knowledge-based trust need not be based on intimate knowledge of the other disputant: it may be relatively

narrow and based on a course of dealing. The cooperation cycle can promote knowledge-based trust easily.

Knowledge based trust can also come from any situation in which it is clear that interests are not in conflict.

Regular communication can also promote knowledge-based trust.

Identification-based trust is hardest to establish. It is commonly found among intimate partners of families.

It is also created in situations involving a joint venture that both disputants care about deeply. However

certain companies (MNCs for example) build this trust through inculcation of company specific values.

Some Japanese companies make their employees sing loyalty promoting poems/songs every morning.

Effects of trust

It is very useful to operate with high levels of trust, particularly with identification based trust. It is seen that

the higher the level of trust, greater the chances of perpetuating cooperation cycle.

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Typical situations in which there is little or no trust include brand new relationships, such as transactions

between strangers, situations in which an intimate relationship goes bad, and situations in which a betrayal

of trust occurs in a cooperative relationship. The effect is to move the disputants into a competition cycle

and toward a state of active mistrust.

On contrary low levels of trust can trigger a cycle of competition. High levels of trust produce good feelings

and generate good quality of human life. Mistrustfulness creates a perception of contrient inter-dependence.

Mistrust creates the impetus to hide information and duplicate effort, which escalate competition cycle.

Building of trust

When one puts faith and trust in another, and that confidence is broken, it can create an emotional response

that elevates to conflict. To trust someone is to place a high confidence level that the relationship will not

be compromised in any way...that I can expect you to do what you say. A trusting relationship leads to

feelings of confidence and security whereas a breach of trust unleashes our strongest emotions that

frequently lead to conflict.

CBMs (confidence building measures) with India provide good example of building trust. As a consequence

of these measures trade between India and Pakistan is increasing now.

Business Relationships

A business relationship is designed for people who must be involved in a relationship but who have very

low levels of trust in each other.

A business relationship has following components.

· Explicit and detailed agreements

· Formal, preferably written communication

· No sharing of emotion

· Balanced, neutral assessment methods

Achieving a Business Relationship through Effective agreement Drafting

Nothing destroys trust quite as fast as the belief that the other disputant has flagrantly violated a hard-won

settlement agreement. Unfortunately poor agreement drafting can lead to misunderstanding over the terms

of a settlement. In a climate of low trust or mistrust, a difference of interpretation can be perceived as a

betrayal. Effective agreement drafting consists of the following goals.

. Accuracy and completeness

. Clarity and certainty

. Flexibility

. Legal enforceability

. Relationship preservation

Accuracy and completeness

The resulting agreement should correctly and completely set down the agreement of the parties. It is critical

to represent the settlement with complete faithfulness and accuracy and not to expand upon or alter the

results of negotiation.

Clarity and certainty

The agreement should make all rights, responsibilities and procedures clear, including minutiae such as the

manner of payment due date, delivery date, responsibility for shipping goods, and risk of damage during

shipment.

Flexibility

The agreement should be workable despite unforeseen developments that might occur in the future.

Flexibility and certainty are often traded against one another in a casebycase balancing process.

Conflict Management HRM624

Legal enforceability

The agreement should preserve or attain the legal status of a contract, and the limits of legal enforceability

should be specified where necessary. The appropriate signature line, seals, and acknowledgement forms

should be used as required.

Relationship preservation

The resulting agreement should avoid damaging relationship by preserving fairness, by avoiding

inflammatory, insulting or demeaning language and by minimizing the likelihood of misinterpretation.

Low trust situation

Following are some of the situations where level of trust is low

· New transactions and relationships

· Breakdown in close relationships

· Historical enemies

· Apparent betrayal of trust

Dealing with low trust situations

In intimate relationships, preserving identification-based trust is the whole point. In other situations, create

calculus-based trust.

Easier a trust is established, the lower its scope

Broad

Moderate

Narrow,

Limited

Easy

Moderate

Hard

Ease of Establishing

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Building trust

Identi-

Broad

fication

Moderate

Knowledge

Narrow,

Calculus

Limited

Easy

Moderate

Hard

Ease of Establishing

Key Points to Remember

Following points should be kept in mind for developing a trusting environment.

· Be a model of calm and control

· Don't give in to emotional outbursts

· Don't assume people are being difficult intentionally

· Find a quiet place in to resolve breaches of trust quietly and privately

Set some ground rules for the discussion:

No raising of voices

This is not a debate

Speak only for yourself..."I" phrases

Confront the issues, not the people

- Maintain or enhance self-esteem

Summary

Trust can be built with an appropriate strategy between or among individuals, companies, or countries.

Confidence building measures (CBMs) between India and Pakistan present a good example to build trust

between the two nations. In present day environment and in increasingly controlled world, trust can be built

with explicit tactics and strategies.

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