This week, I’ve been reading a great book by Stephen M.R. Covey (son of the author of 7 Habits of Highly Effective People) called The Speed of Trust, and this has prompted me to think about the importance of trust in international business.
Too often, trust in international business is low. This is apparent in the way that we think and speak about doing business with people from elsewhere. Business people in the United States are often reluctant to work with companies in the Middle East and business people from the Middle East are hesitant about working with Chinese companies. It’s common to hear Australian business people say that “Indonesia is a hard market” and Ghanaians are concerned about what might happen if they strike up a deal with the French.
Business people around the world worry about working with foreign companies and foreign people … because they don’t trust them. And the lack of trust is not uni-directional. Iranians are just as suspicious of American companies as the Americans are of the Chinese… And the Chinese don’t especially trust the Kiwis either.
Essentially, not many people are willing to extend trust, and this creates problems.
What is trust and why is it important?
In a nutshell, trust is confidence in people, in their integrity and abilities. One reason that trust is so important becomes apparent when you think about what relationships are like when there is no trust. When trust is absent, we are suspicious about other people’s motivations, capabilities, integrity and their ability to produce results. You only need to take a moment to think about the relationship that you enjoy with someone you trust and then contrast it with the kind of relationship that you have with someone you don’t trust to feel how different they are. As Covey says “the difference between a high- and low-trust relationship is palpable”.
Yet, it’s not just the difference in how we feel about these different kinds of relationships that matters, and Covey argues that there is a strong business case for the importance of trust in commercial settings. He says that trust always affects two outcomes – speed and cost. When trust goes down, speed will also go down and costs will go up. When trust goes up, speed will also go up and costs will go down.
He cites the dramatic changes in airport security around the world following the 9/11 attacks as an example. Before 9/11 you could arrive at an airport and go through security quite quickly. But after 9/11, stringent procedures were put in place because we no longer trusted that we could safely board an aeroplane and we wanted to increase trust in the safety of flights. While the measures have had the desired effect, it now takes longer and costs more to travel than it did fifteen years ago. As trust in airline travel went down, speed went down and cost went up!
So, what happens when there is no trust?
Essentially, low trust causes friction, whether it is caused by unethical behaviour or by ethical by incompetent behaviour. Covey says that
“low trust is the greatest cost in life and organisations … it creates hidden agendas, politics, interpersonal conflict, interdepartmental rivalries, win-lose thinking, defensive and protective communication – all of which reduce the speed of trust”.
Low trust slows everything down and makes relationships more difficult and business clunkier and more expensive.
If you have been involved in an international business deal you’ll probably recognise these problems. When we begin working with people who are different to us we often wonder “are they telling the truth?”, “will they do what they say they will do?”, “how do I know that their motives are good?” and “how do I know that we really want the same things?”. These kinds of uncertainties create suspicion, often lead to delays in decision-making and cause people to second-guess the real meaning of what a foreign business partner or colleague says. It might also mean that contracts become unnecessarily complicated or in the worst case, cause a deal to break down entirely.
Conversely, trust speeds things up, produces results, builds loyalty, creates a winning culture and causes customers to purchase more and to refer people, products and services to their friends. In the context of international business it can encourage people to “think big”, plan ambitiously and move quickly.
Five top tips for creating trust
Volumes have been written on creating trust and I can only share a couple of ideas in this post, so I have chosen five behaviours which I believe are key to creating trust in an international context.
Develop strong interpersonal relationships
When you embark on an international business deal, with all its complexity and stress, it can be tempting to focus on the mechanics of the commercial transaction and forget about the people involved. Don’t do it! Getting to know the people you are working with as people will go a long way to increasing the flow of trust between you. Make sure that you make the effort to create a real relationship with colleagues and partners that extends beyond the immediate boundaries of the work at hand. Take time to share meals, find out about their families, their goals, aspirations and what motivates them. Look for shared areas of interest and common ground that you both understand, whether it’s antique clocks, tenpin bowling or mountain climbing.
The best part about this is that it’s not rocket science. Naturally, the better you know someone and the deeper appreciation you have of their character, motives, capabilities and ability to get results, the better you will know how far you can trust them and the easier it will make the process of making commercial decisions. Or, if you get to know someone well and decide that that they are not to be trusted, this might be a good reason not to pursue a commercial relationship with them.
Understand the other person’s expectations
When you are dealing with a person from another culture, it is vital that you take the trouble to understand what their expectations are likely to be, at the outset. This is particularly important when you are dealing with someone who has different standards with respect to, for instance, time.
Business people from India, for example are likely to have a more laid-back approach to time and deadlines than Americans. Unless each side understands that the other has a certain view of and approach to time, the Indians are likely to see the Americans as pushy, greedy and only interested in closing a deal, while the Americans will probably feel that the Indians are careless and have little respect for time – a value which Americans hold dear.
These kinds of misunderstanding around expectations can damage trust quickly, by affecting the way that people perceive each other’s intentions and competence. Make sure that this doesn’t happen to you by making sure that you know in advance what other people are likely to expect in the context of commercial dealings and social interactions.
I can’t overstate the importance of demonstrating respect for your foreign colleagues and business partners. When people run their lives differently to us or hold different values and beliefs from ours, it’s easy to trivialise the way they do things. But if you want to win the trust of the Taiwanese business man sitting across the table from you, showing respect is a great place to start. In many cultures, especially Eastern ones, showing respect is highly valued as evidence of a person’s good upbringing. Consequently, the casual manner that is typical of Western business people is considered by some to be abrasive or rude. Understanding a cultural difference like this one is critically important in seeking to build trust across cultures.
You can demonstrate respect by genuinely caring about the person opposite you at the negotiating table, taking an interest in who they are and what they need. Thinking about your business partner as a person (with particular character traits and habits, hopes and dreams) and not just a means to a deal is a good starting point. Showing that you care about them in the words that you use and the way that you act is a great way to follow up. But make sure it’s genuine though, there are few things more insincere than fake concern.
Listen before you speak
To build trust, you need to listen well (to actively seek to understand another person’s thoughts and perspective through their words) to what your foreign colleague says. Just as importantly, you need to listen and to understand what they are trying to communicate before you start putting across your point of view.
This can be quite hard to do, especially in a conversation where there is a lot going on and you find your mind buzzing with things that you want to say. But if you don’t listen before you speak, and get too focussed on getting your agenda across without finding out what information and ideas other people have, you may be acting on assumptions that are totally incorrect.
If you already deal with people from cultures different to yours, you’ll know how easy it is to make assumptions based on filling in gaps in your knowledge with with information which is not particularly factual. What I really mean is, don’t assume that you know what matters most to others and never presume that you have all the answers.
It goes contrary to how we often feel when working with people we don’t know well or those who are different to us, but extending trust is key to building trust. I’m not suggesting that you go around blindly trusting every person who proposes a business deal to you, but I believe that it’s better to begin with a mindset which is open to trusting people. And that’s because extending trust builds trust. When you extend trust first, it’s likely to build trust with your business partner or colleague much more quickly, which in turn should help to speed up what ever it is that you’re trying to get done.
For more on working across international boundaries, visit Dearin & AssociatesCross-Cultural Consulting page, or ask me a question in the comment box, below!