Rethinking Trust

Despite deceit, greed, and incompetence on a previously unimaginable scale, people are still trusting too much.

by

Roderick M. Kramer

by

Roderick M. Kramer

From the Magazine (June 2009)

Summary.

Reprint: R0906H

Will we ever learn? We’d barely recovered from Enron and WorldCom before we faced the subprime mortgage meltdown and more scandals that shook our trust in businesspeople. Which raises the question: Do we trust too much?

In this article, Stanford professor and social psychologist Kramer explores the reasons we trust so easily—and, often, so unwisely. He explains that genetics and childhood learning make us predisposed to trust and that it’s been a good survival mechanism. That said, our willingness to trust makes us vulnerable.

Our sense of trust kicks in on remarkably simple cues, such as when people look like us or are part of our social group. We also rely on third parties to verify the character of others, sometimes to our detriment (as the victims of Bernard Madoff learned). Add in our illusions of invulnerability and our tendencies to see what we want to see and to overestimate our own judgment, and the bottom line is that we’re often easily fooled.

We need to develop tempered trust. For those who trust too much, that means reading cues better; for the distrustful, it means developing more receptive behaviors. Everyone should start with small acts of trust that encourage reciprocity and build up. Having a hedge against potential abuses also helps. Hollywood scriptwriters, for instance, register their treatments with the Writers Guild of America to prevent their ideas from being stolen by the executives they pitch.

To attract the right relationships, people must strongly signal their own honesty, proactively allay concerns, and, if their trust is abused, retaliate. Trusting individuals in certain roles, which essentially means trusting the system that selects and trains them, also works but isn’t foolproof. And don’t count on due diligence alone for protection; constant vigilance is needed to make sure the landscape hasn’t changed.

The Idea in Brief

Trust is essential for business and economic success. But recent financial scandals suggest that people aren’t always very smart about whom they trust. Bernard Madoff took in some of the world’s cleverest people.

In evolution, trust served humans well because it increased the chances that vulnerable infants would survive. Our body chemistry rewards us for trusting, and we quickly decide to trust others on the basis of simple surface cues such as their physical similarity to us.

Our readiness to trust makes us likely to make mistakes. At a species level, that doesn’t matter so long as more people are trustworthy than not. At the individual level, though, misplaced trust can get us into trouble. To survive as individuals, we’ll have to learn to temper our trust.

The Idea in Practice

To trust wisely, we need to readjust our mind-set and behaviorial habits, following seven basic rules.

Rule 1: Know yourself. If you tend to trust the wrong people, you must work on interpreting the cues you receive. If you’re good at recognizing cues but have difficulty forging trusting relationships, then you’ll have to expand your repertoire of trust-building behaviors.

Rule 2: Start small. Measured trust begins with small acts that foster reciprocity. A good example of the dynamic was displayed by Hewlett-Packard in the early 1980s. Management allowed engineers to take equipment home whenever they needed to, without having to go through a lot of red tape. That sent a strong signal that the company trusted employees, yet it involved relatively little risk, because the policy was tied to employees’ not abusing the trust.

Rule 3: Write an escape clause. With a clearly articulated plan for disengagement, people can trust more fully and with more commitment. In Hollywood, scriptwriters register their pitches with the Writers Guild—a simple act that hedges against the risk that others will claim a story as their own.

Rule 4: Send strong signals. Most of us mistakenly believe our trustworthiness is obvious. We actually need to signal it more clearly. By the same token, we have to retaliate strongly when our trust is abused. Sending weak signals about our willingness to engage in trust or punish abuse of it makes us more vulnerable to exploitation.

Rule 5: Recognize the other person’s dilemma. Because we worry so much about protecting ourselves, we often forget that the people we’re dealing with confront their own trust dilemmas and need reassurance about whether (or how much) they should trust us. Good relationship builders are proactive at decreasing the anxiety and allaying the concerns of others.

Rule 6: Look at roles as well as people. A person’s role or position can provide a guarantee of his expertise and motivation. But be careful; people on Main Street USA trusted people on Wall Street for a long time because the financial system seemed to be producing reliable results that were the envy of the world.

Rule 7: Remain vigilant and always question. Many people whose trust is abused do conduct their due diligence initially. The trouble is that they don’t keep the due diligence up-to-date, because they find that being vigilant and ambivalent about the people they trust is psychologically uncomfortable.

For the past two decades, trust has been touted as the all-powerful lubricant that keeps the economic wheels turning and greases the right connections—all to our collective benefit. Popular business books proclaim the power and virtue of trust. Academics have enthusiastically piled up study after study showing the varied benefits of trust, especially when it is based on a clear track record, credible expertise, and prominence in the right networks.

A version of this article appeared in the June 2009 issue of Harvard Business Review.

RK

Rethinking Trust

The Idea in Brief

Partner Center

Explore HBR

HBR Store

About HBR

Manage My Account

Follow HBR