News and Views
February 12, 2020
Posted in: WATSON Views
In the second part of our three-part series on trust, we explore how to rebuild trust when it has been broken. Read our first article for practical tips on building trust between a board and a new CEO. The third part of our series will take a closer look at the trust relationships within the board.
“It is better to suffer wrong than to do it, and happier to be sometimes cheated than not to trust.” – Samuel Johnson
In the first part of our series, we took a closer look at what trust means for the working relationship between the board and management. We concluded that trust is at the foundation of good governance and high performing board-management teams. Having strong trust in each other allows boards and management to focus on a common purpose, to exercise smart trust in oversight, and to disagree respectfully and constructively.
This can be difficult in practice. Trust is notoriously fragile, and once weakened a lack of trust can deepen rapidly. There are a number of symptoms that can indicate a lack of trust between the board and management:
- Excessive in camera meetings
- The board hears about important issues late or not at all
- Directors or the CEO voice their concerns in parking lots and hallways, rather than in the boardroom
- Management or Directors voice and reinforce their concerns within their own groups, without exploring and seeking solutions with the other group, which can lead to the different groups strongly believing only they are right
- Conflict is not constructive; feedback is not a two-way street; disagreements turn into finger-pointing and fester
- There are elephants in the room that nobody dares to tackle
- Meeting participants adopt passive-aggressive behaviour, such as refusal to follow through on decisions, declining accountability, or small acts, like defensive body language
- There is a “we against them” sentiment, with the CEO being dismissive of the board or seeking to “manage” the board or the board questioning every move the CEO takes
When a board and management experience these symptoms, it becomes important to rebuild trust. The steps we discussed in our first article still apply, although it is more difficult to establish trust once it has been broken. In a situation where trust needs to be rebuilt, there are some additional practical considerations:
- Start by focusing on the purpose of the organization, and each person’s connection to that purpose. Sharing a common purpose can be a powerful reminder to align the board and management.
- Rebuilding trust can take even smaller increments than building trust from a blank slate. Be relentless in making realistic commitments, even if they are small, and carefully keeping them.
- Once trust has been questioned, any new perceived breach of trust will make matters worse due to confirmation bias, which is a natural human response. Be attentive and accountable in your actions.
- Overcommunicate deliberately to avoid misunderstandings that could lead to another loss of trust. Remember that communication is as much about inviting views and listening as it is about sharing your own.
- Invite conversations about trust, rather than assuming that everybody has the same perception. See where others stand.
- Use conversation structure to avoid conflicts becoming unconstructive. This can take the form of allotted speaking time, actively soliciting views from multiple participants, keeping a parking lot for unrelated topics, etc.
- Make it part of the culture to ask “why” often, to better understand the rationale behind positions or actions rather than leaving room for assumptions about intent
- Acknowledge different perspectives to allow for respectful disagreement and constructive discussions on a way forward.
- Be generous by being the first to extend trust. For example, consider if a discussion really must be in camera. Give the board or the management a heads-up, even if it is not mandatory.
It may take time to regain trust and often additional factors make trust more tenuous, such as ongoing dynamics between individuals, external developments in the organizational environment, or crises within the organization.
Sometimes just a few people tip the dynamics of the working relationship. In these instances, the board needs to consider all its options, including the decision to make a conscious change. This is particularly critical if the board comes to the conclusion that the organization needs to change CEOs. It can be damaging to an organization if a good CEO or a strong director leave. A change can also be an opportunity to regain trust if it removes obstacles to a healthy working relationship.
Rebuilding trust is a lengthy and difficult exercise and it is important to maintain trust when it has been established. Read the third part of our series for practical tips on fostering trust within the board.
Stay tuned for part three of our series outlining some practical tips on fostering trust within the board.