Confidence and recognition: the alchemy of trust

Francis Mer / Former Minister of Economy, France / 2015-10-12

Successful companies have one secret: trust. One that facilitates managerial relations, allows taking risks or difficult decisions, and also helps develop trade relations. But trust cannot be imposed from the top. How is it created? The heart of trust is recognition. Far from being a moral issue, it is a major managerial challenge, a key to the performance of firms today.

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ParisTech Review – According to economists, trust is based on the predictability of your counterpart rather than his moral behavior.

Francis Mer – I do not quite agree with this view.

Obviously, knowing one another is necessary. Being able to speak, understand, decipher codes and distinguish the essential from the incidental is important for any negotiation or deliberation.

But this knowledge is also recognition. It is not only about exchanging information, but also about listening and showing to your counterpart that they are recognized and respected.

My experience in the steel industry taught me a lot about this matter. When I started at Usinor Sacilor, in September 1986, the French steel industry was facing a deep crisis and negotiations were tense about how to reduce the wage bill by 30%! Beyond the collective management of early retirement from 50 years, some of the younger workers needed to be convinced to leave while others were meant to keep on working…

Trade unions, renowned for their firm position in this area, had understood the depth of the crisis. They were ready to soften their stand, but we needed a trigger. One of the first topics discussed could seem unimportant or anecdotal, in view of the thousands of jobs at stake: it was the recognition of trade unionists’ careers i.e. to say it bluntly: the recognition of the discriminations suffered by trade unionists in their professional careers. It was a long-standing claim. I decided to take it into account and this simple action contributed to create an atmosphere of trust without which it would have been impossible to move on.

It can seem anecdotal, but this acknowledgment was much more than a simple catch-up pay. My counterparts felt recognized, heard, and that from there on, they could speak. And they had many things say! By ceasing to block their careers, we recognized their value, along with the interest of what they had to say about the company, its businesses, what employees could accept, what they were able to do or learn.

The managerial culture, based on top-down models until then, began to evolve. Management has begun to care for others rather than simply managing production. For example, we decided – in a very tough economic environment – to triple training expenses, by increasing them up to 8% of the payroll for ten years. The challenge was simple: to become the best.

We spent a lot of money, while the two companies that formed part of the group that would become Arcelor suffered from heavy losses. But there is a considerable difference between losses that reflect a lack of competitiveness and those that are necessary to prepare the future.

The message was simple: we have to make it, and to do that, we can only count on ourselves. Everyone needs to participate. The industrial project made sense economically: the goal was to move upmarket, by a massive investment in R&D and the so-called “human capital”. But there was an extra ingredient in this choice of excellence: the pride of the workers, their active participation in something that made sense and became their business.

To support this project, you need a leader who believes in it…

Of course! Beyond recognition, I believe it is crucial to act in accordance with one’s own convictions in order to build trust.

For leaders, it is fundamental. Their mission requires winning the trust of numerous stakeholders in the company. But it goes further. The company is a community. The leader’s task is to make it a successful one. And therefore, he needs. There is a clear bond between trust and confidence. If you give confidence, it will be given back to you.

Getting back to your original question, perhaps it isn’t exactly about moral. Certainly not about mere predictability. Trust is a non-mechanical alchemy. We are talking about human beings, not machines.

Let’s try to understand how the alchemy of trust “works”. What are its ingredients?

It takes time – time for mutual learning, time for knowing and taming each other! But not only. Looking back, the importance of certain actions or tough decisions strikes me. I’m referring to those moments that leave a strong mark and let your contacts know where you are and, more importantly, who you are. The example I gave you, about the careers of staff representatives, illustrates this fact perfectly, even more so because the subject was blocked for ages.

For a decision maker, you need some leeway. The higher in the hierarchy, the more can afford taking real decisions. But I reject the idea of ​​the inhibited manager who cannot afford to please everyone. Precisely, the role of a leader is to propose a vision and to involve the different stakeholders in the decision process.

Finally, the state of mind is equally important and again, the example of the steel industry is emblematic. Top-down culture, characteristic of the traditional industry, is fundamentally a division of roles: I know and you perform. The crisis in the European steel industry in the 80′s can be read as the exhaustion of this culture. What we have begun to outline at the time, is something very different: a world where workers were not just there to do a job (even though it could be highly technical), but to create, to participate.

There was much talk at the time about the Toyota Production System (TPS), based on the active participation of employees “in search of excellence,” to quote a famous book. But beyond the fads, there was something essential, which was far from being obvious: to acknowledge that employees know things that you, as a leader, don’t.

In the same vein, I believe that in a company that has developed a culture of trust, everybody does what they can, but also know that without the others, they can’t do anything. This is why ideas about collaboration and cooperation have gained so much importance in organizations today.

The digital revolution has contributed to a tremendous growth of knowledge and increase in the number of graduates, that have to work together. There’s no going back to “I know, you perform”! Today, the underlying problem for firms is to imagine these new ways of working together. Basically, it is about reinventing management: giving work to someone means giving them the freedom to change their working environment and to accept that they will quickly know more about their task than the person who assigned it to them. The fundamental challenge is to recognize the potential of others, to make it grow and put it to use.

This change of culture is very good news indeed.

Of course, but it isn’t as straightforward for organizations…

True: they must abandon their traditional tendency to rely on diplomas – which will become obsolete increasingly faster – and adopt a much less comfortable position. They don’t have a choice. Especially because the famous Generation Y and the following, have a strong desire to collaborate and receive trust, and will quickly rebel against any attempt of imposing a vertical management culture, that doesn’t allow them enough autonomy. We will have to learn how to cooperate, and companies that don’t accept this fact have much to lose.

We talked extensively about trust in organizations. Does the question arise in the same terms with partners from outside the company?

I don’t see any major difference. Obviously, it’s more difficult as they aren’t rowing on the same boat. But they do share many common interests and belonging to different organizations can also make trust an even more crucial and necessary bond between two individuals or teams. The dynamics is the same: the importance of strong actions, the work time, the active recognition of what partners can bring, the importance of a project that makes sense…

What can make a difference, both within a company and with external partners, is the curiosity you show towards what others are doing. Without this curiosity, there can be no understanding, recognition or confidence.

This is an important point, particularly in a globalized economy where partners, customers and suppliers, but also competitors, are all foreigners. If we don’t lay aside our preconceptions, we are likely to encounter setbacks…

In addition, it is one of the great challenges of our time: to discover that we can work with others (Chinese, Brazilians …) and learn to build trust of another type. This requires effort, curiosity – which isn’t obvious among nations who, like the French, the British, the Americans or the Chinese, once believed they were the center of the world – and ultimately, an understanding of culture.

In a multipolar world, a new world in which everyone is reduced to a marginal position, and where no one can claim any longer to be the center of the game, this type of culture is what allows us to create links, build trust and, for a company, to live and to value its own difference – a difference that is also what makes its added value.

In business relationships like in other fields, trust allows confidence: if we trust others, they will trust us, and this helps us have confidence in ourselves: to continue to believe in what makes us different.