So far in this chapter I have shown the client-side actors make use of control mechanisms. In this section I will discuss how the use of control mechanisms affects trust building and trust maintenance in the outsourcing collaboration. I will do so by applying a notion of control mechanisms as substitutes, catalysts and inhibitors to trust as described in the theoretical section of this chapter.
Control as a Trust Substitute
Throughout this chapter we have seen examples of formal control that suggest that control is indeed a substitute for trust. With regards to output control the SLA measurements, the monthly follow up on the same and the financial sanctions that are contractually put in place to ensure adherence to contractual agreements suggest that output control is a trust substitute. Actors from both organizations acknowledge the need for output control. One of the client-side actors with management responsibility considers the contractual underpinning of the outsourcing collaboration as “very important”, while a vendor-side actor says that it is “extremely important” and adds that without contractual underpinning “any supplier would cut corners” (Field Notes 20140129)
The underlying assumption seems to be that while both parties agree that the partnership must be mutually beneficial, they are, at the same time inherently opportunistic. One example of this is the recent change in the number of onsite field
operators deployed by the vendor-side organization. As one of the vendor-side actors told me, the vendor has decided to cut down on these field-operators, whose purpose is to make sure that physical equipment, such as printers and network devices, are replaced or fixed in cases of failure. The consequence is, in the vendor-side actor’s own words that “we may not be able to meet the SLA requirements” (Field Notes 20140129). However, due to the relatively high costs of having field operators stationed across Denmark ready to service the client’s remote offices, the vendor assesses that it is a financially more sound decision to accept penalties for non-compliance with SLA requirements than to endure the running costs of having field operators. Thus, with regards to SLA measurements the assumption that the other party will act in an opportunistic manner, and thus is not to be trusted, requires adequate controls in place; control becomes a substitute for trust.
With regards to process control, the ITIL-based standard specifications are arguably also an instance of control as a trust substitute. The logic seems to be that an elaborate process framework warrants the dutiful performance of vendor-side actors. Thus, process control is a substitute for trust as standard specifications, evaluation, feedback and rewards and sanctions render trust in the vendor-side actors unnecessary. However, there is another aspect to this too: While rewards and sanctions related to output controls are aimed the organizational level, the rewards and sanctions related to process control are aimed at a personal level. In the analysis above I have shown how on one side the incident managers are personally rewarded with recognition based on a positive evaluation of the incident handling process, whereas the change manager as well the technician attributed the responsibility for ‘the mother of all incidents’ are personally sanctioned based on a negative evaluation of the their compliance with processes. That is, control can be a catalyst to trust insofar adherence to standard specifications is evaluated positively, and an inhibitor to trust insofar adherence to standard specification is evaluated negatively. In the following two sections I will take
a closer look at control as a trust catalyst and control as an inhibitor to trust, respectively.
Control as a Trust Catalyst
As argued above it seems that positive evaluations of adherence to standard specifications of process control are a catalyst for trust in the person that is perceived to embody the process. If we look towards prior theoretical findings, this is indeed interesting. Das & Teng (1998) argue that “the nature of formal controls is at odds with a trusting environment, which suggests a negative relationship between formal control and trust level” (p. 501), which leads them to propose that “deployment of formal control mechanisms will undermine the level of trust among partners” (ibid.). The analytical findings of this chapter, suggest that this it not so. Rather, control can, insofar adherence to standard specifications is evaluated positively, in fact be a catalyst to trust. By the means of the analysis of this chapter I have shown that process control can indeed be conducive to trust.
I argue that the same is the case with regards to output control, however with a different focus. In this particular collaboration the control mechanisms that are available to the client-side actors are never aimed at controlling the individual vendor-side actor, but rather aimed at controlling the vendor as a collective. Thus, whether output control of individual has a positive catalyzing effect on trust cannot be determined in this case. If we consider the effect of collective output control on trust in the collective it seems clear from observing the practices at the service delivery meetings, that output control at a collective level can also be a trust catalyst. Indeed, the output control mechanisms are maintained irrespective of the level of trust, but they do so, because they are contractually agreed upon and because they serve as the input to settle payments. However, from the meeting I have observed during the client visit to the OMC, where the client-side actors praise teams that are constantly “in green”
(Field Notes 20130910, the client-side actors acknowledge ability and integrity. I argue
that this has a positive effect on trust, as lack of trust is more probable for teams that have a history of being “in red” rather than for teams that have a history of being “in green”. Thus, I do not find support for Aulakh et al’s. (1997) argument that output control is negatively related to trust level – on the contrary, output control can also be a trust catalyst, insofar the measurements reveal a positive result.
In a similar vein I have shown how normative control can also be a catalyst to trust.
This finding is in line with Das & Teng’s (1998) proposition that “deployment of social control mechanisms will enhance the level of trust among partners”(p. 501).
“In the beginning, as soon as they give us a specification, they say that it has to be done in like two-three days […] otherwise there will be a breach, a fine […] As soon as we gain some trust, I was able to say: “No, we need some more time”. And they say yes, they believe that [it is] reasonable and they agree to it.” (Interview #5 – vendor-side actor)
Thus, the normative control that is being performed on vendor-side actors stationed onsite is conducive for trust development. In the last chapter ‘Challenged by Distance’
I have argued that co-location is conducive to trust development; and in this chapter I have shown how co-location goes hand in hand with normative control. Thus, the client-side actors evaluate the onsite vendor-side actors on adherence to the client-side actors’ standard specifications of workplace behavior – that is, the expressed values of informality, collaboration and responsibility. Arguably, this normative control is an unavoidable companion to co-location. I propose that there are two different ways in which the normative control that accompanies co-location is a catalyst to trust development: First, co-location is conducive to an increased propensity to trust when the client-side actors acknowledge that the vendor-side actors “are like us”. Second, co-location is conducive to cognition-based trust when the client-side actors acknowledge that the vendor-side actors “work like us”.
‘You Are Like Us’
As soon as the vendor-side actors who are stationed onsite were moved into the client-side IT department to sit close by the client-client-side actors I experienced a change: From being ‘The Indians’ the onsite vendor-side actors were all of a sudden not anonymous resources anymore, but people with names. I argue that what is at stake here is a shift from perceiving them as resources to perceiving them as fellow human beings;
someone one cannot overlook, as they are immediately present; someone who for the most part “are like us”: They come to work every day, they have lunch every day, they interact, they are approachable – in short “they are like us”.
In the next chapter I will unfold this argument in much greater detail and I will show how stereotyping (i.e. ‘The Indians) is counterproductive to trust development. For now, I will merely claim that as the values to which the client-side actors advocate for are repeatedly evaluated as standard specifications to which the onsite vendor-side actors adhere to, by the means of co-location only, the client-side actors’ propensity to trust the onsite vendor-side actors will increase. Thus, co-location is conducive to an increased propensity to trust as the client-side actors, by the means of normative control acknowledge that “you are like us”.
‘You Work Like Us’
My second proposition is that co-location is conducive for cognition-based trust when the client-side actors acknowledge that the vendor-side actors “work like us”. It follows the same line of argument as above, however with a focus on how the co-located actors not only are closer together, but also work closer together. In ‘Chapter X: Passive Face Time and Active Trust’ I have shown how cross-locational collaboration is impeded by perceived difficulties of ‘going directly’, perceived lack of knowledge among the offshore vendor-side actors and perceived lack of transparency.
Furthermore, I have shown that these challenges are rendered obsolete when the actors are co-located. I have highlighted numerous examples on how the onsite vendor-side
actors are evaluated as adhering to the three standard specifications of workplace behavior, namely informality, collaboration and responsibility. These evaluations are the results of normative control only. That is, the onsite vendor-side actors are not evaluated differently when it comes to adherence to standard specifications of process control. In fact, they are not evaluated on adherence to the ITIL-based processes at all, but solely on their behavior at work. And finally, given the output control mechanisms’
sole focus on organizational performance and not individual ditto they are no evaluated on output control either. Thus, co-location is conducive to cognition-based trust as the client-side actors by the means of normative control acknowledge that “you work like us”.
Control as an Inhibitor to Trust
Finally, control can be an inhibitor to trust, which for instance is the case with the change management process where the negative evaluation of adherence to the standard specification has a negative impact on the change manager, who is perceived as not taking adequate responsibility. I have highlighted earlier how the incident managers are rewarded based on positive evaluation of process adherence – in this case it is the opposite: Negative evaluations leads to sanctions.
But there is another and more subtle way in which control is an inhibitor to trust: I argue that the standard specification of output, i.e. output control, even though mostly evaluated positively by the client-side actors are an inhibitor to trust. While the output controls do on one hand act as a trust substitute (as argued above) they are at the same time inhibiting trust as the very focus of the output control is on contract adherence.
Such adherence stands in contrast to the values that the client-side actors perceive as central as ‘responsibility’ and ‘collaboration’ suggest something that exceeds mere adherence to SLA’s. That is, output control effectively hinders the offshore vendor-side actors to show responsibility and collaborative efforts as the output control rigidly summarizes their effort into measurements that render the individual contribution of
offshore vendor-side actors invisible. These offshore vendor-side actors are faceless resources – a point I will address more thoroughly in the next chapter. Piccoli & Ives (2003) rightly claim that “by their very nature, behavior control mechanisms reward compliance with the given rules and procedures. As a consequence, teams are likely to pay significant attention to the requirements” (p. 368). I argue that this it not only the case for behavior control (that is, in my terminology: process control, ref. the theoretical section in this chapter), but also output control, which is in line with Gopal
& Gosain (2013) who finds that “outcome-based controls are effective in addressing the outcomes of choice positively but have possible negative implications” (p. 344) In the same line of thinking Weibel (2007) states that “formal control seems to be a double-edged sword. It may complement trustworthiness and trust but can also have a harmful effect on employees’ trustworthiness and thus negatively affect trust” (p. 511), which indeed is the case here.