Trust is essential in any relationship. It is an expression of confidence in another person or group of people that you will not be put at risk, harmed, or injured by their actions. 6 On a practical level, trust means that we could be exploited by someone. Most relationships offer some incentive for people to behave in an untrustworthy fashion. 7
Three Types of Trust in Relationships
People form three major types of trust relationships with others: deterrence-based trust, knowledge- based trust, and identification-based trust. 8
DETERRENCE-BASED TRUST Deterrence-based trust is based on consistency of behavior, meaning people will follow through on what they promise to do. Behavioral consistency, or follow-through, is sustained by threats or promises of consequences that will result if consis- tency and promises are not maintained. The consequences most often used are punishments, sanctions, incentives, rewards, and legal implications. Deterrence-based trust often involves con- tracts, surveillance, and sometimes punishment. A whopping 77.7% of major U.S. companies keep tabs on employees by checking their email, Internet, phone calls, computer files, or by videotaping them at work. 9 In the Hawthorne plant in the 1940s, the established norm was that workers would not deviate from acceptable levels of production. Whenever a worker was caught over- or underperforming, other plant workers would give him or her a sharp blow to the upper arm (called “binging”). (For another example, see Exhibit 6-3 .)
There are two key problems with deterrence-based trust systems. First, they are expensive to develop and maintain (they require development, oversight, maintenance, and monitoring) and second, they can backfire. Reactance theory argues that people do not like their freedom taken away and will act to reassert it. For example, signs reading “Do Not Write on These Walls Under Any Circumstances” actually increase the incidence of vandalism (as compared to signs that say “Please Do Not Write on These Walls” or the complete absence of signs). 10 Similarly, people take longer to vacate a parking space when they know someone else is waiting for it. 11 People often have a negative reaction when they perceive that someone is controlling their behavior or limit- ing their freedom. When people think their behavior is controlled by extrinsic motivators, such as sanctions and rewards, intrinsic motivation is reduced. 12 Thus, surveillance may undermine the behaviors such monitoring is intended to ensure! The fear of monitoring adversely impacted
6 Axelrod, R. (1984). The evolution of cooperation. New York: Basic Books.
7 Kramer, R. M. (1999). Trust and distrust in organizations: Emerging perspectives, enduring questions. Annual Review
of Psychology, 50, 569–598; Kramer, R. M., Brewer, M. B., & Hanna, B. A. (1996). Collective trust and collective action:
The decision to trust as a social decision. In R. M. Kramer & T. R. Tyler (Eds.), Trust in organizations (pp. 357–389). Thousand Oaks, CA: Sage.
8 Shapiro, D. L., Sheppard, B. H., & Cheraskin, L. (1992). Business on a handshake. Negotiation Journal, 8 (4), 365–377;
Lewicki, R. J., & Bunker, B. B. (1996). Developing and maintaining trust in work relationships. In R. M. Kramer & T. M. Tyler (Eds.), Trust in organizations: Frontiers of theory and research (pp. 114–139). Thousand Oaks, CA: Sage.
9 Office Slacker Stats. (2010). Staff Monitoring New. Staffmonitoring.com
10 Pennebaker, J. W., & Sanders, D. Y. (1976). American graffiti: Effects of authority and reactance arousal. Personality
and Social Psychology Bulletin, 2 (3), 264–267.
11 Ruback, R. B., & Juieng, D. (1997). Territorial defense in parking lots: Retaliation against waiting drivers. Journal of
Applied Social Psychology, 27 (9), 821–834.
12 Enzle, M. E., & Anderson, S. C. (1993). Surveillant intentions and intrinsic motivation. Journal of Personality and
trust among flight attendants at Delta Airlines. 13 Flight attendants came to fear and distrust their passengers because of a policy allowing passengers to write letters of complaint about in-flight service. The climate of distrust was further intensified when flight attendants became suspicious that undercover supervisors were posing as passengers. (We discuss more about deterrence- based trust in Chapter 11 .)
KNOWLEDGE-BASED TRUST Knowledge-based trust is grounded in behavioral predictabil- ity, and it occurs when a person has enough information about others to understand them and accurately predict their behavior. Whenever informational uncertainty or asymmetry character- izes a relationship, it provides opportunity for deceit, and one or both parties risk exploitation. Paradoxically, if no risk is present in an exchange situation, exploitation cannot occur, but high levels of trust will not develop. 14 Trust is a consequence or response to uncertainty. 15
An intriguing example of the development of knowledge-based trust among negotia- tors concerns the sale of rubber and rice in Thailand. 16 For various reasons, the quality of EXHIBIT 6-3
Deterrence-Based Trust
Another striking example of deterrence-based trust is the negotiated agreement between explorer Christopher Columbus and Spain’s King Ferdinand and Queen Isabella. Ferdinand and Isabella offered Columbus ships, men, and money to carry the faith and the Spanish flag to the West. However, Columbus refused to agree until his demands were met in writing. He insisted he be knighted and made admiral of the Ocean Sea and Viceroy and Governor General of all the lands he would discover. He further demanded 10% of whatever would be acquired overseas. A handshake would not suffice. He insisted that the deal be set in writing, and so he drafted a lengthy, detailed agreement between himself and the crown. This move was astonishingly bold, considering the king and queen held the power of life and death over him. The haggling went back and forth, and on April 17, 1492, the Pact of Santa Fe was agreed to by the rulers.
Source: Dworetzky, T. (1998, December 11). Explorer Christopher Columbus: How the West’s greatest discoverer negotiated his trips’ financing. Investors’ Business Daily, p. 1BD. Copyright © 1998–2008. Investor’s Daily, Inc. Republished with permission.
13 Hochschild, A. R. (1983). The managed heart: Commercialization of human feeling. Berkeley: University of California
Press.
14 Thibaut, J. W., & Kelley, H. H. (1959). The social psychology of groups. New York: Wiley.
15 Kollock, P. (1994). The emergence of exchange structures: An experimental study of uncertainty, commitment and
trust. American Journal of Sociology, 100 (2), 313–345; Granovetter, M. (1973). The strength of weak ties. American
Journal of Sociology, 78 (6), 1360–1380.
16 Siamwalla, A. (1978, June). Farmers and middlemen: Aspects of agricultural marketing in Thailand. Economic Bulletin
for Asia and the Pacific, 29(1), 38–50; Popkin, S. L. (1981). Public choice and rural development—free riders, lemons,
and institutional design. In C. S. Russell & N. K. Nicholson (Eds.), Public choice and rural development (pp. 43–80). Washington, DC: Resources for the Future.
rubber cannot be determined at the time of sale but, rather, only months later: When rubber is sold, the seller knows the quality of the rubber, but the buyer does not. This is a classic case of information asymmetry. In contrast, in the rice market, the quality of rice can be readily determined at the time of sale (no informational uncertainty). It would seem that the rubber market, because of its informational asymmetries, would be characterized by exploitation on the part of sellers who would only sell cheap rubber at high prices, creating a market of lemons. 17 However, buyers and sellers in the rubber market abandoned anonymous exchange for long-term exchange relationships between particular buyers and sellers. Within this exchange framework, growers establish reputations for trustworthiness, and rubber of high quality is sold.
Knowledge-based trust increases dependence and commitment among parties. 18 For example, suppliers who regularly negotiate with certain customers develop highly specialized products for those customers. Such product differentiation can create barriers to switching suppliers. In addition to economic dependence, people become emotionally committed to certain relationships. For example, in markets characterized by information asymmetries, once negotiators develop a relationship with someone they find to be trustworthy, they remain committed to the relationship, even when it would be profitable to trade with others. 19 When switching does occur, the party who is “left” feels indignant and violated. People who expect to interact with others in the future are less likely to exploit them, even when given an opportunity. 20 When negotiators anticipate extended relation- ships, they are more likely to cooperate with customers, colleagues, and suppliers but not with competitors. 21 These relationships and the perception of low mobility among indi- viduals promote development of integrative agreements across interactions, rather than only within given transactions. 22
IDENTIFICATION-BASED TRUST Identification-based trust is grounded in complete empathy with another person’s desires and intentions. In identification-based trust systems, trust exists between people because each person understands, agrees with, empathizes with, and takes on the other’s values because of the emotional connection between them; thus, they act for each other. 23 Identification-based trust means that other people have adopted your own preferences.
Whereas it may seem that personal relationships would be completely grounded in knowledge-based or identification-based trust, that is not always the case. For example, a deterrence-based trust system is put in place when couples get prenuptial agreements or when husbands or wives hire private investigators to monitor the actions of their spouses.
17 Akerlof, G. A. (1970). The market for “lemons”: Quality uncertainty and the market mechanism. Quarterly Journal of
Economics, 84(3) , 488–500.
18 Dwyer, F. R., Schurr, P. H., & Oh, S. (1987). Developing buyer-seller relationships. Journal of Marketing, 51(2),
11–27; Kollock, P. “The emergence of exchange structures.”
19 Kollock, “The emergence of exchange structures.”
20 Marlowe, D., Gergen, K. J., & Doob, A. N. (1966). Opponents’ personality, expectation of social interaction and
interpersonal bargaining. Journal of Personality and Social Psychology, 3(2), 206–213.
21 Sondak, H., & Moore, M. C. (1994). Relationship frames and cooperation. Group Decision and Negotiation,
2(2), 103–118.
22 Mannix, E. A., Tinsley, C. H., & Bazerman, M. H. (1995). Negotiating over time: Impediments to integrative solutions.
Organizational Behavior and Human Decision Processes, 62 (3), 241–251.
Building Trust: Rational and Deliberate Mechanisms
There are two routes to building trust: the cognitive route is based on rational and deliberate thoughts and considerations; the affective route is based on intuition and emotion. 24 The cogni- tive and the affective routes to trust have different triggers and turning points in negotiation. 25
Let’s first consider how to build trust through the cognitive route. (For an examination of how businesspeople attempt to secure trust, see Exhibit 6-4 .)
24 McAlister, D. (1995). Affect- and cognition-based trust as foundations for interpersonal cooperation in organizations.
Academy of Management Journal, 38 (1), 24–59; Lewis, D. J. & Weigert, A. (1985). Trust as a social reality. Social
Forces, 63 (4), 967–985.
25 Olekalns, M., & Smith, P. L. (2005). Moments in time: Metacognition, trust, and outcomes in dyadic negotiations.
Personality and Social Psychology Bulletin, 31 (12), 1696–1707. EXHIBIT 6-4
How Managers Secure Commitment in the Absence of Binding Contracts
We surveyed businesspeople on how they attempted to secure trust in relationships. We asked 52 MBA students to “imagine that you are involved in a negotiation situation where you need to get commitment (i.e., follow-through) from one or more of the people involved. The nature of the negotiation does not involve ‘binding contracts.’ How do you try to instill a sense of commitment in the absence of any binding contracts?” The responses varied dramatically.
(continued) 100% 90% 80% 70% 60% 50% 40% 40% 37% 2% 4% 6% 12% 13% 13% 13% 19% 21% 29% 30% 20% 10% 0%
PersuasionCoercionNonverbal Verbal Behavior Rewards Commitments Incentive Alignment BATNA Written Agreements Mutual enemy Escrow
Review of Categories (Left to Right):
• Persuasion and consciousness-raising (e.g., “I would reinforce the idea that this is the beginning of a long-term, multiple-contact relationship, and that it is in my counterparty’s best interest to think about the repercussions of reneging on future negotiations”)
• Coercion and threat tactics (e.g., humiliation, punishment, etc.)
• Nonverbal strategies (e.g., handshakes, establishing rapport, “…look people in the eye, have them look at you, and say to you that they will do what you want them to do…”, etc.) • Verbal agreements
• Behavior modification (e.g., tit for tat; social modeling) • Rewards and benefits
• Public commitments (e.g., “…by making the outcome public, the erring party would suffer public embarrassment and suffer loss of reputation…”)
• Alignment of incentives
• Collecting information about other’s BATNA • Written (nonbinding) agreements
• Creation of a mutual enemy
• Creating escrow or collateral arrangements
26 Jehn, K. A. (1997). A qualitative analysis of conflict types and dimensions in organizational groups. Administrative
Science Quarterly, 42, 530–557.
27 Eisenhardt, K. M., Kahwajy, J. L., & Bourgeois, L. J., III. (1997). How management teams can have a good fight.
Harvard Business Review, 75 (4), 77–85 (p. 80).
TRANSFORM PERSONAL CONFLICT INTO TASK CONFLICT Two basic types of conflict occur in relationships. Personal conflict , also known as emotional conflict , is rooted in anger, personality clashes, ego, and tension. Task conflict , also known as cognitive conflict , is largely depersonalized. It consists of argumentation about the merits of ideas, plans, and projects, independent of the identity of the people involved. Task conflict is often effective in stimulating the creativity necessary for integrative agreement because it forces people to rethink problems and arrive at outcomes that everyone can accept. Personal conflict threatens relationships, whereas task conflict enhances relationships, provided that people are comfortable with it. 26
AGREE ON A COMMON GOAL OR SHARED VISION The importance of a common goal is summed up in a quote by Steve Jobs, associated with three high-profile Silicon Valley companies—Apple, NeXT, and Pixar: “It’s okay to spend a lot of time arguing about which route to take to San Francisco when everyone wants to end up there, but a lot of time gets wasted in such arguments if one person wants to go to San Francisco and another secretly wants to go to San Diego.” 27
The 2005 departure of Carly Fiorina as chief executive of Hewlett-Packard (HP) illustrates how conflicts can also mask the fact that people may never agree on the goals of the company. Escalating disagreements between Fiorina and HP’s board of directors led to an open discussion of their differences at a company retreat. Several board members expressed concern about the company’s performance under Fiorina’s leadership. When a Wall Street Journal story leaked details of their discussions, Fiorina was furious and shifted her focus to the leak. Board members
were also outraged by the leak but felt their concerns regarding the performance of the company were more important. They started to believe it had become impossible to work out their differences with Fiorina. Less than 2 weeks later, during a private meeting, the board members voted to dismiss her. 28
CAPITALIZE ON NETWORK CONNECTIONS Negotiators who do not know each other may attempt to build a more trusting relationship by trying to find a common node in their social networks. Conversely, getting people to talk to someone outside their social network is challenging. An investigation of a weekly business “mixer” revealed that people don’t mix as much as would be expected, given the purpose of the mixer. 29 Affect-based trust is high among people who are embedded densely in their networks and among those who provide social support; cognition-based trust is higher in those with whom people engage in instrumental exchanges. 30
FIND A SHARED PROBLEM OR A SHARED ENEMY It is remarkable how the presence of a common enemy can unite people and build trust. 31 A shared goal was established during the Reagan–Gorbachev summit talks. One evening, President Reagan and Soviet leader Mikhail Gorbachev were drinking coffee after dinner on Lake Geneva. Secretary of State George P. Shultz turned to Georgi Kornienko, the Soviet first deputy foreign minister, and accused him of trying to stall summit negotiations on bilateral issues. “You, Mr. Minister, are responsible for this,” Shultz declared. Then, turning to Gorbachev, the secretary of state added forcefully, “This man is not doing what you want him to do. He is not getting done what you want done.” Reagan took advantage of the situation to create a common bond and looked at Gorbachev: “To hell with what they’re doing. You and I will say, ‘We will work together make it come to about.’ ” Reagan and Gorbachev then shook hands. The moment marked a critical turning point in the summit talk. 32
FOCUS ON THE FUTURE If negotiators can forget the past and focus on their future, they can go a long way toward building trust. When negotiators expect to have future interaction with the counterparty, they have lower aspirations, expect negotiations to be friendlier, are more satisfied, and predominantly use a problem-solving bargaining style. Moreover, compared to one-time negotiations, those who expect to interact in the future have harmonious expectations and seek mutually beneficial solution. 33 In early 2011, ESPN and the NFL came to agreement on a 10- year, 1.9 billion extension of ESPN’s Monday Night Football contact, a huge program for both the network and the NFL. The complex negotiations were completed in a relatively short amount
28 Murray, A. (2006, September 6). Directors cut: H-P board clash over leaks triggers angry resignation—Perkins slams
briefcase, says, “I quit and I’m leaving,” as probe fingers a friend—A new era of governance. Wall Street Journal, p. A1.
29 Ingram, P., & Morris, M. W. (2007). Do people mix at mixers? Structure, homophily, and the “life of the party.”
Administrative Science Quarterly, 52 (4), 558–585.
30 Chua, R. Y. J., Ingram, P., & Morris, M. W. (2008). From the head and the heart: Locating cognition- and affect-based
trust in managers’ professional networks. Academy of Management Journal, 51 (3), 436–452.
31 Sherif, M., Harvey, O. J., White, B. J., Hood, W. R., & Sherif, C. W. (1961). Intergroup conflict and cooperation: The
robber’s cave experiment. Norman: University of Oklahoma Press.
33 Patton, C., & Balakrishnan, P. V. S. (2010). The impact of expectation of future negotiation interaction on bargaining
processes and outcomes . Journal of Business Research, 63 (8), 809–816.
32 Hoffman, D. (1985, November 23). Tense turning point at summit; key Reagan-Gorbachev handshake calmed atmosphere.
of time because the parties were able to focus on their future partnership. The negotiations frequently involved friendly meetings between top-level executives from ESPN and the NFL in the league’s Manhattan offices. Both sides enjoyed a long working relationship and acknowledged they had much to gain from continued mutual rapport. This allowed for a mutually beneficial tradeoff as the NFL benefitted from ESPN’s extensive air time for game highlight packages and from the coverage given to the NFL player draft—an event that ESPN almost singlehandedly shaped into an annual media frenzy.
Building Trust: Psychological Strategies
Psychological mechanisms for building trust are different from the rational, cognitive mecha- nisms discussed earlier in that people tend not to talk about these factors explicitly; rather, savvy negotiators know how to capitalize on them intuitively.
SIMILARITY People who are similar to each other like one another. 34 Negotiators are more likely to make concessions when negotiating with people they know and like. The similarity- attraction effect may occur on the basis of little, and sometimes downright trivial, information. Many sales training programs urge trainees to “mirror and match” the customer’s body posture, mood, and verbal style because similarities along each of these dimensions produce positive results. 35 Similarity in dress also has dramatic effects. For example, marchers in a political dem- onstration not only are more likely to sign the petition of similarly dressed requester, but do so without bothering to read it first. 36 Google’s mergers and acquisitions chief David Lawee uses similarity to establish a personal connection, He often arrives at meetings with a backpack in tow. “He’s got this laid-back style that says, ‘I like you, you like me—one way or another, we’re going to work this out,’ ” said Anthony McCusker, an attorney who represented AdMob during negotiations with Google. 37
MERE EXPOSURE The more we are exposed to something—a person, object, or idea—the more we like it. The mere exposure effect is extremely powerful and occurs below the level of our awareness. 38 For example, fractious political negotiations were smoothed by mere exposure initiated by the “Senate Wives” during the 1950s. The Senate wives met each Tuesday morning and included both Democrats and Republicans. The 50 wives achieved results that went far beyond a morning social club. During the Presidency of Lyndon Baines Johnson, rifts between the adminstration and congressional Republicans, led by Gerald Ford, were often smoothed over by Lady Bird Johnson and Betty Ford, who regularly met socially along with the wives of