Goodwill Hunting in the Name of Efficiency

The following article was published on the FT.com website on 10 th June 2004. A major theme is the
link between staff retention and levels of trust in organisations. It also raises wider issues about the
breakdown in trust between American corporations and their staff in recent years and the damage that
this is now doing. Discussion questions are provided.

Goodwill Hunting in the Name of Efficiency

By Nancy Dunne June 10th, 2004
David Merchant, president of Amsterdam-based More Balls than Most, teaches people to juggle.
'Three balls, two hands, and they learn it all in half an hour,' he says. His clients include Accenture,
Price Waterhouse, General Foods, Unilever and Royal Dutch Shell, and his services are designed to
teach employees flexibility and the ability to 'handle more priorities than they think they can handle'.
Mr Merchant was attending the annual conference and exposition of the American Society for
Training and Development last week in Washington, DC, where trainers, consultants and analysts
were involved in an intense discussion of trends and strategies. There were seminars on everything
from creative training techniques and leveraging e-learning to 'How's your Business Buzzword IQ'
and 'Uh Oh! What now? A Values Approach to Ethical Dilemmas'.
An excited Mr Merchant said he was learning 'heaps'. But what struck him most was a new emphasis
on old virtues: loyalty and trust.
And why not, given the current increase in hiring and with companies once again talking about 'talent
wars'? Although loyalty and trust have often seemed to be under assault in the recent hostile business
climate, they remain rather useful, to say the least, in retaining workers.
Not surprisingly, many companies will have to overcome discontent and distrust after several years of
bankruptcies, scandals, buyouts and layoffs have created 'an atmosphere of sharply reduced worker
confidence and employer loyalty among Americans', according to research released by NOP World, a
global market research firm.
In a recent survey, NOP World found that among the 64 per cent of Americans with jobs, only 46 per
cent believe their field of work is growing, down from 75 per cent last year. Among those who have
jobs, fewer believe there is demand for their skills.
The numbers of workers who feel 'a great deal of loyalty' to their employers and those who believe
their companies are loyal to them have both dropped sharply. This is particularly true in the Midwest,
where even executives and college graduates believe the loyalty factor no longer has a place in the
business world.
A survey by Watson Wyatt, the global consulting firm, found that employees see fewer ethical
breaches in the workplace than the recent corporate scandals would suggest. But they feel most
compromised by day-to-day hypocrisy, favouritism and broken promises. 'Low trust is everywhere,'
Steven Covey, a training and education expert, told ASTD attendees. 'The cost of low trust is real,
often hidden but measurable. It pervades society, organisations and too many relationships.'
He noted an 'alarmingly low' level of trust in most American institutions, including the government
and media, and cited another survey by Watson Wyatt, which found that only 30 per cent of
employees trust their senior leaders.
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He likened low trust to paying a tax, 'a huge drain of value' for which companies get no return. In
'high trust' organisations, managers have more control, he said. In organisations where distrust runs
rampant, companies create more and more bureaucracy that leads to higher costs and less efficiency.
'It is very hard to have a flat organisational structure if trust is not high. It is hard to micromanage a lot
of people when trust is low.'
In meetings where trust levels are high, the talk centres on real issues that can be resolved. In
meetings riddled with distrust, real issues get talked about elsewhere and time is wasted. And trust
speeds decision-making; deals can be done more quickly if the two sides trust each other.
Excessive layers of management and bureaucratic procedures produce a higher customer churn.
'If you do not trust customers, you will lose them,' Mr Covey warned.
Is a solution in sight? According to Mr Covey, executives have to improve their characters by
displaying honesty, loyalty and transparency, demonstrating concern for workers, listening to them,
and correcting wrong-headed decisions. They have to become more competent, continuously
improving their own performance, taking issues head on, clarifying and renegotiating, creating and
expecting accountability and delivering on promises.
Trust and loyalty produces a vital sense of cohesion between management and employees, a lesson the
most successful companies have known for decades, said Arie de Geus, business change and learning
guru.
He cited a study by Royal Dutch Shell of the characteristics of companies that have survived for 100
or more years. One of the key traits of those companies was a clear identity that drew all employees
together. 'People knew what these companies stood for and they were happy to be identified with their
value systems,' he said.
He spoke of the tension between internal and external company relationships. The law says the capital
supplier has the ultimate power over companies and whether to hire or fire, he noted. The financial
community imposes short-term targets for growth and profit.
'If you are trying to make your quarterly figures you are on a very different wavelength from someone
who asks "Where should we be in 2 years' time?"' he said. 'If you miss those targets then the sell
notice goes up very quickly. You are a juicy target for takeover.' Although the priority is the survival
of the organisation, the challenge to executives 'is not to just strip people out of the equation'.
Mr de Geus believes the wealth of economies, developed over decades, has produced a change in the
relationship between capital, management and labour. 'Capital is no longer scarce. It is actively
looking for places to invest. Capital is basically a commodity.
The critical production factor has shifted to people; human talent is the key to competitive success.'
The challenge to companies is to shift from managing capital to get the best out of human talent to
attain an ever-higher quality of output.
This requires time, he said, longer than the next quarter. 'You may cut employees to improve the
quarterly bottom line but that short-term gain risks the consequences of long-term death.'
Copyright: FT.com site

Questions for Discussion

1. Why, according to the article, have the levels of trust American employees
have in their employers fallen in recent years?
2. To what extent do you consider the same trend to have occurred in the UK?
3. What steps would you advise your own organisation to take in order to
increase trust?
4. What arguments would you use to persuade senior managers to support
your propositions?