Barriers to Rebuilding Trust in Organizations

Organizations and their leaders may intuitively assume that improvements in tangible performance will cascade into improvements in reputation and trust. Research from Henley Business School suggests this is a false assumption.

Although a health care organization improved its services significantly, and its reputation as a result, key stakeholders continued to mistrust the organization. The research study based on in-depth interviews revealed the disconnect between transactional-driven reputation and relational-driven trust.

In the UK, Regional mental health trusts provide mental health services. Hospitals, GPs and other ‘commissioning organizations’, such as crisis centres refer patients to these trusts. The mental health trusts are governed by clinical commissioning groups and regulated by the national Care Quality Commission.

In 2011, the Care Quality Commission imposed 15 requirement notices on the SW London and St George’s Mental Health Trust — that is, it identified 15 areas in the delivery of services that needed improvement. An intense focus on improving the quality of the Trust’s services — incorporating research into and transparency about the root causes of quality deficiencies, the collection of important data, and the views of service users and carers — led to significant performance results within a few years.

Unexpected research findings

These performance results, in turn, improved the reputation of the Trust in the community. Unexpectedly, however, the performance results did not improve the trust of stakeholders such as health commissioners and local politicians, who continued to hold and to share negative views of the trust. For example, health commissioners would be sceptical about any data on quality improvements, and demand to see more data. And instead of recommending the Trust now that the organization had significantly improved its services, local politicians and mental health advocates continued to speak negatively about it.  

How can improved services and improved reputation not positively impact trust in an organization? Working with Henley Business School’s John Medejski Centre for Reputation Management, the Trust determined to understand the causes of this seemingly paradoxical situation. The research team was headed by Peter Molyneux, the Chairman of the Trust’s Board and a visiting professor at Henley, and included Henley professors Kelly Sloan, and Kevin Money. The team used Money’s methodology for

investigating reputation based on in-depth interviews with top management and stakeholders, followed by a gap analysis to understand the different perspectives and attitudes between the internal interviews and the external interviews.

The researchers conducted twelve one-on-one interviews with the Trust’s key stakeholders, including strategic partners, organizations that commissioned the Trust’s services and local politicians. Comparing the results of these interviews with the perspectives and attitudes of internal staff revealed the cause of the disconnect: the difference between the transactional and relational roots of reputation and trust.

Transactional factors are focused on the interaction at the moment most often driven by an exchange: the purchase of a good in exchange for money. Relational factors are driven by a relationship between the two parties — the empathy and care with which a doctor listens to their patients and asks follow-up questions is one example.

The Trust’s stakeholders viewed the metrics of the performance improvements of which the Trust was so proud, such as rankings and league tables, as transactional, and they were unimpressed with the subsequent increased reputation such rankings brought to the Trust. In their eyes, rankings and reputation were metrics developed by external sources, and did not reflect the failure of the Trust to improve its relational deficiencies, such as listening and acting flexibly. In fact, the stakeholders believed that in its bid to increase its rankings, the Trust had reduced its focus on important elements of positive relationships, such as: openness, transparency, honesty and integrity; being proactive rather than reactive; and delivering on promises.

Stakeholders also found that at many levels of the organization, employees were unconcerned with stakeholder engagement, an impression borne out by subsequent analysis: many employees believed stakeholder engagement was solely the job of the communications department.

What organizations should do

The idea that improvements in tangible performance automatically cascade into improvements in reputation and trust appears, from this study, to be wrong. Stakeholders may view your improved rankings or any other measure of performance improvement as being based on the perception of outsiders. Their personal experiences in their interactions with your company’s employees and managers — the relational elements of your company’s activities — are much more important. If these relational elements don’t improve — if, for example, you constrain front-line employees with rigid rules and regulations that hamper their flexibility with customers— the performance measures that might delight your C-suite and the business press will be met with suspicion and what might seem to you an inexplicable reduction in trust.

In sum, the quality of services and the quality of engagement are distinct variables. If you sacrifice or ignore the latter for the former, you will find that the quality of your services may increase your external prestige, but not your trustworthiness.

Read the full research paper here: ‘When Improvements in Performance Don’t Translate into Improvements in Trust: A Chair’s Reflection on the Importance of Distinguishing between Transactional and Relational Performance in Building Trust, Reputation, and Advocacy from Stakeholders’. Henley Business School Discussion Paper. Peter Molyneux, Kelly Sloan and Kevin Money.