How - Dov Seidman [96]
At first blush, “trust, but verify” seems oxymoronic. If you are verifying, doesn’t that mean you’ve stopped trusting? Let’s work through an example using employee expense accounts and to see if this is true. (Not all of us make this kind of decision, but it provides a good example for anyone working within a team.) You are the head of the stadium, you have invited people in, and you’ve said, “In this stadium, I trust you.” Then you institute an expense reporting system that relies on rules (forms, manager approvals, accounting sign-off, lots of hoops to jump through). As we have discussed, these rules create all the predictable antirule responses; people feel externally monitored, and respond accordingly. You words say one thing—“We trust you”—but your program says another.
If you take those rules away, however, don’t you get anarchy? Actually, no. If you say to your employees, “Fill out your forms honestly and you will be reimbursed,” your value-based statement sends a powerful message. “We are on this journey together,” it says, “and we get there faster and more profitably when we work together and trust one another.” By inserting trust into the relationship, you can trigger all the responses in others that we know lead to cost-saving efficiencies: less transactional costs to process reimbursements, higher voluntary compliance, and the social bonding that results in greater alignment. In doughnut terms, you let them make their own change. You even get increased internal vigilance, as those who see the benefits of the approach watch out for those who might jeopardize a good thing.
But what of the shirker, the cheater, the one looking to get over on you for a few extra bucks? You can’t rationally assume that no one will cheat, so how do you protect against fraud? You verify randomly. Everyone knows that you have a vested interest in how money is being spent, so everyone knows you will be paying attention. Everyone also knows that the only way to find the people who betray your trust is to pay attention; attention is care as well. The key is to do so in a way that honors the needs of the company without undermining the commitment to trust. Random checks allow ongoing vigilance without imposing a compliance tax on the trustworthy. That’s what it means to trust and verify.
When you do find a transgressor, how you respond makes all the difference. In a rules-based system, cheating is often immediately followed by an e-mail that says, “ From now on, all expense vouchers must be . . .” followed by a new set of rules and regulations. This is a prime example of rules governing our past; someone has been caught cheating, and now everyone must pay though added bureaucratic busywork. It harkens back to elementary school discipline, when the teacher would say, “Because Johnny couldn’t stay in his seat, the entire class will remain behind for five minutes.” This primitive attempt at group-responsibility building in fact has exactly the opposite effect; it makes everyone hate Johnny, fracturing class cohesion. Similar responses occur in business when managers respond to the transgressions of an individual with added burden for the group. Rather than keep people in line, it encourages them to act as free agents, protecting their own space.
Steve Kerr, former CLO of GE and Goldman Sachs, showed me a better response: “An empowering leader, when she finds out that one of the ten has cheated, then micromanages that person. The transgressor will now feel externally treated, but he will deserve to be. If you ask him to evaluate his superior, he will probably say, ‘Oh, she’s an autocrat and is always on my back,’ but the other nine people won’t know what he’s talking about. Their sense of trust will remain intact.”18 The penalty for breach of trust (provided that it is not severe enough to warrant the ultimate penalty of dismissal) is the withdrawal of trust. If adult Johnny