Tagged with: endorsements • ethics • human-behavior • reputation • risk averse • transparency • trust
We are working with people from all over the world. Globalization goes together together with an increase in transparency of reputations. The Internet introduced deadly transparency. The flattened and connected world makes sure reputations spread faster than you can say “Slartibartfast”.
With an increase in geographical and cultural distance the aspect of “trust” becomes all important. When people have never met, there are only two mechanism we can fall back on:
- reputation: what others are saying about the other person, and
- trying to read “telltale signs“, look for behavior or other marks that they identify with trustworthiness.
This second mechanism might be as simple as being friendly and saying “hello” every time you see someone down the hall. People attempt to detect the tell-tale signs of trustworthiness not only based upon behavioral markers that society associates with it; it has also to do with the similarity of the other with you. Persons that are more viewed as being equal or “the same” are more likely to be considered honest and sincere towards you.
Back to “reputation”.
Technology has brought us the challenge of working with people we really, really, really don’t know, but it has also provided us luckily with a reputation mechanism by transparency. The question we all ponder: does this help? Is the transparency and the resulting reputation reliable? And does transparency lead to more ethical behavior?
As for the first part, that one is easy: every system can be manipulated. Especially on the web. Entire PR companies are in existence simply to provide “a good vibe” about a person or company on the web. All the “experts” are recommending each other. The eBay seller reputation system has been mislead before by people selling stuff for a penny just to get the needed recommendations. The system is just as reliable as the people using it.
But even when the system is working properly, even when transparency makes sure people’s behavior will be noted around the globe, this doesn’t mean you can take the benefits from it in your project or business. Although with a good reputation a lot is to gain, having a bad rep puts a lot at stake. So people will play things save. They will create low-risk behavior, resulting in the end into mediocrity..
A good example of this is illustrated by the following:
“While the typical CEO is only too happy to pocket the lucrative financial rewards that come with the mantle of leadership, some seem reluctant to accept this degree of accountability – especially if it means personally taking the rap for non-compliance with the law. I guess not many corporate heads are convinced that a minimum-security sabbatical in an orange jumpsuit will be as good for their careers as it seems to have been for Martha Stewart’s.”
Humans have a preference to fail conservatively. For me personally this is a surprising one. However, I do recognize it. The idea behind this is that people would rather choose an option that they know, that they have done in the past, EVEN if the outcome is likely to be unsuccessful, than try something new, where the outcome may be positive, but unsure. If they fail, they can also hide behind the notion that they did everything everybody else is also doing.
Let’s hope that the future doesn’t only contains of people conning the reputation systems by “influencing” information that tries to pose as “transparent”, and people that fear the system and stick to mediocre accomplishments. Otherwise, performing global projects will become a though job.
Bas,
Maybe you have a different point of view here, but for me building a long-term trust relationship (which is needed to perform well) is practically impossible when there's virtually no face-to-face contact between at least some people in the team.
Consider you manage a team spread among 3 countries: Netherlands, India and USA. I don't say you, as a manger, have to know in person all people working in all three countries (although this would help) but at least you have to build a trust relationship between you and managers of local teams. It's hard for me to imagine how the team would work with no such relation.
Are you able to build trust relationship with managers (and hopefully other people spread over the world too) with no direct contact? In my case answer is negative and I don't really see the way how it can be done.
A bit on the simplistic side.
In one of my latest MIT newsletters (free subscription of course!) a great piece on testing assumptions.The Importance of Testing Assumptions
Behavioral economist Dan Ariely's talk from the TED conference last month was recently posted online. In his talk, Ariely (who wrote the best-selling Predictably Irrational) addresses, through his own experience, a topic that is also quite relevant for innovators in an uncertain environment: the importance of testing assumptions through experiments.
He also makes some great comments on cheating.
<ul>
<li>Everyone cheats, a little. But only to a point where it does not challenge their self image of being a “good” person</li>
<li>People start cheating (more) when a member of their in-group blatantly cheats</li>
<li>People stop cheating when a member of an out-group blatantly cheats </li>
<li>People cheat less when confronted with moral standards (people lie less about remembering the 10 commandments, for example)</li>
</ul>
Hi Pawel, I understand your point. I think there are mutiple levels of trust, or different kinds of trust. (I am not sure how to call it). I have worked multiple times with people i have never met face-2-face but have earned my “trust” by consistent good work over a longer period of time e.g. I would not give them my credit card number though.
I have never met someone from Amazon, but I do trust their site with my ccard info.
I know it's not all the same, but that is a small direction of my line of thought.
I agree that my most intense trust-relations are with people I physically have met.
Thanks for the great resource Andrew! Yes I know things are a little more complex
I plan to address free rider problem and agency problem too and this are fabulous additions. Thanks again.
Hi Bas! I’m in Transparency International – Philippines’s anti-corruption advocacy. As early as 1987 I published in the World Executive Digest that both corporate and bureaucratic corruption can be prevented because it is like fire. It depends on three interdependent vaiables,namely Attraction (due to a temptation of High Gain at Low Risk), Rationalization (due to a battery of alibis,half-truths & plain lies based on distorted moral values) and Occasion (due to High Descritionary powers at Low Transparency).Without one variable it cannot happen.So increasing the transparency of corporate & government transactions will indeed result to lesser opportunity for corruption. Reinforcing it with a culture intolerant of corruption will certainly lead to a more ethical behavior. I have seen it work both in the private business and public government organizations for the last twenty years.
Hi Antonio, that sounds very interesting. Do you know some article online that I can check out to read about what you describe? That would be much appreciated.
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