Trust, the high-performance fuel for success- Part 2

Organisations when asked, will generally have a “gut feel” as to where the commercial relationship is at and the level of trust. Understanding the nature of trust and relationship acts as the trust fuel gauge for the commercial relationship, providing confidence that you will get to your intended commercial destination, with minimal distractions.

Trust base

We can also evaluate the nature of trust by comparing capabilities of performance and commitment in a commercial relationship. Performance is looking at the outcomes, while commitment gauges the intensity of effort and level of resources invested into the ongoing relationship.

We gauge the trust base and its intensity by framing the performance and commitment capabilities as perceived by the parties to the agreement.

Limited trust

Low performance and Low commitment

When a commercial relationship has low commitment and performance, its trust base is low and limited. The parties are perceived to not deliver on their promises, are viewed with suspicion, and are seen as opportunistic in their business dealings.

For simple transactional agreements this may be satisfactory, however for more complex, higher value, longer term, and strategic relationships, it’s imperative to transform the relationship out of this quadrant to improve the relationship.

Performance based trust

High performance and Low commitment

The commercial relationship is one where the parties are achieving strong transactional performance in the commercial agreement but are reluctant to commit attention or resources to a long-term partnership. Strong performance paves the way to higher trust, but ascension does not occur. This is an appropriate and cost-effective quadrant for highly transactional and commoditised commercial agreements, where the investment to achieve quality trust and relationships far out way the benefits.

Commitment based trust

Low performance and High commitment

The parties focus predominantly on having strong strategic relationships and are there for the long haul.  High performance is implied, but not necessarily focused upon. Unfortunately, commitment can only support the relationship for so long before lack of performance starts undermining trust. Commitment based trust is a great starting point for a commercial relationship, however it’s important to quickly start delivering on performance commitments before the relationships end up in the Limited trust quadrant.

Collaborative trust

High performance and High commitment

The holy grail of long-term strategic partnerships. Its where performance is high, as is the strength of the commercial relationship. Fundamentally, performance and commitment support each other to maintain high levels of trust. This reduces contract friction that in turn improves efficiency and boost performance.  Collaborative trust base is hard to achieve and even harder to maintain.  However, for achieving success in high value, complex, strategic long term commercial relationships, it’s crucial.

Summary

Relationships and trust are difficult to measure in commercial environments, however an effective way to do so, is to use a relational assessment tool like Contract Harmonics. This tool enables the parties to a contract to measure the level of trust and its quality, differentiating its core and dynamic components, as well as gauging their underlying relational contract norms.