Trust relationships outperform power relationships in outsourcing

It is not surprising that in a global, virtual world, business people are developing an enormous interest in trust, says Niki Panteli, Director of the Center for Information Management at the University of Bath/UK. In her article, "Trust in Global Virtual Teams" from the University's Ariadne web magazine, Dr. Panteli states, "Trust enables cooperation and becomes the means for complexity reduction in situations where individuals must act with uncertainty because they are in possession of ambiguous or incomplete information."

It is clear from other research as well that trust-based relationships eclipse power-based ones. In Warwick Business School's white paper "The Outsourcing Enterprise 2," one of the seven key relationship lessons identified is:

"For all but short-term arrangements, power-based relationships are poor substitutes for cooperation and trust building processes, given the high transaction costs of monitoring and of imposing sanctions, the negative orientations and behaviors adopted, and the limited goals that can be pursued by the parties."

High-trust versus low-trust virtual teams

Defining power as the capability of one party to exert influence on another, Dr. Panteli's research includes a study of 18 culturally diverse, geographically dispersed virtual teams. She and her partner in the study developed a table of factors that demonstrate the differences between high- and low-trust teams. Among their conclusions are:

Power = responsibility

Interestingly, Panteli and Tucker found that in high-trust teams, power moves to where the knowledge is on a team. At Coherent Solutions, we have found this moveable power paradigm to help build trust on all sides. In this model, power is equal to responsibility and team members tend to work together to develop both team and individual skills to shoulder their piece of a project's power/responsibility.

A model for building trust

Trust cannot be meted out at the front-end of an outsourcing relationship. It must be earned through day-to-day performance. At Coherent Solutions, we emphasize local project management and a four-stage outsourcing approach to build trust with our clients:

• Open communication. Appropriate give-and-take accomplished via transparency with, and availability to, clients. As full members of the development team, Coherent Solutions' Minsk developers ask for clarification, challenge assumptions and offer suggestions.
• Commitment to Action. Clarity on which team members are responsible for what deliverables, combined with individual commitment to common objectives and priorities.
• Delivery accountability. A no-excuse environment in which team members hold themselves and each other responsible for deliverables.
• Focus on results.Coherent Solutions' outsourced teams track performance and celebrate individual and team successes.

Building trust is the holy grail

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