Hubler For Business Families
Family Businesses: The Trust Paradox - Part 1
Trust is provocative, paradoxical and implies risk

Key Takeaways:
  • Emotional breakdowns of trust injure business and family relationships and capabilities more often than any other single factor.
  • Trust is a reciprocal relationship premised on a shared reliance that is both emotional and behavioral.
  • Forgiveness is critical to the revitalization of trust in a family or family business in which there has been a major breach of trust.
  • As renowned journalist and essayist H.L. Mencken once observed, "It is mutual trust, even more than mutual interest, that holds human associations together."

After more than 30 years of working with family businesses in transition, succession and management planning, I am convinced that emotional breakdowns of trust injure business and family relationships and capabilities more often than any other single factor. Dynamics such as favoritism, criticism, misjudgment, silence, suspicion, impatience, exclusion, indulgence and disparity (to name a few) can easily compromise trust.

Trust Is a Provocative Word
The word "trust" implies belief, confidence, commitment, hope, expectation and even desire. It can contain permissions and pledge security and oaths of allegiance and honor. It ranges from the promise of banks and respect for loans to fidelity in marriage and sacrifice for country. Trust is an emotionally charged term.

Like other emotional words such as patriotism, loyalty and truth, trust can be used to accuse as much as to engage, to perjure as much as to embrace. Trust is difficult to discuss passively, more difficult to define and most difficult to quantify. Yet many family business practitioners, me included, consider trust fundamental to a successful family and its business.

Trust is what develops a family firm's social capital, according to University of Mississippi management professors Allison Pearson and Jon Carr (Family Business and Social Capital, 2011). Their work implies that trust is essential to the creation of social capital. At the same time, they challenge what trust is and how to sustain it.

In literature intended for family businesses, Case Western Reserve professor Ernesto Poza (Family Business, 3d Ed., 2010) writes, "Trust is not an article of faith among adults… trust comes from information, reliability and predictability, accessibility, shared goals, emotional bonds, a sense of fairness and transparency." This thought echoes the famous Ronald Reagan line "Trust, but verify." It implies that trust involves facts and feelings.

Emotional breakdown occurs because one party's actions do not meet the expectations of another party. For this reason, I define trust as a reciprocal relationship premised on a shared reliance that is both emotional and behavioral.

Put more simply, I see trust as emotional equity. "You are there for me when I need you." This parity describes the trust I see nurtured among families I have worked with.

Even during highly charged disputes such as sibling rivalry over the business, it is common for a family member to reveal privately that they know their brother or sister would be there in a crisis. See a real-life example below.

Painful Circumstance
Two brothers in a family business were at odds with each other. The older sibling bypassed college to join his father in business and helped complete a series of government contracts. He anticipated being the heir. His younger brother graduated from college, traveled around Europe, then decided to join the family business. He was given the same level of responsibility and salary. The older brother was offended. Unable to resolve this with his father and younger brother, he left the family business to become a competitor in a neighboring state. They stopped all communication and the family was estranged.

About a year later, the older brother stopped to help a driver stranded at the side of the road. A drunk driver hit the older brother's car, pinching him between the two vehicles and crushing his leg. He was rushed by helicopter to a regional hospital for emergency surgery.

After the operation, the older brother awoke to find his younger brother standing there, holding his hand. Everyone in the room was crying. Their relationship was instantly rekindled, and in future family meetings the story was retold as the basis for their brotherly trust. They were there for each other.

Trust Is Paradoxical
Different factors and circumstances build and evolve trust in a family. Some are emotional, some rational and some perhaps even biological. There is evidence that humans may be predisposed to trust. Harvard psychologist Dan Gilbert (This Emotional Life, PBS series, 2010) says that we are wired for the trust response - that trust has a biochemical component.

Whether generated by nature, by nurture or by both, trust must be thoughtfully cultivated. It should not be taken for granted. A plant deprived of water, nourishment and sunlight will wither and die. I use this analogy with clients to describe trust in families. Trust must be consciously tended for it to survive. Individuals need to be aware and intentionally promote trust. Trust may occur spontaneously but must be consciously reinforced.

Trust is reinforced when people act in expected ways. Thus, trust arises from consistency. Yet people do not always act as expected. People, even those you know well, can be unpredictable or illogical. So how is trust sustained? This is a paradox.

It's a paradox because human nature is not robotic. Individuals are never perfectly consistent or totally predictable. In addition, expectations we have of each other are usually ambiguous and personal. What is expected by one person may seem odd to another. Also, there is no general agreement about when a breach of trust has occurred - no common triggers. Yet when someone feels a line has been crossed - whether it relates to family, business or financial issues - their feelings are hurt. Relationships become strained. Trust falters.

Triggers of Mistrust
Mistrust arises when one person does not live up to another's expectations. Yet those expectations can be likely murky, undefined and unsaid. This makes it impossible to avoid hurt feelings and the resulting mistrust. This is as prevalent in families as it is in businesses, which make it doubly sensitive when families are businesses.

Family interactions are not all perfect. Family members will inadvertently step on one another’s toes. A sense of trust may be bruised or broken. Yet the family business must move on. And for the business to move on, the family must forgive because the family is the business. This magnifies the paradox.

Forgiveness is critical to the revitalization of trust in a family or family business in which there has been a major breach of trust. When trust is violated in a family, as it regularly happens in many families, there needs to be an internal mechanism that allows the family to begin anew. From my perspective, that mechanism is forgiveness. (For a more complete discussion about forgiveness in family-owned businesses, read Forgiveness as an Intervention in Family-Owned Business: A New Beginning)

Trust Contains Risk
In a 2010 presentation (Psychodynamics of Family Business), psychologist Kenneth Kaye portrayed trust in business families as the result of what you are willing to risk. His question was "What are you willing to risk or contribute to the family if there is no guaranteed payback?" I commonly ask families a related question: "What are you willing to risk to create a new beginning?" The family must be willing to act in order to maintain or rebuild trust.

This implies an added paradox. Ambiguous, emotional expectations produce hurt feelings that destroy trust. Logic might infer that to rebuild trust, the family should share compensating emotional rewards. I contend the opposite: Emotionally triggered mistrust requires an unsentimental response. Rational, formal, structured action nurtures trust - within the family and the business. The pathway to sustained trust in business families requires an active willingness to contribute to the common good. We'll discuss this in more detail in Part 2 of this article series.

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