TRUSTING IS THE BASIS OF SUCCESS IN BUSINESS
Published: Newsday June 17, 2001

RICHARD JOSEPH
GENERAL MANAGER,
CARIBBEAN BUSINESS SERVICES LIMITED

A recently appointed Chief Executive of a prominent manufacturing company was outlining his experiences in taking his company to a new stage of development. The physical challenges, such as expansion and changing factory layout, though expensive, were manageable and were achieved in record time. The most difficult area to change was and continues to be the company’s industrial relations. For example, a new production incentive system was initially rejected because the workers representatives were of the view that anything that was good for the company was bad for the workers, even though they could not figure out what was bad about it.

The workers reaction arose from a lack of trust of the management of the company that had been developed over the years. More than anything else, if the CEO is unable to win the trust of the workforce, he will not be able to achieve the full potential of the company.

The importance of trust as a key element of economic development was recently highlighted in a series of seminars held by TIDCO to promote the new Cluster Development Strategy being adopted to promote private sector development. At the seminars, clusters were defined as “firms and others within a concentrated geographical area co-operating towards common goals and establishing close linkages and working alliances to improve their collective competitiveness”.

The components of a cluster may include core manufacturers or service providers supported by suppliers, contractors, professionals, financial institutions, training institutions together with the physical infrastructure that supports them.

In considering the factors that would promote the optimum development of local clusters, trust was identified as a pre-requisite for success. If suppliers could be trusted to supply accurate quantities of the best qualities at the best prices, if training institutions could be trusted to provide candidates who are competent, if regulatory agencies could be trusted to be transparent and fair, a lot of energy could be diverted to deal with the issues that really matter, such as improving each firms internal processes for efficiency.

Some may say that this is a utopia that will never be achieved, but this utopia is being practiced by many large international companies and is an essential feature of their success. Manufacturers of complex equipment such as cars do not have the time or resources to check that each delivery from a supplier of components is accurate as to quantity and specification. Most of these manufacturers operate “Just in Time” systems where components are delivered just before they go into production. If the supplier cannot be trusted to deliver on time in specification the manufacturer will not be ale to attain the efficiencies that are essential for price competitiveness.

As can be expected, this trust is not blindly placed. Large companies go to great lengths to ensure that quality management systems have been implemented to assure that suppliers can meet their commitments. This has contributed to the development of certification systems such as the ISO 9000 series, which confirms that a company’s quality management system has been designed and is being operated to an international standard.

The benefits of these new approaches to managing business relationships can be seen in the construction of the liquefied natural gas complex in Point Fortin, which has set new international benchmarks for cost and efficient construction of LNG plants.

At its most developed stage, members in a cluster exchange information freely about matters that improve the prospects of the cluster as a whole. Where there are manufacturers who make similar products, a manufacturer that receives an order that cannot be met in the required time frame would share the order with their members of the cluster to everyone’s benefit.

These relationships occur in several countries today among businesses that are as small as ours, and have contributed to the economic success of geographical regions, such as Northern Italy. Trust is the basis of their success, and if we wish to develop in a similar manner, we have to develop relationships based on trust as well.