The cost of low-trust: low efficiency

Last night I was invited at a dinner with Chinese people – entrepreneurs, angel investors, a TV producer. Too many conversations entangled for me to perform at my best – but my seat neighbour, fortunately, was considerate enough to speak slowly, repeat, and listen to my broken Mandarin.

At some stage – after much baijiu toasting and spicy thin sliced beef, our conversation rolled on Chinese workers’ efficiency. ‘Why?’ I asked. ‘I did hear, and observe, that Chinese workers are not efficient – but is there a cause?’ – ‘No trust’, replied my seat neighbour.

We then started pulling it apart – though my limited language skills, unfortunately, did not allow us to go quite as far as I would have wanted. If two people are joining in a business deal, or a work agreement, but there is no trust between them, then haggling will start: ‘you pay me first – you do the job first – no you first.’ This haggling, in and of itself, is a loss of time. And because it is not guaranteed that the pay will come – why do the job well? And because it is not guaranteed that the job will be done, why set aside the money to pay, or why offer good pay?

I proposed a piece of theory that I developed earlier: trust is the most fundamental element in any professional relationship. In a trusting environment, staff and partners are selected based on their competence – because everyone, a priori, can be trusted. In a low-trust environment, trustworthiness trumps competence: I’d rather have someone do the job slowly to a low standard, rather than pay for a competent person to do nothing, or worse. And trustworthiness comes with personal connection, habit, long-established networks. Hence nepotism and guanxi plays, and hence a perception that, ultimately, who you know matters more than what you know.

Lack of trust extends outside of the workplace, to doctors, teachers, politicians and the media – none of these, according to my seat neighbour – and others who since had joined our conversation – would be trusted here. This is not just a China story. We should take it as a warning, but also see the need and opportunity: Australia has built a relatively high level of trust. What happened? Is it replicable? And is there something we can do to help Chinese businesses, groups or councils increase the level of trust, and – to some extent – mitigate the negative consequences of this situation?

I will be thinking about this question further – and would very much welcome your thoughts!

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