Chris Smulders

Chris Smulders

‘Control is good, trust is better’

It was under this title – the quote is attributed to Vladimir Lenin – that Professor Kees Cools published a paper several years ago describing the impact of stricter corporate governance regulations:

in the wake of a number of financial scandals, a growing number of new laws and codes are being adopted in efforts to prevent new scandals from arising. However, the impact of these measures is limited: as these types of wrongdoings tend to be rooted in hubris, greed, and rainbow-chasing rather than poor corporate governance. While reducing the number of corporate governance activities may diminish the likelihood of accidents, it does not motivate employees and, in fact, undermines the spirit of enterprise.

Cools’ study shows that focusing on trust does motivate employees and often even increases productivity.
His findings still hold true today, on account of the more stringent compliance and risk management measures introduced since the financial crisis.

However, I feel that a focus on trust is too one-sided: as with a focus on control, this suggests a hierarchical form of management and reflects, in any case, a top-down approach.

Organisations benefit from a situation where leaders at all levels of the organisation not only trust, but are also trusted by, the people who work for them.

Is that a lot to ask? Is it hard to achieve? Sure – but while it may not be easy, it is possible. Conducting yourself as a leader in such a way that your team members don’t just see your ambition, but are also aware that you take an active interest in them – these people who are essential to achieving this goal – and that you see their potential. Establishing a bond that demonstrates that you’re all working toward the same goal and that everyone involved in this process is respected.

I have a few pertinent examples of managers who truly went above and beyond in building relationships with their employees: one board member who interacted so regularly with his hundreds of staff that he knew all of them by name; a managing director who spent at least one day a week visiting his employees in the workplace and who did not shy away from confrontation with them, even in particularly challenging situations. What more perfect basis is there for making improvements in an organisation?

Just like in any other situation – including interactions with family and friends – there’s always a risk your trust will end up getting betrayed. However, it is my firm belief that you should never change your basic attitude even if something like this happens, but should find out what is at the root of the problem instead.

Unfortunately, there is one similarity with good corporate governance: these basic rules, too, are likely to be broken by arrogant and overconfident leaders, blinded by their own ambition and/or looking only to protect their own job.

This is because, despite all the selection criteria in place, assessments and approvals of organisations, there will always be managers and leaders who try to evade the requirements we attempt to achieve through good governance. Preventing this is one of the areas in which I would like to lend a helping hand: solving dilemmas and helping to prevent and resolve problems.