Trust and the Virtual Organization

Handy, C.  (1995).  Trust and the Virtual Organization.  Harvard Business Review, 

As virtuality becomes more common, trust can falter, so organizations must take measures to make sure that this does not occur.

This article focuses on the necessary element of trust and its vital role in the virtual organization.  As virtuality becomes more common, trust can falter, so organizations must take measures to make sure that this does not occur.

It begins by discussing how virtuality is replacing physical places, causing institutions to be known as concepts and activities instead of buildings.  However, the article points out that the idea of an activity without a home in the form of a building and where work is based on information as the raw material is not new.  A good example of this is a network of salespeople who also work out of sight but not out of touch.  The Open University of Britain, which is the largest business school in Europe, has created a virtual summer school program in which students and faculty never meet in a formal setting.  This also exemplifies how a concept without a place has engulfed such institutions.

In organizations, projects are assembled which may include people from both inside and outside the parent organization itself.  However, often such projects exist only as activities because they do not have a certain place to call their own.  And this will be the trend into the future.  The author states, "the office of the future will be more like a clubhouse; a place for meeting, eating, and greeting, with rooms reserved for activities, not for particular people".  This will be a big change in the minds of many because they will have to accept that as virtuality becomes more of a common place, work will be a matter of what you do, not where you go.  And this can be difficult to accept because many of us identify a sense of place with a sense of purpose.

It will become more common for us to be spending time in virtual space.  What this means is that we will have to get used to "working with and managing those whom we do not see, except on rare and prearranged occasions".  Such occasions include meetings, which will also become few and far between.  However the key to making this virtuality work is trust, and this may be the hard part.

Handy offers seven rules for trust that we should keep in mind, but are also instinctive.  First, trust is not blind.  We don't tend to trust others that we don't know well, don't know much about and who don't have commitment to similar goals.  It can be difficult to know more than 50 people really well.  Because of this, large organizations, in order to be compatible with this idea and for trust to be possible, need to create smaller groupings of employees.  
Secondly, trust needs boundaries.  Essentially, a trust without boundaries is unrealistic.  Organizations display trust more as confidence in someone's ability or commitment to a goal.  When this happens, more freedom within these boundaries can exist and people can be left to achieve these goals on their own.  
Trust demands learning.  In order to portray constancy in an organization, it must also be able to change when times and customers demand it and keep on top of such change.  This requires a strong learning culture to enable employees to adapt to new technologies and situations.  
Trust is tough.  No one can be right about judgments of character 100% of the time.  But when trust is lost, not because of ill intentions but because someone can't be relied on or doesn't come through as expected, then they must go. "Trust must be ruthless".  
Trust needs bonding.  While smaller individual units are responsible for certain results that build the whole of the organization, both of these parts must have goals that bond them together for the organization to work.  
Trust needs touch.  "Paradoxically, the more virtual the organization becomes, the more its people need to meet in person, because a shared commitment still requires personal contact to make it real".  If people can recognize each other in meetings and teleconferences as ones they know and recognize, then such meetings can be more productive and can reinforce corporate goals and strategies.  
Finally, trust requires leaders- a multiplicity of leaders whom individuals trust for their commitment towards a common goal.

The dilemma for the organization is what motivates people in the virtual organization to put so much into it, although some person, unknown to them, may own it.  One answer to this involves a trust that secures a sense of mutuality and reciprocal loyalty in which the laborers are turned into members.  Members have rights and responsibilities which include a share in how the community they belong to is run.  This can greatly impact an organization because "people who think of themselves as members have more of an interest in the future of the business and its growth than those who are only its hired help".  This concept of membership can further enhance trust within an organization because "when made real, it would replace the sense of belonging to a place with a sense of belonging to a community even if that community is a virtual one". Such a sense of belonging is also a necessary ingredient for commitment to an organization.  This is well illustrated through families whose sense of belonging, commitment and mutual trust bind them as a community.

Economies based on information, ideas and intelligence will add value to societies by providing alternatives to material growth and environmental erosion.  This could result in promoting a gentler and quieter world with fewer people commuting from place to place.  Growth would be based in certain sectors that are focused on the mind rather then the body.  But in order for this type of economy to flourish, all people need to be able to take part.  We need to teach and develop skills in everyone, in the overall workforce so we are making use of a much greater percentage of it and not just focusing on core members of organizations. 

This article vividly illustrates how virtuality is becoming more common, but involves many ideas that we are actually very familiar with.  What is necessary in organizations for virtuality to work is trust among its members and trust involves many things.  However, trust can be more easily overlooked in virtual organizations causing dilemmas for managers and society and we need to make sure that this does not happen.

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