Trust vs Control: Is control merely a substitute for trust?
I received this quote in an invitation to a fraud workshop today [the theme of the workshop: "The real secret to fraud deterrence"]:
“If you were to ask a group of typical accountants what deters fraud, they would respond in unison: “Internal control!” Using this logic, companies with internal controls would not have fraud. But they do – time and again.” – Joe Wells, founder of the Association of Certified Fraud Examiners.
This sounds a bit like a boring accounting/auditing issue, but it’s actually crucially important to each one of us in every sphere in which we interact!
Why do I say this?
Simple – controls are nothing more than a substitute for trust.
If trust is absolute, controls are unnecessary. But increasingly trust is taking a back seat to controls as the business environment becomes more fluid and absolutes go out the window, giving less certainty to any and all dealings.
How do you gain trust? Only by giving it. And that’s where the problem starts, isn’t it… can you trust me before I trust you? Hmmm? So perhaps control is just the easier option then?
Consider these examples (in nature’s formula of cause and effect, I’m not sure which these qualify under, but they’re substantial problems nonetheless):
- Employment – People used to remain in the same job for their entire career and had implicit trust in their employers [and employers therefore were able to trust their employees]. Now jobs change faster than Madonna’s outfits, and employee motivation and retention are key issues for every company.
- Business relationships – Contracts have become the be-all and end-all. Gentlemen’s agreements, handshakes and good faith are all endangered species.
- Regulation – Regulation is increasing so much so that all aspects of life are subject to scrutiny in some form or other. It used to be high-level matters like tax affairs and criminal records, but now the level of detail being extracted from us borders on obscene, simply because the best way to maintain control is to know everything.
The way I see it, if you can’t trust someone, why do you want to do business with them in the first place? Or work for them? Or employ them? Or whatever…
Sadly, “good faith” is really difficult to find nowadays. In fact, it’s rather ironic if you consider the real value that people place on relationships [built on trust, presumably].
Anyway, please let me know what you think – is there a place for trust in business today, or is control the way to go? How would you run your business? [When it's tiny? And when it's huge?]
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