The trust paradox is a disjoint that straddles organisational size and global cultures. I’ll use one narrow prism – procurement and buying stuff from other businesses and people – as the vehicle on this brief newsletter journey.

Large (often Western) MNCs sometimes feel trust should be replaced by procurement. Why? Various reasons appear, including:

👉 Reducing the risk of nepotism, fraud, corruption, etc.

👉 Ensuring the best terms for a given purchase.

👉 Central oversight to ensure standardisation, optimisation, and other ‘isations.

👉 If you’re buying (supposedly) commoditised items, it affords leverage.

This doesn’t work in every instance.

Part of that is the old cliche about knowing the price of everything and the value of nothing. Then there’s the (occasional) inability to differentiate between apples and oranges (both fruit!). But I disclose my sour grapes (more fruit) at filling out myriad vendor onboarding forms that bear no resemblance to risk reality – one size fits none. But most of my unease with the “centralised procurement ALWAYS = good compliance” argument is that it goes against common sense and human nature.

Common sense

When I started Ethics Insight, I needed a bunch of people to do things – accountants, lawyers, brand specialists, website builders, developers for the platform, and on. I’d be institutionalised in corporate MNC thinking and put out well-crafted-tenders. Most of what I drafted was rubbish.

You see, you don’t know what you don’t know. It’s hard for someone whose only understanding of code was watching The Imitation Game to draft a sensible tender document for developers to build an app. In the era before ChatGPT, and Google Translate, lived Babelfish. The site was a source of constant amusement for me and others, as we’d translate English phrases into something complex (Chinese and Japanese, usually) and then back into English.

This is what procurement looks like if the parties involved don’t speak enough of the same language. Sometimes the person who has to live with the buying decision (the tattooee) needs more say! In other cases – shock horror – the *providers* or *vendors* should input into shaping a scope.

In one instance (the platform), I was lucky to find a team of developers who told me how nonsensical my concept was and proposed a revised version. Trust was established when they removed redundant elements and stagger phases, which gave both parties options to back out if it wasn’t working.

If you’re buying from specialists or experts, there’s a reason for that. Don’t lose that in a procurement process designed to work for widgets and copy paper.

Human nature

Would you go with the doctor a trusted relative recommends or the cheapest one on an online listing? The budget may factor, but if it’s crucial, you opt for competence rather than wing it.

The biggest lesson by year three of Ethics Insight was dispensing with tender-style procurement charades for any purchase that was:

a) A long-term partnership

b) High risk

c) A specialisation I struggle to calibrate

Things got much better when I trusted trust.

I understand why words like guanxi (关系) – personal trust, relationship, obligation, and I scratch your back, you scratch mine – create fear for risk and compliance folks. Trust can be abused with dodgy relatives or unqualified (but connected) contractors used. But could we sometimes harness this human nature more?

Referrals are encouraged in many contexts – I get sent regular emails offering X or Y if I refer a friend to a given service or product. Employment referrals can lead to bonuses. The difference is that there’s something in it for the entity seeking those referrals. There is also a tangible incentive to give solid referrals – e.g., the employment bonus only kicks in if the person you referred passes a six-month probationary period.

But could we not flip that a little? If you refer a supplier, let’s say, and after six months they’ve (over-)achieved independently-set KPIs, you get some form of reward? You’d need to declare conflicts of interest and any relationship. But is there space to leverage the trusted networks of our people in some contexts?

Ending procurate procurement?

I am acutely aware of the pitfalls of laissez-faire purchasing – it would be a disaster. I am not advocating a disbanding of procurement or demeaning the value that skilled deal-seekers and scope-setters bring. It’s just that the tail sometimes seems to wag the dog.

Is there not some happier medium between professionalised – not procurate – procurement, common sense, and human nature?

I know many organisations straddle the happy hybrid. But the move to centralise much third-party management can create unintended negative consequences that undermine risk & compliance folks. So, I’m “asking for a friend”.