I believe that trusting relationships are at the heart of profit-making and sustainability in a global, knowledge-based economy.

As one very successful CEO told me recently; "For our company to be sustainable, we must be able to make the right decisions fast. But our performance will fall short if there is a lack of trust and commitment." He notes that when his senior managers trust each other, information is shared more freely, there is less emphasis on protecting turf and empire building, and more focus on creating a healthy company.

As paradoxical as it seems, putting people ahead of profits does seem to be good for business. This is especially true today when intangibles like employee creativity and commitment, reputation, long-term alliances and brand equity (rather than hard assets) account for a greater percentage of corporate value.

In a knowledge economy, corporate value increasingly resides in people's hearts and minds. For example, responding just-in-time to changing customer demands depends upon having trusting relationships with suppliers who are willing to go the extra mile to deliver what you need. Similarly, employee know-how won't be transformed into value-creating innovation unless employees are willing to collaborate, share ideas and take risks. They must trust their colleagues and be committed to the mission and values of the company as a whole.

Managing in this age of intangibles requires that we develop a very different mind set and skill set. We know that command and control doesn't work. We must work harder at building trust.

This is true in all industries, even in the brawny forest sector. To quote the CEO of a mid-sized forestry company when asked why his company was flourishing when many others in the Pacific Northwest were floundering: "We put a lot of emphasis on building relationships based on trust and mutual respect."

This remarkable leader has deliberately cultivated long- term trusting relationships with his customers, employees, suppliers and even environmentalists. To build trust, he regularly tests new equipment and ideas from suppliers in the mill.

In this company, employees are paid more than the industry average -- and the company condo in Palm Springs is available to everyone, not just senior management. The CEO has strong values and a clear social vision for his company. He cares about people and clearly communicates this concern in day-to-day decisions.

When asked why other forest companies haven't followed his example despite the obvious benefits, his reply revealed a great deal about this leader and about the importance of trust. "Some CEOs lack the confidence to act from their gut. We judge our performance on criteria other than dollars, act accordingly, and the money just follows."

It's time for all of us to manage as if relationships mattered.

© 1999 by Ann Svendsen