The importance of being in the same room–familiarity breeds trust

I came across an interesting article this morning from academics at MIT who have been researching the importance of face time in the office for over a decade. Their research suggests that people who work remotely get lower performance evaluations, smaller raises and fewer promotions. This is the key paragraph:

Companies rarely promote people into leadership roles who haven’t been consistently seen and measured. It’s a familiarity thing, and it’s a trust thing. We’re not saying that the people who get promoted are stars during every “crucible” moment at the office, but at least they’re present and accounted for. And their presence says: Work is my top priority. I’m committed to this company. I want to lead. And I can.

This is interesting to me because the concept of ‘face time’ stretches beyond remote working and performance evaluations to building trust generally. The high level of uncertainty at startups makes trust between team members particularly important and this research is a reminder that trust follows face time. Most of our portfolio companies open international offices in the US and many of them have development in eastern Europe and encouraging travel between the different sites is the key to getting the face time necessary to build trust and help keep everyone pulling in the same direction.

  • http://twitter.com/raitens Rait Ojasaar

    Although I agree with the general notion that face time is important for building trust, I would also like to highlight some of the pitfalls that often come with too much face time between startup CEO and his investors.

    With too much face time, it is almost impossible for the CEO to build a balanced momentum of results being achieved. Startup life is full of highs and lows, unevenly distributed over time, with the lows usually leading the score against highs. If the CEO meets too frequently with his investor, the information about startup’s progress will be drip-feed and may cause unnecessary panics due to disproportionate distribution of +/- news over time. 

    This leads to another pitfall – scientists have long proven that negative news elicits stronger and longer reactions compared to positive news. Provided that startups usually generate more negative news over the course of their existence (i.e. when hypothesis are proven partially or fully wrong), then too frequent “close-up” could paint investors a grim and psychologically misleading outlook of the startup. 

    And last but least, as we all are human, the excessive face time could also lead to a mutual friendship that in turn could stretch the perceived borders of the CEO and investor roles, thus making it difficult to deliver and respond to hard news without getting emotional. 

    So I believe one must be careful with getting too close too often to each other in the CEO and investor relations. But well balanced face time could indeed help both parties build trust and have synergetic effects on the whole venture. 

  • http://www.theequitykicker.com brisbourne

    Hi Rait, couldn’t agree more. CEOs should spend enough time with investors to maintain a trusting relationship but the main focus should be running the business. I’ve found it helpful to spend a lot of time with entrepreneurs up to and in the period shortly after the deal and once the trust is there less face time is necessary.

  • Andrei Kovacs

    I remember a psychological study which showed that students living in the same house would become good friends based on “facetime” – even if they might not have to much in common.

    In case of M&A/offshore centers facetime is extremly important – especialy for bigger companies but not only.
    This is due to the inherent stereotypes, especially when you take into account cultural differences.

    I would have a word of caution here based on my experience – it is the atmost importance that travel is ecouraged for the right people – people who “change cultures” on the spot depending who is the bigger fish will tend to cause troube as they will isolate the interraction – it is easy to tell someone what he/she wants to hear and take a one side cultural stand ignoring the reality.

    With US is ok however I heard some funny (and real stories) about an italian company for example where they  required all their employees at an outsourcing center to learn Italian as the Italian mangement did not speak English 😛 .

    I think when you have a dominant party which is aware of this it is quite ok.
    I wonder how an “equal power” partnership/merger would work – I suspect it would complicate things a little unless both sides push for cooperation in equal ways.
    I suspect this is the reason why a lot of M&A fail ?

  • http://www.theequitykicker.com brisbourne

    Thanks Andrei. Outsourcing/offshore dev was one of the cases I was thinking about when I wrote the post. Thinking about who should travel is a great idea, and, similarly, who are the main conduits of contact between different locations more generally.