Forge Trust Through Simplicity

Complexity undermines trust.  Simplicity fosters trust.

A recent Harvard Business article In Simplicity We Trust elaborates on these simple truths as they apply to the relationship between businesses and their customers.  To bring the point home, author Ron Ashkenas relates the story of how a step as basic as simplifying their insurance application form drove tremendous improvements in sales and customer retention for Zurich Global Life Insurance.

When Paul van de Geijn was the CEO of Zurich's Global Life Insurance business, he brought his European country managers together for a conference in Barcelona. At the meeting he gave each of them five minutes to fill out the application form for the simplest type of life insurance for his or her country. When nobody was able to fill out the form in the allotted time, van de Geijn convinced his team to start a simplification program that they called "Make Life EaZy". In this program, the Zurich managers looked at every aspect of their business from the perspective of how to make it easier for the customer to understand, purchase, and renew life insurance. The results: In the first year, in the participating countries, sales increased by 7%, re-investment rates (buying new products when old ones mature) went up by 24%, and far fewer customers cancelled policies (all astounding numbers in a low-growth, mature business).

Why did simplicity make such a substantial difference for Zurich? Besides making it easier to do business, simplicity also changed the underlying relationship between the company and its customers. When you ask redundant questions, one of the subtle messages to customers is that we don't trust your answers — we need to ask you the same thing several times in different ways so that we can make sure you're being truthful. Similarly, when you create complicated explanations of products, services, and contracts, customers often feel that you aren't being truthful about what's being offered — otherwise the material would be straightforward and easy to understand. In other words, complexity does more than just waste your customers' time — it potentially undermines the relationship.

We would do well to remember that these same truths hold for the design of reward programs.  When we create plans that are too convoluted for employees to understand, with too many twists and turns for them to track and see whether or not they are likely to or have already earned an award, we are building neither motivation nor trust.  And we sure aren't driving business improvement.

Easy?  Of course not.  And certainly we must balance simplicity with the imperative to focus rewards on the right things.  But we can do better than we often have.

That's what I think.  You?

Ann Bares is the Editor of Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations.  She earned her M.B.A. at Northwestern University’s Kellogg School, enjoys reading in her spare time and is currently enjoying having her daughter home from a summer in China.  Follow her on Twitter at @annbares.

Image: Creative Commons Photo "Simplicity" by 1happysnapper

Comments

[Wally Bock]

Simplicity works because human beings are simple creatures. We like to think otherwise. We often mistake complexity for wisdom. But we're simple beings, really.

When it comes to compensation, we want to understand how the amount on the paycheck is figured out. We want to know what to do to make it bigger. We want to be able to anticipate what the next check will be.

[Ann Bares]

Wally:

Amen to all of that, especially our tendency to mistake complexity for wisdom. We must learn to appreciate the power and elegance of simplicity!

Thanks for the thoughts!

[Becky Regan]

A confused mind does nothing....or comes to the wrong conclusion based upon the lack of information. Great advice, Ann!

[Ann Bares]

Becky:

Excellent point - we risk misunderstanding when we allow complex plans to create confusion. And when that misunderstanding leads to a perception of a violated promise or agreement, trust is broken - perhaps permanently.

Thanks for sharing your perspective.

[working girl]

So true. I specialize compensation software and sometimes have to shake my head at the complexity compensation programs put everyone through to figure out a 2% difference between two employee increases. . . and wonder whether impacted employees really buy into any of it or if they just want their money.

[Ann Bares]

WG:

I think, as Wally points out, they just want their money, they want to know how it came to be what it is, when and why any changes are occurring and how to increase it if they're so inclined.

Not such a very tall order, if you think about it - and yet we make it all so complicated sometimes ...

Thanks for the thought!

[Wally Bock]

Congratulations! This post was selected as one of the five best independent business blog posts of the week in my Three Star Leadership Midweek Review of the Business Blogs.

http://blog.threestarleadership.com/2009/09/09/9909-midweek-look-at-the-independent-business-blogs.aspx

Wally Bock

[Sharon Markovsky]

I loved your piece! Great information in less than 500 words! For a culture that is reportedly too busy and over-stressed, we sure do over communicate! I think many of us suffer from the delusion that long(also known as book-like) reports and presentations show clients—both internal and external—that we are smart people. I can remember when I started in the marketing research field 16 years ago, a mentor once told me that we give our clients research by the pound...hmmm...like liverwurst?

Live simply and prosper! Sorry Spock!