Why the sharing economy needs to worry more about trust


Anyone who cares about human resources needs to remember one central issue: the way we work now and into the future may be being challenged, but sticking by age-old values and practices is more critical than ever.

It’s now assumed that disruption is the new normal; everyone is talking about it from our Prime Minister to CSIRO. Now, even the most established businesses are scrambling to disrupt themselves in the hope of staying ahead.

Deloitte Access Economics has estimated the current value of the ‘sharing economy’ to be worth $504 million per year in NSW alone.

While change may get all the attention, what’s less talked about is how some essential things never change — one of them is trust.

People Problems Haven’t Changed

People are still at the core of it all – and people aren’t new. New networks bring powerful efficiencies, but these networks bring problems too. And these problems are age old. When an Uber driver or a host at AirBnB host does the wrong thing, people are surprised. We assume that because these platforms are better at solving one set of challenges, they should be more evolved when solving others.

In fact, sharing economy platforms aren’t very good at solving trust issues. Many of these new players advertise their platforms as trustworthy and use language and imagery that insists on the security of the experience. However the way sharing economy companies build trust is flawed.

Social proofing, based on user ratings and transparent interactions on the platform has been used as the default trust builder by sharing economy providers.

However social proofing — whether or not a driver showed up on time with a clean car and a good attitude, or a host was friendly— is short-term and highly subjective.

In the past, society has insisted on a different approach: the third-party verification of identity and reputation. We have found value in requiring a wider, dispassionate view of the organisation within a much longer time period.

Trust Is Central, But It Isn’t Easy

In many cases social proofing offers a false sense of security to users, and provides cover for people who should not be working with consumers. In some recent sharing economy verification trials, my organisation has found upwards of 30 per cent of providers on a platform had serious inconsistencies in their licensing and identities. It’s very likely that the porousness of many platforms is actually attracting people who would be unable to qualify for the same work by applying via a traditional process.

This matters because study after study has shown human beings are notoriously bad at assessing risk.  The sleekness of new platforms,the ease of their use and the savings we can earn make people forget that objectively the risks may be higher. They also have less recourse if things go wrong. When they do require third-party verification, it is often not true third-party verification at all; the person being verified often has access to his or her records and could tamper with them.

The future of trust in the new economy

What’s likely to happen, and should happen, is the industry will mature.  Already government in Australia at the state and federal level is thinking seriously about what happens next in terms of regulation. Judging by recent position papers from the NSW Department of Finance, Services and Innovation, as well as work by the Office of Fair Trading, regulation will soon catch up to these new business models.

While it would be a terrible thing for regulators to kill the new economy with tone-deaf regulation, it would be equally bad for new economy players to fail to recognise that trust can’t simply be window dressing.

Nick Roberts is the CEO of RISQ Group and an expert on screening and verification.  

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Why the sharing economy needs to worry more about trust


Anyone who cares about human resources needs to remember one central issue: the way we work now and into the future may be being challenged, but sticking by age-old values and practices is more critical than ever.

It’s now assumed that disruption is the new normal; everyone is talking about it from our Prime Minister to CSIRO. Now, even the most established businesses are scrambling to disrupt themselves in the hope of staying ahead.

Deloitte Access Economics has estimated the current value of the ‘sharing economy’ to be worth $504 million per year in NSW alone.

While change may get all the attention, what’s less talked about is how some essential things never change — one of them is trust.

People Problems Haven’t Changed

People are still at the core of it all – and people aren’t new. New networks bring powerful efficiencies, but these networks bring problems too. And these problems are age old. When an Uber driver or a host at AirBnB host does the wrong thing, people are surprised. We assume that because these platforms are better at solving one set of challenges, they should be more evolved when solving others.

In fact, sharing economy platforms aren’t very good at solving trust issues. Many of these new players advertise their platforms as trustworthy and use language and imagery that insists on the security of the experience. However the way sharing economy companies build trust is flawed.

Social proofing, based on user ratings and transparent interactions on the platform has been used as the default trust builder by sharing economy providers.

However social proofing — whether or not a driver showed up on time with a clean car and a good attitude, or a host was friendly— is short-term and highly subjective.

In the past, society has insisted on a different approach: the third-party verification of identity and reputation. We have found value in requiring a wider, dispassionate view of the organisation within a much longer time period.

Trust Is Central, But It Isn’t Easy

In many cases social proofing offers a false sense of security to users, and provides cover for people who should not be working with consumers. In some recent sharing economy verification trials, my organisation has found upwards of 30 per cent of providers on a platform had serious inconsistencies in their licensing and identities. It’s very likely that the porousness of many platforms is actually attracting people who would be unable to qualify for the same work by applying via a traditional process.

This matters because study after study has shown human beings are notoriously bad at assessing risk.  The sleekness of new platforms,the ease of their use and the savings we can earn make people forget that objectively the risks may be higher. They also have less recourse if things go wrong. When they do require third-party verification, it is often not true third-party verification at all; the person being verified often has access to his or her records and could tamper with them.

The future of trust in the new economy

What’s likely to happen, and should happen, is the industry will mature.  Already government in Australia at the state and federal level is thinking seriously about what happens next in terms of regulation. Judging by recent position papers from the NSW Department of Finance, Services and Innovation, as well as work by the Office of Fair Trading, regulation will soon catch up to these new business models.

While it would be a terrible thing for regulators to kill the new economy with tone-deaf regulation, it would be equally bad for new economy players to fail to recognise that trust can’t simply be window dressing.

Nick Roberts is the CEO of RISQ Group and an expert on screening and verification.  

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