Organisational trustworthiness – a matter of survival

Big corporates are often seen as distant and less caring than small family-businesses and medium sized enterprises (SMEs). An employee may never even meet the Managing Director of the company let alone to be directly motivated by him. The challenge for a bigger organisation then seems to be in communicating the company vision – “raison d’être”, and values from the top-management to all levels of employees, create trust, inspire and motivate all employees to work for the common goal.

A recent study exploring employee perceptions of organisational trustworthiness across Europe¹ indicates that organisations, big or small, are not doing this job very well…Employee trust in organisations seems to be alarmingly low when only 42% of employees believe that their organisation can be trusted, as the study shows. The study was conducted by training and coaching company Krauthammer on behalf of a specialist team representing seven European universities².

Big corporates are often seen as distant and less caring than small family-businesses and medium sized enterprises (SMEs). An employee may never even meet the Managing Director of the company let alone to be directly motivated by him. The challenge for a bigger organisation then seems to be in communicating the company vision – “raison d’être”, and values from the top-management to all levels of employees, create trust, inspire and motivate all employees to work for the common goal.

A recent study exploring employee perceptions of organisational trustworthiness across Europe¹ indicates that organisations, big or small, are not doing this job very well…Employee trust in organisations seems to be alarmingly low when only 42% of employees believe that their organisation can be trusted, as the study shows. The study was conducted by training and coaching company Krauthammer on behalf of a specialist team representing seven European universities².

“Organisational trustworthiness is a fundamental asset, a source of competitive advantage for an organisation, and a lack of trust clearly presents a threat for the organisation’s long term survival”, comments Ronald Meijers, Krauthammer Executive Board member. “The challenge is to start managing the trust-building process deliberately, which obviously requires the attention and leadership by example of top management”, he added.

So what do employees actually think?

Six crucial pillars of organisational trustworthiness were identified in the research: Justice (HR systems – fair remuneration and training and development), Communication, Control mechanisms (clarity of expectations and rules and regulations), Organisational prestige (perceptions of the employer’s reputation), Effectiveness of senior management and Compliance to external regulation.

The results showed the following:

• 25% agree that the conditions for rules and regulations are met – organisational rules seem to be followed only rarely.
• 30% agree the conditions for fair HR practices are met.
• 35% agree the conditions for effective senior management are met.
• 38% agree the conditions for effective communication are met.
• 48% believe the organisation has a good reputation.
• 54% agree the conditions for external regulation are met.

Organisations seem to fail in reaching out for the employees in order to inform and inspire, leaving them often very de-motivated. Top-management may not know how to do it or does not consider it important. For a reason or another, the study shows that organisations don’t have the proper systems and processes in place to effectively communicate with their employees.

As a Dutch respondent told us: “After a reorganisation, it was not long before small changes started to be made, without properly informing employees as to the how and why.” The impression – “My organisation is not trustworthy.”

The vision of an organisation must be a guiding lighthouse to people, and yet its light is regrettably dim to employees and even more worryingly, to the managers whose job it is to foster it. “Our current lack of vision and strategy allows for continual changes in direction,” said another respondent from Monaco, concluding: “Short-term profit and loss objectives drive the company’s internal behaviour.”

Another respondent revealed: “In my previous company, executives lied to top management – in front of employees who knew the truth. Consequences? We see resignations, absenteeism and demotivation.”

Trustworthiness adds value

When asked directly if the employees indeed trust their organisation 53% actively say that they do. In other words people are less positive about the “trust-building pillars” than about their overall impression of their organisation’s trustworthiness. In addition, when organisations have the right HR mechanisms in place and supportive senior management behaviour, it can override individual’s lack of trust.

Too many organisations are relying on the goodwill of their employees. The report sets out 5 potential – measurable – gains for organisations whose employees perceive their trustbuilding architecture as solid.

1. Security. Employees can feel free to feedback to the management.
2. Innovation. When employees feel supported, protected from “crossing the line” they are more inclined to ‘go create’.
3. Partnerships. The willingness of clients to take the risk depends upon trust.
4. Output. Paranoia, speculation and gossip – is widespread in low-trust environments. Minimise the related distraction and time wasting, and morale and productivity will benefit.
5. Talent. Employees are more likely to resist the headhunters from a big brand if they believe their organisation has their best interests at heart.

^[1]Full report: on www.krauthammer.com

^[2]ROCOT: Research On Cross-Cultural Organisational Trustworthiness is a cooperation between a group of 7 international trust researchers They represent Amsterdam University, Free University of Amsterdam, Brunel University, Coventry University, the Open University, the University of Warwick, the University of Zürich.