Suspicious Minds

Can managers build their dreams without the trust of their employees?

America’s trust in its leaders is at a low ebb. Fewer than half of those surveyed in recent polls characterized President Bush as trustworthy, while Congress fared no better. The Catholic Church continues to reel from its clergy abuse scandals. The Supreme Court, union leaders, and the news media are all distrusted by large segments of the public, according to pollsters.

And business executives? Last year, only 2 percent of respondents to a Roper poll described CEOs of very large companies as “very trustworthy.” In a 2005 survey of 800 organizations by Mercer Human Resource Consulting, just 40 percent of workers trusted management “to always communicate honestly.” That trust could be even lower in 2006, thanks to such factors as the oil companies’ huge profits, the spread of outsourcing, and the criminal trial of former Enron executives Kenneth Lay and Jeffrey Skilling.

Dan McCauley, a principal in the Chicago office of Mercer Human Resource Consulting, says that workers’ trust in management has been declining since the onset of downsizing and restructuring in the late 1980s and early 1990s signaled the end of traditional job security. The corporate scandals of the past few years have exacerbated the slide, says McCauley; so has the widening pay differential between executives and front-line employees. “There’s a fundamental perception that executive teams have their own interests at heart,” says McCauley. “That seems to be becoming very embedded in the workforce mind-set.”

How much do employees value trusted leaders? One answer was provided a few years ago by the Global Leadership and Organizational Behavior Effectiveness (GLOBE) research program, an international network of social scientists and management scholars. Starting in 1993, the GLOBE program conducted a massive, multiyear study of cultural influences on leadership, surveying more than 17,000 middle managers in 62 societies. The study’s investigators wanted to find out, among other things, which attributes of effective leadership are universally endorsed and which are culturally contingent. Not surprisingly, they found that trustworthiness in leaders is prized in all cultures, says Paul J. Hanges, a principal investigator for the study and professor of industrial and organizational psychology at the University of Maryland.

A 36 Percent Raise

A quantitative value for trust in management comes from a pioneering study released last November by two economics professors at the University of British Columbia. Analyzing the responses to three large, recent Canadian surveys, John Helliwell and Haifang Huang found that four nonfinancial job characteristics contribute significantly to employees’ life satisfaction: trust in management, a variety of tasks, a job that requires skill, and time enough to do the job. Of the four, trust in management was by far the most valued. Improving it by 1 point on a 10-point scale raises life satisfaction by the same amount that a 36 percent pay raise does, the professors concluded. (The equivalents for task variety, skill required, and sufficient time were 21 percent, 19 percent, and 11 percent, respectively.)

“[T]he current situation probably reflects the existence of unrecognized opportunities for managers and employees to alter workplace environments, or for workers to change jobs, so as to increase both life satisfaction and workplace efficiency,” noted Helliwell and Huang.

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