Employee Trust: A Casualty of the Financial Crisis

Employees are increasingly mistrusting their supervisors during the financial crisis, according to a national study of leadership funded by the University of Phoenix National Research Center (NRC). (2009)

Throughout the summer of 2009, Dr. Richard S. Schuttler and I collected data from 1,150 working adults who evaluated the effectiveness of their supervisors. The employees who participated reported that their supervisors’ use of dishonest or inconsistent information caused them to question the integrity of these leaders. “My firm went through five rounds of layoffs before our parent company filed for bankruptcy,” one frustrated worker shared. “The whole time the communication with employees was that everything was fine and the firm was doing great.” 

Workers criticized leaders for using “company-generated propaganda” designed to conceal the truth about the problems facing the organization. Employees also complained about hypocritical leaders. “Don’t tell employees there will be no raises this year and then take a $10 million bonus check,” one study participant said. 

“Trust has all but disappeared,” one employee commented. Another said, “The crisis makes everyone look over their shoulder.”

Trust Busting and Trust Building

Dr. Schuttler said working adults in the study described these five ‘trust busting’ tactics:

• Secrecy–intentionally hiding information
• Lying–deceitfully spreading incorrect information
• Bias–‘spinning’ information to prejudice conclusions
• Hypocrisy–saying one thing while doing another; showing favoritism
• Threats–using intimidation and fear to control employees

In contrast, ‘trust building’ communication strategies should focus on:

• Transparency–openly and frequently sharing information
• Honesty–truthfully and objectively communicating
• Visibility–face-to-face communication (rather than email) to maximize visibility and approachability

Leaders are confronting tremendous economic challenges today and may lose sight of the importance of maintaining employee relationships, Dr. Schuttler said. While several participants in the study said they could not risk changing jobs during the financial crisis, many indicated they intended to leave their current organizations once the job market stabilized. 

“Leaders need to recognize that relationships have been damaged so changes can be made,” Dr. Schuttler said. “Supervisors who ‘stick their heads in the sand’ practically guarantee high employee turnover once the financial crisis subsides.”

Dr. Schuttler and I are both researchers, as well as faculty members at the University of Phoenix School of Advanced Studies.