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Employee Experience (EX) Leadership: Build trust through employee experience and engagement

Authors:
  • Willis Towers Watson

Abstract

An insider’s guide to employee engagement and employee experience (EX). Trust is the essential ingredient in any successful business. The author looks at how leaders have built trust by making it safe for people to speak up and by using feedback to make meaningful changes. For decades, that has meant running employee surveys. With new technologies and new data science approaches, there are opportunities for companies to move far beyond traditional engagement programmes and to achieve much more. The book highlights those opportunities and also the risks. EX leadership refers to those companies that are leading the way in developing this new science, and also the key role that leaders play in shaping a compelling employee experience.
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Employee Experience (EX) Leadership:
Individual Risk and Trust
There are good reasons for being optimistic about the future. In
general terms, for example, Stephen Pinker argues in his book
Enlightenment Now that life experiences are largely getting better.
i
By many macro measures of human well-being, such as personal
safety, longevity, economic security and happiness, people in many
places are better off today.
When it comes to the future of work specifically, there are also
grounds for being positive. Work places are generally safer. Boring
drudge-work is increasingly done by technology now. This frees
people up to do more interesting and creative tasks.
Many companies are paying more attention to their corporate and
social responsibilities. There are stronger rights for working parents.
There is more focus on gender inequality. There is more emphasis
on inclusion and diversity.
In addition, people are able to work more flexibly. Not only in
terms of where they work, but also when and how. There are pros
and cons to this, but it can mean some people are better able to juggle
their work and personal commitments.
Employment wise, there has been a growth in the number of
small and micro-businesses. Small firms can now compete with big
firms in niche markets by using social media and networks to sell
their services. This is leading to a blossoming of boutiques and
artisan businesses. These are often rewarding places to work.
In terms of positive thinking, some commentators even talk about
a future democratisation of work, whereby technology empowers
employees and enhances individual work choices. Some people
hope we are shifting to a skills-based economy that is less restrictive
in terms of how companies view their human resources.
To be open and up-front, this book is written by someone who is
more pessimistic about the future.
2
There are advantages to pessimism, especially defensive
pessimism, whereby you lower your expectations and prepare for
the worst.
I might also spruce things up a bit and say that I have a critical
perspective. Critical pessimism implies a firm degree of scepticism
the asking of hard questions about what’s really happening in
societies, communities and corporations.
In part this reflects my job. In my role, I interrogate data about
companies to identify potential problems. This requires a critical
eye. I have to be sceptical in order to understand what’s going on.
At heart, though, I worry about the future of work. The basic
premise of this book is that business is getting more challenging and
that leaders need to adapt quickly.
Specifically, there are long-term trends that are accelerating and
that have become critical to address in order for large organisations
to continue to be effective. Not only in terms of generating revenue
and profit, but also in making a positive contribution to the
communities in which they are based.
From Built-to-Last to Built-to-Change
Most leaders I meet are also very interested in the future. There
is a strong sense that many aspects are changing quickly and that
most industries and businesses face disruption.
From a leadership perspective, many companies are planning for
how they navigate volatile and uncertain times. This sense of
uncertainty is not restricted to immediate political and economic
events. It reflects a deeper loss of confidence in established business
models and ways of working.
In 1994, Jim Collins and Jerry Porras wrote the best-selling
business book Built to Last. The book was a celebration of the
longevity and success achieved by some remarkable American
companies such as GE, HP and IBM.
ii
Despite its faults, it's one of my favourite books. The authors
describe the success of these visionary companies through
compelling stories. They argue that these companies succeeded by
putting sustainability ahead of short-term profits. Their success is
3
the result of leaders building the organisation first, rather than
specific products. In their words, "clock-building" rather than just
"telling the time”.
These built-to-last companies are good at trying lots of stuff to
see what works well. They set ambitious goals. They have strong
work cultures. They emphasise home grown talent.
The authors talk about the myth of the great charismatic leader.
They believe it's more important to have leaders who worry most
about preserving the organisation's core purpose and values.
One of the attractions of Built to Last, and a key reason it became
a best seller, is its focus on longevity when corporate survival rates
are actually so dispiriting.
This becomes clear when you look at changes in the FTSE 100
index of the UK's leading quoted companies.
The FTSE 100 was launched in January 1984, just a couple of
years before the Big Bang in the City of London when trading
became computerised. Thirty years on, only 31 of the original
hundred remained listed on the index. By the end of 2018, only 29
were still there.
Changes to the list over that time clearly illustrate the impact of
globalisation. Through mergers, failures, promotions, demotions
and new listings, the FTSE 100 has evolved to become a less UK-
centric index. It now reflects the fortunes of the global economy
instead.
In addition, the FTSE 100 has become less diverse in terms of
industry. Whereas in 1984, there was a wide mix of manufacturing,
chemicals and services, now financial services have a big presence.
Moreover, there has been a concentration of value, so that two-
thirds of the value of the entire list is based on the ten biggest
companies alone.
In the face of these trends, business writers have naturally begun
to focus on other critical organisational success factors. In a twist of
phrase, Ed Lawler and Christopher Worley in 2006 wrote their book
Built to Change.
iii
The authors highlighted how organisations need to focus on
agility and transformation rather than longevity and sustainability.
4
In their words, "We believe that instead of pursuing strategies,
structures, and cultures that are designed to create long-term
competitive advantages, companies should seek a string of
temporary competitive advantages through an approach to
organisational design that assumes change is normal."
The focus on adaptability has increased in importance for all
organisations. When leaders look into the future, they see even more
upheaval ahead.
The new machine age
Of all the major forces impacting jobs and work, the most
obvious is technology.
It is popular in business circles to talk of a fourth industrial
revolution. Earlier revolutions refer to the rise of steam power and
urbanisation, electricity and mass production, and computing and
digitisation. We are now at the beginning of a new machine age and
the implications are wide ranging.
This current economic shift is being driven by cognitive
technologies such as artificial intelligence and robotics. It is fuelled
by access to far greater computing power and massive amounts of
data.
Erik Brynjolfsson and Andrew McAfee (who are both professors
at MIT) describe three key features of the new technology
landscape: platforms, crowd-based solutions and smart machines.
iv
Firstly, in terms of platforms, companies like Uber and Airbnb
provide examples of a new business model. These companies are
able to create digital marketplaces where they act as a gatekeeper
and charge a fee accordingly.
Secondly, new technologies have led to decentralisation and
crowd-based collaboration. As digital technologies lower the cost of
interacting, more things can be done by informal groups. In this way,
for example, Facebook and YouTube can challenge traditional
linear media businesses.
Thirdly, new machine technologies reduce the barriers to market
entry, leading to start-ups and new competitors.
5
Market disruption of this kind is a haunting spectre for many
executives. According on one study, 78 per cent of businesses
believe digital start-ups pose a threat to their organisation, and 45
per cent fear their company may become obsolete in the next three
to five years as a result. That’s a lot of senior people who are even
more pessimistic than I am.
v
As far as this book is concerned, what really distinguishes this
new machine age is the impact that cognitive technologies will have
on human relations and work.
Erik Brynjolfsson and Andrew McAfee describe how artificial
intelligence is already being used to do many of the tasks that have
until now been done by humans. This trend will accelerate in lots of
ways, from self-driving cars to cashier-less shops to generative
design. The nature of human-machine collaboration is changing and
this has widespread implications for jobs and employment.
We are still at the early stages of this transformation. At this
point, most companies (57 per cent) see the primary aim of
automation as augmenting human skills and productivity rather than
replacing humans at work.
vi
In the short term, only 22 per cent of tasks inside most
organisations are likely to be automated. But longer term, perhaps
up to 47 per cent of jobs are at risk of automation, according to some
studies.
vii
The hope is that the jobs that are lost will be balanced out by the
new jobs and professions that are created, although estimates of the
number of new jobs vary widely. Moreover, there are significant
implications for skills and training.
A key focus for many organisations at the present time is to break
down jobs in order to identify those manual, high-volume, repetitive
tasks which can be done by robotic process automation instead.
This can have a positive impact for employees. In call centres,
for example, it can mean that routine requests are handled by chat
and voice bots, leaving humans to deal with more complicated
questions. These are often more challenging and interesting queries,
requiring a focus on customer service and problem solving. In turn,
this can help to improve the culture in call centres, which have often
6
been difficult places to work in, characterised by low engagement
and high turnover.
The work spaces that I have seen change the most because of
robotics are factories and warehouses. In addition to the widespread
adoption of lean methodologies, the biggest change in
manufacturing is the introduction of smart machines and the
requirement for computing skills inside the plant.
In a modern Coca-Cola bottling facility, for example, the level of
automation is striking. A factory like the one in Baton Rouge,
Louisiana is able to make and package 4.5 million servings a day,
operating 24 hours, and once the syrup has been added the process
is almost wholly automated. Robots even make up, wrap and then
dispatch the final pallets.
Inside a BMW factory, humans no longer work independently
from robots. Robots used to be fenced off and housed separately.
Now robots are positioned alongside people. Robots complete the
tasks that require strength or precision. Some BMW factories are
also using exoskeletons to augment their humans’ performance.
Amazon has become famous for its unlit warehouses where its
Kiva robots move items continuously and bring goods to packers in
a mesmerising fashion. When Alibaba introduced similar
technology at its warehouse in Huiyang, China, it led to a threefold
increase in output and a reduction in human labour of 70 per cent.
You read that correctly, 70 per cent.
viii
Robotic automation is already having a noticeable effect on the
workplace, therefore.
Cognitive automation is still an emerging technology, but its long
term impact may end up being far greater.
There is already evidence of a hollowing-out of middle income
jobs in administration and service work due to cognitive
technologies. There are fears that this is leading to job polarisation,
whereby middle-income jobs are reduced in number, whilst high and
low-income jobs remain less affected (for now at least).
Cognitive automation is likely to have a big effect on sectors such
as professional services. The main area of growth in the legal sector,
for example, is law-tech, which is receiving a lot of investment in
7
cognitive technologies for things like contract and case reviews.
This is having an impact on labour requirements, productivity and
fees.
It is not just law. Similar changes are happening in financial
services. Traditionally, investment management companies have
been well paid for research and analysis, but in a world of open data
and easy access to information, which can be analysed at scale by
new technologies, that closed research model has come under
serious threat (and has accelerated with regulatory changes).
At the same time, fin-tech provides new ways for customers to
make investments. Fin-tech can provide personalised choices and
recommendations. It offers a level of service and price that is
sufficient for many customers.
Another sector that is being transformed in the new machine age
is advertising. There is still a creative element to advertising, of
course, but advertising has also become a big data game.
Global consulting firms like Accenture, whose roots are in
accounting, are now among the biggest advertising agencies in the
world. This is because the advantage in advertising now sits with the
automated application of data science.
Traditional ways of understanding consumer motivation are
being superseded by the real-time measurement of consumer
behaviours. These can be quantified and analysed with probabilistic
models that are developed and refined by artificial intelligence.
These capabilities are more often found in finance and
accounting organisations than in the traditional advertising agency,
which is why firms like Accenture are making great progress in the
new realm of performance marketing (discussed later in this book).
In his book The Globotics Upheaval, the economist Richard
Baldwin presents a concerning view of the future, where
globalisation and cognitive technologies converge to have a
dramatic effect on white-collar work.
ix
Although new technologies have always destroyed some jobs and
created new ones, in his view job replacement will struggle to keep
up with job displacement this time.
8
According to Baldwin, this new revolution, driven by white-
collar bots, is different for two reasons: “It is coming inhumanly fast,
and it will seem unbelievably unfair.
It is already resulting in a shift in the balance of individual risk
in many organisations.
Demographic changes at work
Globalisation and technology are disrupting many industries and
organisations. Another important force having a major impact on the
future of work and jobs is demography.
Demographic changes are already having a profound effect on
the UK labour market. For starters, the UK, like many other
developed economies, has an ageing workforce.
Around 32 million people are in work in the UK, but only 3.8
million are aged between 16 and 24 (12 per cent of the total
workforce). This is the lowest proportion since accurate records
started to be kept in the 1970s.
By contrast, around 30 per cent of UK employees today are older
than 50. That is the highest proportion since accurate records began.
x
There are so many important issues wrapped up in an ageing
workforce. What happens when people retire, taking their skills and
experience with them? Companies need to identify, predict and
manage for potential skills gaps and labour shortages.
Of course, many older employees may not be in a position to
retire when they reach their sixties (or seventies). They may need to
remain employed for economic reasons.
According to a survey by NORC (the National Opinion Research
Centre at the University of Chicago) a quarter of Americans aged 50
or older expect never to retire at all, primarily for financial reasons.
According to another study, 42 per cent of Americans have saved
less than $10,000 for retirement, while 14 per cent have absolutely
no money put away.
xi
Some older employees will also just want to work for longer,
because they want to remain economically active for as long as
possible. As a result, companies need to manage talent opportunities
9
carefully, so that younger generations are not blocked in their early
careers by older workers remaining in post.
Organisations need to adapt their working practices to
accommodate the needs of an older workforce. This might include
more part-time positions and flexible working. They may need to
support older workers in maintaining their health and wellness.
All large organisations now have multi-generational workforces.
For really the first time in the history of the modern corporation,
four generations are working side-by-side in the workplace.
Age does not always infer seniority or experience. In flatter, less
hierarchical organisations that have gone through significant digital
transformation, workers of different ages can be working as team
leaders, mentors, coaches and individual contributors based on their
own mix of experiences and skills not their age.
In terms of generations, millennial employees have been at the
centre of a huge amount of discussion. In fact, to a ridiculous degree.
Baby boomer leaders seem to have a strong sense that there is
something different about these employees (basically their
grandchildren).
Millennials have been stereotyped as lazy job-hoppers who
expect everything to be delivered to them on a plate.
In fact, most research shows that millennials' approach to work,
careers and learning is consistent with new entrants into the
workplace generally and also reflective of broader societal shifts in
attitudes.
The debate is also a bit pointless since millennials are already one
of the biggest cohorts inside many organisations. In the UK as a
whole, 9 million employees are millennials, which is 28 per cent of
the workforce.
What is relevant is that the world of work is changing rapidly in
front of millennials' eyes. They are at the forefront of the changes
taking place and they are the generation that will be affected deeply
in the new machine age.
As well as an ageing workforce and generational changes, the
other important demographic shift is towards greater diversity in the
10
workplace and (belatedly) many leaders' realisation that diversity
and inclusion is important.
Diversity is broad in scope. Diverse workplaces are composed of
employees with varying characteristics including, but not limited to,
gender, ethnicity, religious and political beliefs, education,
socioeconomic background, sexual orientation and geographic
location. Diversity also includes cognitive diversity. In other words,
people with different views and opinions, who are willing and able
to express them. (There is much more on this in later chapters).
The leadership challenge
The forces described above globalisation, new technologies,
demographic shifts are having a profound impact on work, jobs
and organisations.
This shift is leading to an increased tension inside many
companies.
On the one hand, there is a push towards greater efficiency and
cost savings. Companies have moved work to low-cost locations.
They are replacing human labour with technology. They are entering
into new kinds work arrangements. They are shifting responsibility
and risk onto the shoulders of individual employees.
But on the other hand, business success is increasingly dependent
on making an investment in key talent and in creating a work culture
where individuals and teams are freed up to innovate and to create
distinctive value.
The key leadership challenge for tomorrow's workforce,
therefore, is to manage this tension in a constructive way, so that
leaders are able to build trust and create engaging experiences for
employees and customers.
Trust matters
Trust is critical to the way every organisation functions, from the
smallest start-up to the largest multinational. I believe all the
projects I have run can be put under the heading of building trust,
11
whether the aim has been to improve collaboration and efficiency,
to encourage innovation, to increase customer focus, and so on.
Trust is at the heart of people's experience at work. A positive
experience strengthens trust, but in order to have a positive
experience there needs to be some degree of trust in the first place.
This operates in big and small ways. For example, a positive
experience could be that my manager gives me useful feedback,
which helps me improve the way I support a customer. I feel a
stronger sense of achievement as a result. But I need to trust my
manager to some degree already, in order to be open to receive the
feedback constructively. This kind of situation is repeated
throughout the work day in lots of ways.
Trust has always mattered to organisational effectiveness. But it's
the argument of this book that it matters more for leading
tomorrow's workforce.
This is because, in order to find a competitive advantage,
companies are more reliant than ever on the ingenuity, creativity and
ideas of their workforce. One effect of technology (the application
of machine intelligence) is to level the competitive playing field in
terms of products and services. In turn, this means it's literally the
talent of your people, and the experiences they create, which sets the
best companies apart.
As a result, you need to create an environment of high trust and
open expression, so that people bring their best ideas forward. The
organisation of the processes, systems and behaviours that are
required to build that level of trust is really what matters.
What's meant by trust?
Before going any further, it's useful to have some definitions.
Trust can be a hard concept to pin down.
In everyday use, trust means the reliability of someone or
something. In academic circles, psychologists have viewed trust in
terms of interpersonal relationships. Economists view trust in terms
of contracts, philosophers in terms of ethics.
Much popular writing on trust focuses on the apparent decline in
confidence in institutions like government, the media and business.
12
There is a widely held view that there is a trust crisis in modern
economies, which has profound implications for politics, for society
and for the communities we live in.
This is compounded by the fact that traditionally trusted sources
of information are being challenged by social media, which is
vulnerable to misinformation, propaganda and lies.
There is also a broader, popular cynicism, characterised by the
belief that the truth is always being spun to someone's advantage.
In fact, trust is hard to define because it always depends on the
context and it changes based on the nature of a relationship.
One key concept is that trust is the result of a process, meaning
there are phases and episodes through which trust is formed and
eroded. As such, trust is cumulative, the sum of personal experience
and recurring exchanges. There are key moments when trust is tested
by critical incidents.
There are conditions that lead to trusted relationships being more
likely to form at those key moments. For example, those doing the
trusting need to have a propensity to trust and a degree of
vulnerability, which is partly a result of personal characteristics,
norms and incentives. Those being trusted need to have earned
some degree of trustworthiness in the first place. This requires an
assessment of their competence, integrity and benevolence.
Because an assessment is needed, trust is cognitive. In other
words, it is based on what I know. Once I have relevant knowledge
of your character, your competence, your reliability, then my
knowledge partly constitutes my degree of trust or distrust. In this
way, transparency and openness, as well as misinformation and bias,
can influence trust.
Another key ingredient here is reciprocity, which means an
exchange for mutual benefit. Or as Russel Hardin puts it, at the heart
of a trusted relationship is the knowledge of encapsulated interests.
By this he means: "I know you have an interest in fulfilling my trust
in you (you encapsulate my interest in your own.)"
xii
13
A general trust crisis?
The most obvious form of trust is between two individuals. Much
work on the psychology of trust has involved measuring this, for
example through game play. However, trust is also commonly seen
as working across levels, including individual-to-organisation and
even more broadly as generalised trust.
It is the perceived decline in individual-to-organisation trust that
is felt to be at the heart of a trust crisis in economies like the US and
the UK.
Much of the evidence for that decline comes from surveys, such
as the General Social Survey run by NORC since 1972 and NatCen's
British Social Attitudes Survey which has been run since 1983. Both
surveys highlight a rising degree of scepticism towards institutions
like government, business and the media.
In the General Social Survey, for example, only 17 per cent of
people express "a great deal of confidence" in major US companies.
This is down from 29 per cent when the question was first asked in
1973.
xiii
The score declined markedly in the late 1980s and then again in
the early 2000s. Both periods were characterised by economic
restructuring and shifts in the employment deal, including changes
to labour relations under President Reagan and the jobless recovery
under President George W. Bush. The score reached a low of just 13
per cent in 2010 at the height of the financial crash.
In the UK, the level of trust in government and politicians has
never been very high. According to the Social Attitudes Survey, in
1986 only 38 per cent said that they trusted government "to place
the needs of the nation above the interests of their own political
party." By 2000, this had fallen to only 16 per cent. In 2016 the score
remained low at just 18 per cent.
xiv
According to NatCen, "While a degree of scepticism towards
politicians might be thought healthy, those who govern Britain today
have an uphill struggle to persuade the public that their hearts are in
the right place."
These words were written before the Brexit vote.
14
Another question in the Social Attitudes Survey is even more
damming when it comes to generalised trust. When asked "How
often do you think that people would try to take advantage of you if
they got the chance?" a third of people responded "almost all the
time" or "most of the time".
The communications firm Edelman has also tracked generalised
trust through its annual Barometer Survey since 2001. Over that
time the general population’s trust in institutions like business,
government and media has declined markedly and in 2017 Edelman
concluded that, "With the fall of trust, the majority of respondents
now lack full belief that the overall system is working for them."
xv
In the UK in 2017, only 45 per cent of Edelman respondents
indicated they trusted business. Only 37 per cent of people rated
CEOs as "very credible" as a source of information.
At the same time, there was a growing gap between the views of
those defined as "informed public" (college educated, higher paid,
consumers of traditional news media) and the "mass population" (all
others).
Many commentators have highlighted the importance of social
media in this decline in generalised trust.
Social media now challenge newspapers and television as
sources of influence and news. But incidents such as the use of
Facebook data by Cambridge Analytica reveal the degree to which
such sources are vulnerable to manipulation.
Online interactions clearly play an important role in the
development of social capital, but more so in terms of bonding
communities of interest together rather than bridging across diverse
groups. Hence, the rise of social media echo chambers, whereby
your own opinions are constantly played back by like-minded
people, in turn reinforcing your own beliefs.
Algorithms also play a role here. The internet activist, Eli Pariser,
highlights what he calls the "filter bubble" meaning that as
websites get to know your interests better, they also get better at
serving up the content that reinforces your interests, while filtering
out those things you generally don't like or agree with.
xvi
15
At the very least, the rise of social media means that traditional
communication routes are breaking down. New approaches are
required to communicate clearly and to cut through the noise, and to
break out of your bubble.
This is especially important from a change leadership perspective
and for overcoming the barriers to successful transformation, such
as employees' overall scepticism and change weariness.
It has led writers like Sherry Turkle to argue that leaders need to
re-focus on personal communication and direct face-to-face
conversation.
xvii
Organisations need to work harder to create both
physical workspace and time for dialogue and conversation to
happen.
Given all these challenges to trust then, how is trust affected
specifically at work?
I argue below that there is a significant trust gap in most
organisations, which acts as a drag on productivity and performance.
First though, it's important to note that there are two main ways
in which trust manifests itself at work in the functioning of teams
and in the confidence that employees have in leaders.
Trust at work - teams
In terms of trust at work, one of the most important dimensions
is at the local level.
Within a team, trust operates between colleagues and between
employees and their direct manager.
There is a vast literature on high performing teams, which
stretches back to the 1950s. But Jon Katzenbach and Douglas Smith
wrote convincingly about The Wisdom of Teams in 1993.
xviii
For
them, effective teams are relatively small, contain people with
complementary skills, share a sense of purpose, focus on achieving
specific goals, have a clear approach to the way they work, and
crucially, team members share a sense of mutual accountability.
Two critical success factors are holding yourself accountable for
team goals and following through on your promises.
16
It used to be that trusted relationships could be built up over time
at the team level, based on recurrent events and reciprocity.
One of the most familiar models of team formation is Bruce
Tuckman’s model of group development, with four key stages:
forming, storming, norming and performing.
xix
The norming stage depends on a successful coming together and
a settling down as team members get to know one another. This is
when the team becomes focused and productive, with an established
way of working together, leading to the performing stage.
However, in today's more flexible organisations, teams often
come together rapidly and need to work together effectively without
the time it usually takes to build trust in the norming stage. This has
given rise to the notion of swift trust.
Swift trust refers to the way that rapidly-assembled or
temporary teams are able to work together quickly. It's important
because teams are often put together in order to achieve short-term
tasks, before being disbanded and re-formed with different team
members for a different task.
According to Debra Meyerson et al, swift trust requires parties to
interact as if trust were present, and then to quickly verify that is
actually the case in order to manage vulnerabilities and
expectations.
xx
As such, swift trust is a form of risk management. Swift trust
assumes that members have little or no choice except to give each
other the benefit of the doubt for the success of the group.
To build swift trust, the team leader needs to spend time setting
things up correctly, for example, by explaining why each person has
been selected for the project. In this way they act as a "trust broker".
It's important for team members to build a great first impression
in the earliest days. Other success factors include dealing quickly
with any issues as they arise, very frequent and open
communications, and quickly celebrating achievements.
Swift trust is critical for virtual teams when there is limited or no
time to build interpersonal relationships. It is especially applicable
to discussions about the future of work, where projects may be
17
managed by instantly-formed, diverse and short-lived teams of
strangers spread across continents.
This may include a mix of different kinds of workers
employees, contractors, partners, customers who only ever interact
online. The ability to establish an identity, to share a common
purpose and to deliver an agreed outcome requires an assumption
that trust exists.
A key success factor is transparency and openness in the way
people work. This is the hallmark of many virtual teams in the
technology sector, for example, who openly share all their data and
workings, as this means that trust verification can be quick.
At a team level, the key performance benefit from trust is
improved cooperation.
In 2016, Bart de Jong et al published a meta-analysis examining
the relationship between trust and team performance. Their paper
looked at data from 112 studies, representing almost 8,000 teams
and they found that intra-team trust is positively related to team
performance.
xxi
A similar conclusion was reached by Sarah Brown et al who used
the 2004 and 2011 Workplace Employment Relations Study to
analyse the role of employee trust in influencing team performance
in both pre- and post-recessionary periods.
xxii
Their findings showed
a positive relationship between three measures of workplace
performance (financial performance, labour productivity and
product or service quality) and employee trust at both points in time.
At a team level, therefore, trust helps people to focus on
collective goals rather than their own narrow interests.
In high-trust teams, employees are more likely to openly share
perspectives and to work through differences, improving
collaboration and work quality. While in low-trust teams, people are
more likely to spend time worrying about the need to defend their
own personal positions and interests.
Moreover, in terms of the future of work, Christina Breuer et al
have looked specifically at the impact of trust on the effectiveness
of virtual teams. They looked across the findings from 52 studies,
representing 12,615 individuals in 1,850 teams, and they confirmed
18
the positive overall relationship between team trust and team
effectiveness. But they also found that the relationship between team
trust and team performance was even stronger in virtual teams.
Hence, the ability to establish swift trust in virtual teams has an even
more important impact on the performance of those groups.
xxiii
Trust at work - leadership and confidence
The second key form of trust at work operates between the
individual and the organisation they work for.
Francis Fukuyama argues that there is a significant economic
benefit to trust for organisations. For Fukuyama, the most effective
organisations operate like a network: "They can save on transaction
costs substantially if their members follow an informal set of rules
that require little or no overhead to negotiate, adjudicate and
enforce."
xxiv
These informal rules depend on trust.
This is a link that others have explored in detail. For example,
Paul Zak and Stephen Knack used data from the World Values
Survey (WVS) to show how higher trust at a country level is related
to increased investment and economic growth. Rafael La Porta et al
also used WVS data to demonstrate the impact of trust on the
performance of large firms. Marc Goergen et al used macro-level
data and comparative evidence to show how country-level trust and
firm-level trust have a positive impact on financial performance.
xxv
When it comes to individual-to-organisation trust in the
workplace, there is a strong argument to say that the focus should be
on confidence as well as trust.
Confidence is the belief, based on experience or evidence, that
certain future events will occur as expected. Confidence means that
I believe things will get better, assuming they need to improve, or
that they will stay the same if they are already positive.
Confidence is future-oriented and it affects the personal and
business decisions that I take. This might include, for example,
whether I keep an eye open for job opportunities or if I will commit
to stretching performance goals.
One key challenge for leaders in building confidence and
demonstrating their trustworthiness is the increasing
19
complicatedness of getting work done. It is harder to build a direct
line of sight between input and output in modern organisations
where individual contributions can be only a small element of a very
complex work ecosystem. There is also a growing challenge of
bureaucracy.
Yves Morieux is a writer and consultant who focuses on the
increasing burden of complexity at work. He cites the causes of
complexity as resulting from more stakeholders with more demands,
more customers with more choices, more markets (domestically and
internationally) requiring attention, more requirements and
personalisation in service delivery, more difficulty in creating
genuine value, and more conflicting demands and faster changes.
In turn, this causes companies to become more complicated in
the way they work. They introduce more procedures, processes,
structures, and so on. More time is spent on managing work and less
time is spent on doing it.
As a result, many people feel they're working harder in terms
of being busy in meetings and on email and IM but they're not
really producing more.
In some organisations that are struggling with complicatedness,
managers can spend up to 40 per cent of their time writing reports
and up to 50 per cent of their time in meetings.
xxvi
All this poses a productivity challenge. Fighting complexity,
according to Morieux, is the number one battle for all business
leaders.
Morieux is not alone in worrying about this. Gary Hamel is
similarly appalled at the damage being done to the global economy
by bureaucratisation. He argues there is a 3 trillion dollar wealth-
creating opportunity in tackling bureaucracy, and pleads with
business leaders to get to grips with it.
Some of the issues Hamel identifies include policies and
processes sapping individual initiative, sign-offs slowing decision
making, organisational boundaries creating silos, matrix structures
blurring accountability, and time and energy consumed by unhelpful
reporting and pointless meetings.
20
In my experience, complicatedness is the bane of modern
organisations. Technology and globalisation have made it harder to
do things simply and well. The chain of people, processes and
systems that is required to deliver a product or a service can easily
become long and convoluted unless you have real focus and
discipline.
In some ways, this may appear counterintuitive. Surely
technology is enabling organisations to be more agile and
streamlined? Certainly, the Chief Financial Officer assumes this will
be the case when making an investment in new systems. But in fact,
human behaviour often dictates that things become increasingly
messy, and too often organisations do not think through the human
implications of technology changes.
In addition to the economic cost, the increasing complicatedness
of work also makes it hard for employees to actually assess their
leaders' competence. To what extent is the success of a leader due
their efforts rather than just simple chance? It is often, frankly, hard
to judge.
Individual risk
Another trust challenge, compounding the above, comes from
changes to the traditional elements of jobs and employment, where
more risk is falling on the employee side of the equation.
For the post-War generation in economies like the US and the
UK, there was a fairly stable and well-established employment deal,
which most companies stuck to. Sometimes the employment deal is
called "the give and the get" or the psychological contract. Whatever
you call it, it is a form of reciprocity.
In many organisations in the post-War period, in return for
employees' hard work and commitment, employers provided pay
and benefits, including pensions for life after work, as well as a
career path based on experience, skill and seniority. In the US and
other countries, health care for workers and care cover for retirees
was also part of the mix. A represented workforce was an element
in maintaining labour relations.
21
There were obviously problems associated with this deal, such as
inflexibility and the tendency to reward tenure over merit. This
compounded the issues that already existed in terms of a lack of
diversity.
For these reasons and others, this deal has been breaking down
over a long period of time. Certainly, the situation now is very
different. For new employees joining organisations most aspects of
that traditional deal are off the table.
Not many companies promise a long-term career any more.
Instead, they offer the chance for workers to gain experiences and
opportunities which will make them employable.
Benefits are more likely to be lifestyle-oriented, including things
like gym membership, in order to ensure wellness at work. Other
benefits are experiential, such as a college-like campus, or working
spaces with creative meeting areas.
Rather than receiving a proportion of your salary upon
retirement, an employee can expect a contribution to a savings plan
(a defined contribution plan). When it comes to health care in the
US, only a small number of large companies still offer retiree health
care coverage.
Even the core tenets of a job are in question in some
organisations, where tasks are being parcelled out among a
workforce comprising not only employees, but also temporary
contractors, agency workers and freelancers.
One effect of these changes is a lack of security and an increase
in perceived individual risk.
According to the Work Employment Relations Study in the UK,
61 per cent of employees say they feel their job is secure. This
number has declined over time. In 2004, 67 per cent felt their job
was secure.
xxvii
This is interesting as the number of people in
employment in total is quite high relative to long-term trends. Below
this headline figure, it’s possible to see more detailed concerns.
The UK Skills and Employment Survey, for example, explores
job status insecurity this refers to how people fear changes may
affect their status at work in the future. Almost a third of respondents
say they fear changes to their job will give them less say over how
22
it is done. A quarter fear that changes will make it more difficult to
use their skills and abilities. And 40 per cent fear changes will
reduce their pay.
xxviii
This lack of confidence has consequences. In the US, a study by
Sarah Burgard and Sally Seelye looked at 25 years of data from the
Americans’ Changing Lives study to examine long-term histories of
perceived job insecurity and its link to psychological distress. They
found that insecurity is a significant predictor of stress and that this
association holds after adjusting for age, gender, race, educational
attainment and household income.
xxix
In his book The End of Loyalty, Rick Wartzman regrets the end
of the post-War work contract.
xxx
He argues that shareholders are
benefitting while employees lose out.
Wartzman highlights the impact of off-shoring, outsourcing, new
technology, and the willingness of leaders to lay people off, as
among the trends that are leading to a new era of low loyalty and
low trust. The impact of these changes is more risk for employees.
“For workers, the American corporation used to act as a shock
absorber. Now, it’s a roller coaster.”
In the UK, there is a lot attention paid to zero hours contracts,
which seem to epitomise this new era of lower quality jobs. These
contracts allow employers to hire staff with no guarantee of work.
Employees work only when they are needed, often at short notice,
and their pay depends on how many hours they work. The CIPD has
estimated that 1.3 million UK workers are on zero hours
contracts.
xxxi
The headlines over the use of these contracts often neglect to
mention their upside. For some people, especially those with critical
and in-demand skills, these agreements can be very popular,
allowing them to manage their work commitments flexibly.
However, for others, casual contracts like these are a concern.
According to the CIPD, the most common jobs with zero-hours
contracts are not highly-skilled technology jobs, but rather
administrative and support roles, care work, cleaning and various
hospitality-related functions where people might not choose to be
on them." In these cases, they can be a cause of stress.
23
Researchers from the Centre for Longitudinal Studies at
University College London, for example, analysed data on more
than 7,700 people living in England who were born in 1989-90 and
are being followed by a study called Next Steps. They found that
young adults who are employed on zero hours contracts (about 5 per
cent of their sample) are less likely to be in good health and are at
higher risk of poor mental health than workers with stable jobs.
xxxii
Similar results were found by Brendan Burchell at the University
of Cambridge, who looked at workers in two supermarket chains,
one UK and one US.
xxxiii
His findings showed that a range of flexible
employment practices not just zero hours contracts contributed
to anxiety and stress as a result of financial and social uncertainty.
A key problem he identified is simply the insecurity of working
hours, which is symptomatic of low-quality employment.
These kinds of issues attract a lot of attention, but they are only
one part of the overall shift in the employment deal. The best
organisations have realised that the psychological contract has been
changing for a long time and they have worked hard to re-state their
employee value proposition. What is clear is that, however you
articulate it, all of the changes described here mean that more
financial, career and personal risk now falls on the employee side of
the deal.
The trends are not all negative for all employees, of course. Those
employees with in-demand skills can drive a hard bargain. In areas
such as data science, data management and coding, employees with
these skills are able to achieve great benefits. These are the latest
“hot jobs” and there will always be parts of the job market where
skill gaps are critical, because supply is far short of demand.
In addition, although unions have less influence, there is a rise in
new digital workplace activism, whereby internal concerns over
workplace issues are brought out into the public domain through
external social media. As more employees think of themselves as
consumers, they are also able to bring a collective power to how
brands and companies are perceived.
Witness, for example, how in 2018, claims of inappropriate
behaviour were captured on WhatsApp from employees of the
British fashion retailer Ted Baker. These eventually led to the CEO
24
resigning after allegations of misconduct, including complaints of
"forced hugging". Employees at Google have also demonstrated the
power of online activism through walk outs related to the treatment
of women and also of temps, vendors and contractors.
xxxiv
But for many people, the traditional equation that determined
reciprocity at work, which was a characteristic of the post-War
employment deal has been lost. Too few companies have come up
with a compelling alternative.
What is the trust gap?
Having looked at the extensive challenges to trust that exist both
in general and specifically within a work context, it is the argument
of this book that in many organisations the result is a trust gap and
that this is a critical problem for leaders to address.
Here, the trust gap refers to two key aspects: low trust and
confidence in absolute terms, and a relative difference between the
views of senior managers versus rank-and-file employees.
On the first point, in many organisations trust is simply low. This
means not enough people feel trusted to get on and do their best and
to work effectively in teams.
For example, in the UK on average, according to data collected
by Willis Towers Watson, only 69 per cent of people feel their
judgement is trusted. (Of this figure, 31 per cent agree their
judgement is trusted and the remainder only tend to agree).
xxxv
In addition, too few people are confident that company leaders
are making the best decisions for the future. Only 66 per cent of
people say they have confidence in the decisions made by leaders of
their organisation.
This leaves a large group of people in most organisations
around a third of employees who can be characterised as having
low trust and confidence.
The figures are borne about by the CIPD, which has also been
tracking trust at work though their Employee Outlook Surveys.
xxxvi
The CIPD found that only 29 per cent of employees rated the
level of trust in senior managers as strong or very strong.
25
Worryingly, more people (33 per cent) rated trust as weak or very
weak.
On the second aspect of the trust gap, in most organisations there
is a significant difference between how senior managers and rank-
and-file employees view things.
Using Willis Towers Watson data again, 87 per cent of senior
managers in the UK say they feel trusted, which is far above the
overall average. Similarly, managers have more confidence in the
decisions made by top leaders (80 per cent say they have
confidence).
Edelman found a comparable difference in its Trust Barometer
Survey, where 64 per cent of senior managers say they trust the
company they worked for, but only 48 per cent of non-management
employees agree.
This reflected a broader trend that they identified in the data,
where there is a significant divergence of views between an
"informed public group" (whom they define as those with at least a
college education, who are very engaged in the media and have a
high income) and everyone else ("the mass population").
Both aspects of the trust gap low trust and a significant
difference in the views of senior managers versus everyone else
pose a challenge for organisations.
There are implications for both team and organisational
performance. There is also a significant opportunity cost, which is
an even bigger drag in an experience-based economy.
Trust is becoming even more critical - a perfect storm
There is plenty of research, then, into the impact of low trust at
work on performance, both at an organisational level and at a team
level. So the trust gap that exists in many organisations, where
around a third of people on average fall into a low-trust group, is a
serious drag on performance.
It is the argument of this book that this should be a major concern
for leaders. Moreover, given the changes that are happening in the
economy and in the workplace, that degree of concern needs to be
heightened, and quickly. Unfortunately, at the moment, many
26
leaders see things differently from rank-and-file employees and are
detached from the problem.
It feels as though there is an almost perfect storm affecting trust
in organisations. The best leaders have long understood that trust-
building is a core part of their role. But the challenges have
intensified over recent times.
In part this is due to a decline in generalised trust and increased
scepticism at large. This has been compounded by the fact that the
complicatedness of work makes it hard for people to judge their
leaders' effectiveness. At the same time the traditional employment
deal has broken down and many companies have not articulated an
alternative. Reciprocity has been damaged as it feels like more risk
is now falling on the employee side of the equation. This is
especially concerning for many people who, when they look
forwards worry that automation will even further weaken their side
of the deal.
On top of all of this, the problem for many companies is that trust
has never mattered more to their success.
How do companies really win in the modern market place? In an
economy where products and services can be quite similar, what
really matters is the special element that your people bring through
their own ingenuity, creativity, commitment and effort.
This shift is described in more detail later in this book as a shift
to an experience economy, where goods and services are no longer
enough to generate growth and success. What really matters now is
the staging of compelling and memorable customer experiences. In
turn, these depend on the experiences that organisations create for
their own people.
The challenge for organisations is to remove the obstacles that
are preventing employees from bringing their best thinking and their
best efforts to their work.
Leaders need to enable people to go the extra mile in delighting
clients, to bring that extra degree of empathy to product design, to
insist on the highest standards when dealing with personal data or
financial transactions, to think outside of the box when solving
problems, and so on. All of this depends on trust.
27
Moreover, in the future, as more routine elements of jobs are
automated, the human workforce will spend more time on the very
tasks that require human intelligence and empathy.
Jobs are going to be more focused on creativity, critical thinking,
and service, all of which are trust-dependent.
Companies will be competing against one another on the basis of
the degree of trust they can establish with their workforce, and so
the superior experience, service and design they can then deliver on
to their customers.
What really impacts trust at work?
So what's to be done? The leadership challenge to building trust
is pretty extensive.
It’s the argument of this book that one of the most important
resources available to leaders in building trust is employee voice.
Feeling you can speak up and that your views are acted upon is a
critical ingredient in building trust at work.
Voice is a form of upward communication and is part of an
overall culture of transparency. It is a complicated area, however,
and in many situations employees will often default to silence unless
leaders work hard to capture people's honest opinions and ideas.
It is an area that my work has been focused on for twenty years
enabling employee voice and encouraging leaders to listen.
The next chapter goes into depth on why it's important and what
leaders need to do to encourage people to speak up. And essentially,
speaking up is the focus of the remainder of this book.
In the next few chapters I look at how to run effective employee
surveys and engagement programmes.
Later on, I highlight how the way leaders listen to employees and
capture employee voice is changing.
Although many organisations have achieved a lot through
initiatives like engagement surveys, there are now new ways of
listening on a more continuous basis. These provide the chance to
build trust and confidence. They yield immediate insights. They
give a more holistic and dynamic view of employee experience.
28
I will talk about the opportunities in these new approaches and
also since I am a critical pessimist the risks.
i
Pinker, Steven. Enlightenment now: The case for reason,
science, humanism, and progress. Penguin Books, 2019.
ii
Collins, James Charles, Jim Collins, and Jerry I. Porras. Built to
last: Successful habits of visionary companies. Harper Business,
1994.
iii
Worley, Christopher G., and Edward E. Lawler III. Built to
change: How to achieve sustained organisational effectiveness.
Jossey-Bass, 2006.
iv
McAfee, Andrew, and Erik Brynjolfsson. Machine, platform,
crowd: Harnessing our digital future. WW Norton & Company,
2017.
v
The figures for companies who fear they may become obsolete
come from a study by Vanson Bourne & Dell Technologies. Results
can be found online.
vi
The figures on companies’ plans for automation come from the
Willis Towers Watson Future of Work Survey (2018) which you can
find online.
vii
On 47 per cent of jobs at threat, see Frey, Carl Benedikt, and
Michael A. Osborne. "The future of employment: how susceptible
are jobs to computerisation?" Technological forecasting and social
change 114 (2017): 254-280.
viii
The information on Coca-Cola, BMW and Alibaba comes
from online sources.
29
ix
Baldwin, Richard. The globotics upheaval: Globalization,
robotics, and the future of work. Oxford University Press, 2019.
x
The workforce data in the UK comes from the Office for
National Statistics (ONS).
xi
The data on American retirement savings come from a survey
reported in Fortune magazine in April 2018.
xii
Hardin, Russell. Trust. Cambridge: Polity, 2006.
xiii
The General Social Survey (GSS) is a project of the
independent research organisation NORC at the University of
Chicago, with principal funding from the National Science
Foundation.
xiii
The British Social Attitudes Survey is run by NatCen Social
Research.
xv
The Edleman Trust Barometer can be found on their website.
xvi
Pariser, Eli. The filter bubble: What the internet is hiding from
you. Penguin, 2011.
xvii
Turkle, Sherry. Reclaiming conversation: The power of talk
in a digital age. Penguin, 2016.
xviii
Katzenbach, Jon R., and Douglas K. Smith. The wisdom of
teams: Creating the high-performance organisation. Harvard
Business Press, 1993.
xix
Tuckman, Bruce W. "Developmental sequence in small
groups." Psychological Bulletin 63.6 (1965).
30
xx
Meyerson, Debra, Karl E. Weick, and Roderick M. Kramer.
"Swift trust and temporary groups." Trust in organisations:
Frontiers of theory and research 166 (1996).
xxi
On the performance impact of trust at a team level, see: De
Jong, Bart A., Kurt T. Dirks, and Nicole Gillespie. "Trust and team
performance: A meta-analysis of main effects, moderators, and
covariates." Journal of Applied Psychology 101.8 (2016).
xxii
Brown, Sarah, et al. "Employee trust and workplace
performance." Journal of Economic Behavior & Organization 116
(2015): 361-378.
xxiii
Breuer, Christina, Joachim Hüffmeier, and Guido Hertel.
"Does trust matter more in virtual teams? A meta-analysis of trust
and team effectiveness considering virtuality and documentation as
moderators." (2016).
xxiv
Fukuyama, Francis. Trust: The social virtues and the creation
of prosperity. Free Press Paperbacks, 1995.
xxv
On the impact on organisations, see: Zak, Paul J., and
Stephen Knack. "Trust and growth." The economic journal
111.470 (2001): 295-321. Shleifer, A., La Porta, R., Lopez-de-
Silanes, F., & Vishny, R. W. (1997). Trust in large organisations.
Am Econ Rev, 87(2), 333-338. Goergen, Marc, et al. "Trust, owner
rights, employee rights and firm performance." Journal of Business
Finance & Accounting 40.5-6 (2013): 589-619.
xxvi
On complexity, see: Morieux, Yves, and Peter Tollman. Six
simple rules: how to manage complexity without getting
complicated. Harvard Business Review Press, 2014. You can read
about Gary Hamel’s challenge to leaders on his website.
31
xxvii
The Workplace Employment Relations Study (WERS) is a
series of surveys that aims to provide a nationally representative
account of the state of employment relations and working life inside
British workplaces. You can find details on the WERS website. See
also: Van Wanrooy, Brigid, et al. Employment relations in the
shadow of recession: Findings from the 2011 Workplace
Employment Relations Study. Macmillan, 2013.
xxviii
The Skills and Employment Survey is a series of
representative sample surveys of workers in Britain stretching back
over 30 years. You can find details on the Cardiff University
website. See also: Gallie, Duncan, et al. "Fear at work in Britain:
first findings from the Skills and Employment Survey 2012."
(2013).
xxix
The Americans’ Changing Lives Study is the longest,
ongoing national study in the US to clarify how community, work
and social connections affect health throughout adulthood. You can
find details on the University of Michigan website. See also:
Burgard, Sarah A., and Sarah Seelye. "Histories of perceived job
insecurity and psychological distress among older US adults."
Society and mental health 7.1 (2017): 21-35.
xxx
Wartzman, Rick. The end of loyalty: The rise and fall of good
jobs in America. Public Affairs, 2017.
xxxi
On zero hours contracts, see: CIPD 2015 Policy Report, Zero-
hours and short-hours contracts in the UK: Employer and employee
perspectives.
xxxii
The UCL study is summarised on their website under the
heading “Being on a zero-hours contract is bad for your health.” 5
July 2017.
32
xxxiii
Brendan Burchell’s study is summarised on the University
of Cambridge website under the heading “Zero-hours contracts are
‘tip of the iceberg’ of damaging shift work, say researchers”. 18 Apr
2014. See also: Wood, A., and Brendan J. Burchell. "Zero hour
contracts as a source of job insecurity amongst low paid hourly
workers." (2014).
xxxiv
On workplace activism, see: Workplace activism gathers
pace after Ted Baker case” in The Financial Times, 17 January 2019.
xxxv
The Willis Towers Watson data come from The Global
Workforce Survey (2016).
xxxvi
You can find the CIPD Employee Outlook reports on their
website.
ResearchGate has not been able to resolve any citations for this publication.
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Six simple rules: how to manage complexity without getting complicated
  • Marc Goergen
Am Econ Rev, 87(2), 333-338. Goergen, Marc, et al. "Trust, owner rights, employee rights and firm performance." Journal of Business Finance & Accounting 40.5-6 (2013): 589-619. xxvi On complexity, see: Morieux, Yves, and Peter Tollman. Six simple rules: how to manage complexity without getting complicated. Harvard Business Review Press, 2014. You can read about Gary Hamel's challenge to leaders on his website.