Academic journal article Forum on Public Policy: A Journal of the Oxford Round Table

Trust within Organizations-Benefiting from Demographic Changes by Fostering Intra-Organizational Trust

Academic journal article Forum on Public Policy: A Journal of the Oxford Round Table

Trust within Organizations-Benefiting from Demographic Changes by Fostering Intra-Organizational Trust

Article excerpt


Trust has been a topic of great importance to researchers from different scientific disciplines such as sociology (e.g., Coleman, 1990), psychology (e.g., Colquitt, Scott, & LePine 2007, 909-927), and economics (e.g., Williamson 1993, 77-140). It is recognized as an important factor influencing both organizational success in the marketplace and the wellbeing of the workforce (Connell, Ferres, & Travaglione 2003, 113-118). In this paper, we will focus on trust within organizations, since we argue that high levels of intraorganizational trust are a prerequisite for an organization's ability to be perceived as trustworthy by customers, shareholders, and the general public. Many organizations have in the past had great difficulties in building, retaining, or rebuilding the trust of different stakeholder groups.

These difficulties stem from a number of recent developments, with blatant cases of mismanagement (e.g., the Enron or Worldcom scandals) being only an extreme example, but certainly not the most important. Much more importantly, many organizations now view large profits as not just the main, but as the only objective of their existence. To this end, many companies no longer provide the job security, benefits, and pay structures that a large section of the workforce could rely on in the past. Globalization and rapid technological changes have done their part to increase competitiveness and fuel the scramble for survival in a business environment in which hostile takeovers or insolvency are constant threats. To be sure, the general public has contributed to this development in that it demands both low costs of products and services and at the same time high quality.

The perception that the satisfaction of employees is not at the top of the list of priorities for most organizations (which, in many contexts, it has never been) and the ubiquitous threat of downsizing, outsourcing, and offshoring and the attendant layoffs have, on the part of the employees, led to an erosion in trust in their organizations (Connell, Ferres, and Travaglione, 2003, 113-118). According to Shaw (1997), a large part of the workforce has become cynical and withdrawn. Little or no increases in inflation-adjusted salaries and large-scale dismissals of long-term employees coupled with ever-rising compensation packages for top managers and increasing organizational profit margins have done their part in diminishing employee's trust in and identification with their organizations. Davis and Landa (1999, 12-16) have found that 68% of employees do not trust their superiors and 43% of employees believe their superiors cheat and lie. Moreover, McCune (1998, 10-14) argues that trust is unlikely to emerge when there exists a power asymmetry, as in the case of employer and employee.

While this erosion in trust has often been discussed and lamented, both in the scientific literature and the public at large, there is little in the extant literature on how organizations can build, enhance, or rebuild trust and trusting informal cultures--which, due to the above developments, may be even more difficult today than in the past (Connell, Ferres, and Travaglione, 2003, 113-118). The preponderance of studies focuses on trust between persons, most notably the trustworthiness of leaders (e.g., Dirks & Ferrin 2002, 611628). In this present paper, we will focus on trust within organizations--that is, the informal culture of trust that permeates the interpersonal relationships among members of organizations. These relationships comprise not only those between employees and their direct superiors and top management, but also those among employees. Shaw (1997) has argued that trust constitutes a "collaborative capital" that helps organizations attain success and cope with periods of high stress, environmental uncertainty, and rapid change.

We argue that one important aspect has hitherto been ignored in the extant literature on trust within organizations, namely its promise with respect to unlocking the potential entailed by diversity within the workforce. …

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