Trust is a key component of the relationships an organisation has with its stakeholders.
It can determine how stakeholders interact with your organisation, since perceptions of an organisation's motivations and behaviour influence stakeholders' current and future decisions and actions towards it.
With trust in place, customers remain loyal and recommend you to others. Suppliers and business partners will work with you on more favourable terms. Trust makes investors want to lend to you and regulators more likely to grant you a licence to operate.
Should a crisis arise, trust that has been established with stakeholders will not only mitigate the severity of its impact on your organisation, but also can also be positively managed to help achieve recovery.
Trust is also crucial for internal stakeholders. When employees trust the organisation they work for, they are willing to go the extra mile. Trust promotes confidence in the organisation's future, giving employees the security to work effectively, be engaged, and be more productive.
Research by the Institute for Public Relations found that employee trust is a strong leading indicator of organisational performance in a variety of sectors around the world.
Companies with higher levels of employee trust also tend to foster a culture that supports innovation, which in turn boosts competitiveness. In a 2013 PwC innovation survey, 93% of the CEOs responding expected that their organisations would drive the greater proportion of their revenue growth through innovation, and the characteristic that most clearly differentiates innovative companies is a higher degree of trust in management.
Measuring levels of employee trust can provide insights that help employers understand future retention patterns, productivity risks, and indications of problems being stored up. It is also a more effective indicator of engagement than productivity for the following reasons:
- There is a lack of evidence linking employee engagement to increased productivity.
- There is no universal definition of employee engagement, leading to a lack of clarity on what should and can be measured.
- Employee engagement is more of an attitudinal-based measure; employee trust looks more at the drivers of that attitude and therefore can be more predictive.
Drawing on PwC's research into the drivers of organisational trust, and the resulting Trustworthy Organisation Model, we look at two sets of employee trust survey results and the warning signs they reveal, and set out recommendations for action based on those findings.
The first step in measuring trust is to define why it matters. An organisation may be looking at employee trust to resolve an engagement or retention issue, for example.
The next step is gathering data. When looking at employee trust, public data will be thin or non-existent, and therefore surveys are the most appropriate means of gathering the required data.
Most employee engagement surveys do not ask the right questions to determine levels of trust, so either a separate survey, or adding questions to an existing regular survey, will be required. Some relevant questions for gauging employee trust would be: "Do you have a clear understanding of the core purpose of the organisation?" and "Can you rely on the organisation to deliver on its promises?" Using data that can be split by length of employee service, location, grade, etc., will also increase the depth and variety of insights that can be gained.
Once the collated data have been cleansed, they need to be coded against the model and then interpreted to provide actionable insights. The examples below show the employee trust profiles of two very different organisations.
Organisation 1: What the trust profile shows
The organisation in Figure 1 scored particularly poorly when employees were asked whether they perceived it to be a "well-run business". Other, more complex drivers (eg, "sociability" and "ethical") produce higher trust scores than the sector average. Overall, this would suggest that the strategic management and overall ethos of the organisation is resonating with employees and that organisational clarity is there — but in the day-to-day activities, the operational management of employees could have a detrimental impact on employee productivity. To remedy this, the organisation should:
- Examine the investor trust profile to determine whether investors share employees' perception that the business is not well run. If the two groups of stakeholders agree, the organisation should look at other key performance indicators to determine how accurate that perception is. It may be that the business is in fact well-managed, but leaders are failing to communicate with employees.
- If this is found to be the case, the organisation should engage more with employees, using forums, surveys, and user groups, for example. Ensure that suggestions for change can come from the bottom up as well as from the top down, and find out what staff perceive is preventing them from doing their job properly.
Scores on the "delivers promise" and "reliability" indicators are also low in this example, which is likely to be a factor in employees' perceptions of poor management. This suggests that some of the promises the organisation is making to its employees — either explicitly or implicitly — are not being met. Therefore:
- The organisation should review policies around performance management, remuneration, career progression, and working patterns, etc., and ensure that they are happening in practice as well as theory. If not, then the root causes should be determined and resolved.
- Management may have misunderstood employee expectations in this regard, so it is important to check what staff are actually thinking.
Organisation 2: What the trust profile shows
The organisation in Figure 2 does well for "individualisation" (or the perception that the organisation treats each staff member as an individual) — an important driver for employees. This suggests that employees are able to get what they are looking for out of working at the organisation — possibly through flexible work arrangements or having tailored training plans or a wide variety of employee benefits.
However, the result on the "shares values" driver trails the sector average by a wide margin. Having a shared set of values with the organisation is key to employees being happy and fulfilled in their work, giving them the incentive to go the extra mile for their employers.
That suggests this organisation is likely to lose employees in the medium term — although they appear to be relatively happy at the moment, there are danger signs. Employees do not believe they share the same values as the organisation, do not understand the type of organisation it is trying to be (see the "vision" score), and do not understand its core purpose (reflected in the "clarity" score).
In this case, employees are likely to be looking outside their organisation to get this clarity — within a sector where companies generally do understand the direction the industry is going in, as demonstrated by the high sector trust levels for these drivers. The organisation is in danger of losing employees to its rivals.
The more employees look outside the organisation, rather than within, to determine the direction their employer is going, its sustainability, and their future job prospects, the greater the damage to organisational trust.
In this case, the organisation should:
- Seek to clarify its organisational strategy. If other stakeholders share this perception, there is likely to be overall confusion as to the organisation's purpose, vision, and values. If the perception is held only by employees, then a carefully thought-through communication plan will help ensure that employees understand the strategy and their part in it.
- Ensure that employees understand the values of the organisation and what they mean in practice. Bold values statements are fine as far as they go, but employees need specifics to guide their behaviour. For example, many organisations have "put the customer first" as a value but fail to articulate how this relates to an employee's day-to-day interactions or how it fits into decision-making.
- Ensure that there is a clear line of sight between everything that drives behaviour in the organisation and its values and core purpose. How is the organisation structured? How do people get rewarded and recognised? What communication channels are used? Aligning these factors to the core purpose, vision, values, and behaviours is key to providing the organisational clarity that employees currently feel is lacking.
Helen Tuddenham is a director at PwC. She advises companies around the UK and Europe on how to understand and build trust with their stakeholders.