At a fundamental level, trust is the belief that someone will follow through on commitments. The reason that trust is crucial is that it extends the time horizon over which you are willing to settle up with others. Without trust, every interaction needs to be an even exchange in the moment. As the level of trust increases, you’re willing to put in more effort in the moment, knowing that things will even out in the long run.
This facet of trust is particularly important for organizations. Employees of organizations get paid less than consultants would to do the same task, because organizations provide security, training, and other benefits that create a more trusted relationship between a firm and the people who work for it. But when employers undermine that trust, they run the risk of seeing their employees flock to the exits.
Here are four key ways that employers often destroy the trust that is so critical for stability. All of these sources of mistrust are expensive for firms. They lead employees to be less likely to put in extra effort to complete tasks and they drive turnover. It costs a lot of money and time to replace a worker who leaves, so most firms are well-served by focusing on developing trusted relationships with the people who are already working for them.
Not owning mistakes
Trustworthy individuals and firms are not perfect. They will make mistakes. And circumstances will change so that plans that seemed reasonable when developed will fail when implemented. The key is for leaders in an organization to take the blame for mistakes and failures quickly, to understand what went wrong, and to act as quickly as possible to address the problem.
Employers fall down at each of the stages of this process. There are many leaders who are unable to admit to mistakes and failures. Sometimes that happens because organizations punish mistakes. (Organizations shouldn’t punish mistakes or failures; they should punish negligence.) Sometimes it happens because an individual in a leadership role has difficulty taking responsibility for problems.
Even when leaders do accept the blame, they may not look carefully to understand what is happening. Some organizations believe there isn’t time to track down sources of failure. Others are so committed to plans as they have been developed that they treat failures as anomalies rather than as signs that something needs to change.
Finally, some organizations do not follow through effectively. They may send a note of apology without making any changes. They may try to offer a payment for an error, rather than understanding how an employee feels about something that went wrong. These responses lead employees to feel like the organization lacks commitment to improve.
Not closing the communication loop
One way that companies try to gain trust with their employees is by inviting them to provide feedback about their experience. Requesting feedback is a great step in the process of helping people to feel like they have a voice in the governance of their organization.
However, simply asking for feedback is not enough. Organizations have to demonstrate that they have heard what people are saying and are making changes based on that information. Surveys, focus groups, and discussions that have no impact on the way that the organization functions ultimately undermine people’s faith that the organization really cares what employees think.
Not investing in career paths
As mentioned earlier, trust is a vehicle for extending the duration of relationships. In order for that to happen, though, employees need to believe that the organization is interested in a long-term relationship.
A great way to make that happen is to invest in people’s future. Organizations have several avenues to support career development. They can provide resources to people to get additional education, they can run regular seminars in-house, and they can put together meaningful mentoring programs in which there is a clear goal. These send a signal that improving knowledge and skills that will enable people to continue to develop their careers is important. That investment also communicates that the organization wants their employees to succeed.
Organizations that do not invest in this education send a message that it is up to individuals to manage their own career paths. The danger with this strategy is that many people will manage their path out of the organization altogether.
Significant pay inequities
One final way that organizations undermine trust is in the way that employees are paid. Obviously, different people in a firm will be paid different amounts. We expect that salaries will go up with experience and responsibility. But two different types of pay inequities can lead to mistrust.
The first is big disparities among people who have similar jobs. People’s general sense of fairness is that individuals doing similar work should be paid similar amounts. If people discover that they are paid significantly less than others at the same level, that can create a desire to even things up and to question whether there are other inequities. As a result, leaders need to look across the team to ensure that everyone within a band is paid at roughly the same rate.
The second is when there are sharp differences between pay for executives and frontline workers. One factor that has eroded people’s loyalty to particular firms is the recognition that top-tier leaders are paid significantly more than rank-and-file employees at multiples that seem exaggerated relative to their importance. This pay gap leads to a perception that leaders are more concerned with their own well-being than that of their employees, which further contributes to a sense that lower-tier employees should sell their services to the highest bidder.