According to a new report from the CIPD, a lack of trust in the UK’s workplaces poses a potential threat to economic recovery. The research finds that employees who do not trust their senior managers are likely to be less productive and less engaged. With only just over a third (37%) of employees trusting their organisation’s senior management*, this leaves considerable room for improvement in raising the UK’s relatively low labour productivity.

The paper “Are organisations losing the trust of their workers?”, published today by the CIPD, the professional body for HR and people development, forms part of the CIPD’s Megatrends research project exploring and developing the debate on the economic and social trends that will shape the world of work, the workforce and the culture and organisation of workplaces in the future.

The report presents data from a wide range of surveys and research documenting recent trends in employee trust in senior management. It analyses the various factors likely to be behind weak employee trust, the implications for organisations when trust is lost, and how trust can be rebuilt.

Mark Beatson, Chief Economist at the CIPD comments: “Trust is an economic issue. If employees do not trust their leaders, this damages business performance. Employees spend more time covering their backs and trying to second guess what management are up to. They are much less likely to be engaged in their work; indeed, they are more likely to be looking for another job and are unlikely to recommend their employer to anyone else.

“The public are interested in how companies treat their employees and they often see employees as more credible sources of information on what is really happening inside a company than the CEO. So if a company loses the trust of its workforce, it can lose its public reputation.

“Problems of trust have been building up for some time. There has been a fairly continuous diet of crises and scandals in both public and private sectors in recent years, and the recession made the trust issues worse as many employers had to take tough measures to pull through, cutting jobs and freezing pay. There are some good examples where businesses and public bodies managed to take employees with them through this process, but other employees will have seen this as breaking written and unwritten promises or acting in bad faith.

“Sustainable economic recovery will only be possible if employers can improve the productivity of the workforce, equipping them with the right skills and bringing out the best in them. But little over a third of the UK workforce say they trust their leaders and another third at least need convincing, which means they are likely to question the motivation for change and wonder if there is a hidden agenda. Employers can’t afford a lack of trust to hold them back.”

Peter Cheese, CEO at the CIPD comments: “Employers in all sectors need to recognise the critical importance of trust at all levels, and senior leaders need to take a long hard look at how their employees see them. This is ‘putting trust on the table’ and not enough employers do it.

“Trust takes time to build, but can be very quickly broken, and the bar of expectation in organisational and leadership behaviour and values has gone up as a result of too many poor examples in recent years. Rebuilding trust is not rocket science, although it requires a sustained focus and some hard work.  Employees are usually very clear about what they see as the ingredients. Regular and honest two way communication is a start, where not only are employees engaged and kept informed of the business purpose, context, and rationale for change, but the views of employees are actively sought out and listened to. Corporate values that clearly capture the expected behaviours and then are lived up to, especially by senior management, are equally important. These become the bedrock of the corporate culture, and the right behaviours should be recognised and rewarded, and the wrong ones called out and discouraged. Sustained reinforcement and building understanding through leadership development at all levels needs to become the norm with much more focus on ethical standards and behaviours and the management of people than historically has been the case. .”

*According to the CIPD’s Employee Outlook: Focus on trust in leaders, published in October 2013, nearly a third (31%) say they do not trust senior management, and the remaining third are neutral.