The effects of low trust in organisations

Rahat Joshi
August 29, 2023
The effects of low trust in organisations

Trust is a business’ primary currency. Let us explain why.

1. Investors need it to ensure they are spending their money on the right companies.

2. Clients need to know they are in safe hands to spend their budget.

3. Employees need to hear their leadership has their backs if they are to execute on their company’s vision.

Trust is, therefore, so much more than a nice-to-have; it's a non-negotiable necessity. Whether you're a small startup, a multinational corporation, a government agency, or a non-profit organisation, the ability to build and regain organisational trust is paramount to your long-term success.

Trust is what makes a entire organisation go round. So, what happens when an organisation fails to deliver on the promise? Here's the seven most common challenges organisation with low trust are experiencing.

1. Higher retention and loyalty

According to our study, Fighting Turnover, the biggest reason why an employee tends to leave is low trust. In other words, employees who trust their organisation are more likely to be loyal and committed, leading to higher retention rates. Trustworthy organisations are also more likely to attract and retain top talent, as employees seek to work in environments where they feel valued, respected and supported.

87% are more likely to leave a manager who doesn't keep promises.

2. Better employee engagement

Trust is a foundation for employee engagement. When employees trust their leaders, colleagues, and the organisation as a whole, they are more likely to feel committed, motivated, and engaged in their work. Simply said, trust fosters a positive work environment where employees feel supported, respected, and valued, leading to increased engagement and productivity.

3. Increased innovation and creativity

Trust creates an environment where innovation and creativity can flourish. When employees trust their ideas and suggestions will be valued and considered, they are more likely to share their innovative and creative insights without fear of judgement or repercussions. Trust fosters a culture of openness, experimentation, and learning, which can lead to increased innovation, collaboration and creativity in the organisation.

4. Better organisational reputation

Organisations known for their trustworthiness and integrity are more likely to be respected and admired by employees, customers, and other stakeholders. A positive reputation for trust can enhance an organisation's brand image, attract customers, investors, and partners, and contribute to long-term organisational success.

5. Reduced conflict and miscommunication

When employees trust each other, they are more likely to communicate openly, honestly, and transparently, which can help prevent misunderstandings, misinterpretations, and conflicts. Trust fosters a positive communication environment where issues and concerns can be addressed proactively and resolved more effectively.

6. Increased agility and autonomy

In a world that moves as quickly as ours forces us to act fast and be agile. In a trusting environment, employees feel empowered to take calculated risks, make decisions, and adapt to changing circumstances without fear of blame or reprisal. This promotes a culture of agility, where employees are more willing to embrace change, innovate, and adapt to new situations, leading to increased organisational agility and resilience.

7. Higher performance

All the factors we’ve mentioned above combine to send performance soaring. When your employees feel trusted they perform better, they’re more productive, they have more energy and better morale. It's a win win. Your employees feel happy and valued, and your organisation’s performance goes through the roof.

To help you learn more about the real impact each of these dimensions on organisational trust, and how you can address them as a manager or business leader, we have developed the guide How to regain organisational trust.

If you would like to learn more about ways you can address a drop in organisational trust early, contact us.

Rahat is a Senior People Scientist at Winningtemp. She has a Masters in Industrial Management, with over 18 years experience as an HR/Organizational Behavior professional within a wide range of roles such as Organizational Development, HR Analytics, building and executing people strategies. At Winningtemp, her work centers around bringing a scientific mindset to organizational challenges and translating people data into actionable insights to improve business performance. She applies her HR experience to design solutions that provide a better world of work for employees.

About the author
Rahat Joshi

Focusing on people

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