Workplace trust key factor in productivity

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Improving trust between employees and their managers could be vital in raising productivity and improving company performance, new research has found recently published in the Journal of Economic Behaviour and Organization.

As productivity in the UK continues to lag behind the developed world, researchers in the Faculty’s Department of Economics have looked into the role that workplace trust can play in boosting output.

Professor Sarah Brown, Dr Daniel Gray, Dr Jolian McHardy and Professor Karl Taylor used both the 2004 and 2011 Work Place and Employee Relations Surveys (WERS) to analyse the relationship between trust and performance in 1,500 workplaces across the UK.

Professor Karl Taylor who presented the research findings at the European Economic Association Annual Conference in August said “It is apparent that employee behaviour may influence an organisation’s performance given that many workers are likely to have some degree of discretion with respect to how hard they work.”

Professor Taylor also commented that “In particular, the extent to which employees trust that their managers will treat them honestly and fairly may have some bearing on the extent to which employees engage in opportunistic behaviour or otherwise.”

Their analysis found that a high level of trust between employees and their bosses increases the likelihood of labour productivity to around 5 per cent above the industry average.

Surprisingly, the results were generally the same for workplaces both before and after the financial crisis in 2008. However the study notes that the way organisations dealt with the recession could have potentially detrimental effects on trust and productivity.

The study suggests restricting paid overtime as a result of the recent recession potentially eroded employee trust, whilst requiring employees to take unpaid leave appears to have had no effect on employee trust.

In addition, it discovered that job or work reorganisation experienced at either the employee or organisational level is associated with lower employee trust.

The analysis highlights the importance of employee trust for workplace performance as well as shedding some light on how such trust is influenced by job and work related characteristics.

The findings, which show a clear link between employee trust and productivity, might also shed some light on ways to improve productivity and firm performance.