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February 25, 2013

How to trust employees and create successful organizations?

An interesting example Over a period of years, we have seen that the employee trust plays a big role in the organizational success.  According to a study, employees seek freedom of risk-taking, experimentation, collaboration and also freedom to fail.  Though, the impact of organizational trust can be seen only after a couple of years, the immediate outcomes are no less impressive.  When we talk about organizational trust, the first company that comes in my mind is none other than Microsoft Corporation.  Just a decade before, I had read somewhere that Microsoft is a company of billionaires and the employees at Microsoft are encouraged to work in casual dresses.  You need not wear a tie and a formal suit, in order to be the best employee in this company.  You can come to the office, in your bermudas and take away as much money as you want in terms of incentives and share in profits, provided you contribute to the earning of the organization.  Now this is called a very high level of employee trust and this is the reason Microsoft has the highest number of millionaires as compared to the other organizations in the world and it has successfully led the global markets in desktop software for around two decades.


Generation gap and need of increased level of trust Now as a matter of fact, most of the top managers in the organizations are either baby boomers or Gen X, whereas most of the employees in the executive are generation Y or millennial people.  As a result, the nature of the workplace has entirely changed.  The new people are armed with new skills.  Such as, most of the Gen Y employees are extraordinary gamers and Facebookers.  Now, when it comes to gaming, it teaches you many things, which are crucial to succeed in real life.  According to a survey, the online gamers are good problem solvers, more confident, quick learners, prompt decision-makers and able to adapt change quickly, while their peers, struggle with these things. 


Employees, who are active on social media such as Twitter or Facebook have amazing social skills and ability to manage as much as 2000 online friends all the time.  Now, from organizational point of view, this is an extremely desirable quality, which the baby boomer managers do not possess.  Now, it becomes the duty of senior managers and business leaders to create a very high level of organizational trust, so that an individual feels free to experiment and share innovative ideas.  This is the only way, his new found social media skills can be mapped to organizational situations and tasks.  Such kind of trust multiplies into limitless growth of the organization, as the employees feel more autonomous and empowered to contribute towards business processes.


Need of robust two-way communication According to the latest reports and surveys in the business schools, organizations need more open communication to work in cohesion and to take on more challenging business environment of modern times.  The two-way flow of information is highly desirable in the dynamic organizations.  Employees also need to be given more authority and freedom in order to deal with day-to-day business problems in more innovative ways.  Nowadays, the information flow is faster than ever and the only solution to deal with it is allowing greater experimentation and innovation.  The traditional ways of organizational governance and management should be restructured and more trust should take place instead of the rigid systems and practices of yesteryears.  The defects in business processes can be eradicated through the robust quality assurance.  The big disadvantage with low trust environment is that employees have a very narrow outlook of their job responsibilities.  They clearly narrow down the tasks they handle and refuse to do anything beyond that, because they know that their managers do not trust their abilities and they are not allowed to experiment or do any kind of mistake. 


The factors leading to lower level of trust The factors which lead to lack of employee trust are sudden and unnecessary downsizing, a veil of secrecy and previous records of the organization.  Violence and discrimination within the workplace are also responsible for lack of trust.  This spells a very negative impact on the growth perspectives of an organization, regardless of how effective strategies are adopted from top down.  Disappointment, frustration, and breach of trust among the employees are the surest ways to the downfall of an organization.  Sometimes, the managers have personal agendas and greed for promotion and their reckless behavior creates disaster for the organization and reduces the trust level.  They deliberately block communication and create an environment of vengeance.  They also resort to such behavior to hide their incompetency.  The other factors responsible for lack of trust are the record of underperformance, management conflict, and rigid and inconsistent management policies.  An efficient management should remove these barriers to build trust in order to grow smoothly.  Untrustworthy employees never produce successful organizations.


Effects of increased employee trust and engagement: Examples from the business world


Now let's have a look at the link between employee trust and organizational growth in real life scenarios. According to a report in Harvard Business Review, the financial gains recorded in a specific store were of the order of $100,000 for increment of 0.1% in employee engagement.  Employee engagement is taken here as a measurable indicator of employee trust.  According to the Gallup report in the year 2009, the enterprises in the top half on employee engagement among the 200 surveyed, had delivered twice as much high-performance as compared to the organizations in the lower half.  It is a clear indicator of how employee engagement and trust is directly linked to the organizational performance. According to Hewitt Associates, the organizations with a higher employee engagement, had a 20% higher shareholder return as compared to the organizations with average engagement.  The organizations with low engagement had 45% lower shareholder return as compared to the average. In an interesting study, Standard Chartered Bank reported that its branches, which implemented a higher level of employee engagement had recorded around 20% higher profits, then the branches with slightly lower level of engagement.  According to another Gallup survey, the organizations in UK with a high level of employee trust recorded that the number of average sick leaves taken by their employees were around 2.50 per annum, whereas the organizations with lower employee engagement recorded 6.20 average leaves per year.


Conclusion So, to include, we can say that organizations that have higher level of trust in the employees grow faster than the organizations with lower level of trust and empowerment.  The trend is more prominent and significant in Indian context, where organizations such as Infosys, Reliance Industries and TCS have registered tremendous growth because of an increased employee engagement level. We can trust these employees by providing them more autonomy, more freedom of experimentation and innovation and enabling robust two-way communication between the management and the employees.

Tags : Employees, organization, employee trust

About Nashaat Quadri

Freelance Content Writer (Compare Infobase, New Delhi.) Ex Sr Content Writer, Western Software, New Delhi. Ex Relationship Manager, Mashreq Bank, Dubai.