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13th November 2018

TRUST – Building a trusting, trustworthy organisation

What is Trust?

‘Consistency and integrity, the feeling that a person and an organisation can be relied upon to do what they say, come what may’1

Why is Trust important?

As organisations face the challenge of increasing competition within the modern economy, building and enhancing trust becomes more important than ever before.

  • Trust in an organisation’s product and services helps develop positive customer attitudes, intentions and behaviour which is crucial in obtaining and sustaining competitive advantage2.
  • Trust plays a crucial role in recruiting and retaining valuable employees within an organisation3.
  • Trust is critical to establish and sustain relationships with external stakeholders in the modern climate of increased globalisation and inter-organisational collaboration. Trust has been found to play a critical role in influencing negotiation success4 and for increasing relationship quality and collaborative performance5.

It is thus extremely critical for modern organisations to build and maintain trust to form a foundation for functional relationships and co-operation from employees, suppliers, and other stakeholders, in addition to nurturing consumer trust in products, services and ethical practices.

How is trust developed?

“People’s perceptions of others’ ability, benevolence, and integrity explain a major portion of the variance in perceived trustworthiness” 6.

Mayer et al. (1995) proposes the following three contributors to trust: –

Ability refers to the skills and competencies of a person or organisation. Trust in an organisation or person develops if there is a belief that a person or an organisation has the ability and knowledge to perform well6.  Employees will perform better if they perceive that their leadership and organisation have the ability and skills to lead them and customers will trust an organisation who consistently delivers the product and services to their satisfaction.

Benevolence refers to the expectation of others to have a moral obligation and responsibility to show a concern for interests above their own7. Demonstrating corporate social responsibility and thus benevolence is important for organisations to build trustworthy relationships with internal and external stakeholders8.

Integrity refers to the perception of a person or organisation to adhere to principles or comply to legal requirements, and the presence of procedural justice within the organisation. An example is an employee who feels that their performance is being fairly measured by an acceptable appraisal system, or an organisation who is assured that a supplier is adhering to international regulations and following ethical practice7.

How can organisational trust be developed?

  • By developing organisational culture and organisational practices which foster shared ethical values and builds up benevolence, integrity and ability.
  • By developing leadership skills (ability component) which foster subordinate trust and mediate the relationship between organisational culture and organisational trust9.
  • By developing an organisational culture which considers the wellbeing of employees, increasing their belief that leadership have good intentions towards them (benevolence component).
  • Share knowledge of practices with external stakeholders and consumers via a knowledge management strategy which builds up their perceptions of the organisation in terms of benevolence, integrity and ability.

Taking Action

For more information on how your organisation can grow as a trusting, trustworthy organisation and thrive in today’s competitive, inter-organisational climate, get in touch with us here.

Reference

1. Handy, C. (1993) Understanding organizations (4th ed.). London: Penguin.

2. Swan, J. E., Bowers, M. R., & Richardson, L. D. (1999). Customer trust in the salesperson: An integrative review and meta-analysis of the empirical literature. Journal of business research, 44(2), 93-107.

3. Ozmen, Y. S. (2018). How employees define organisational trust: analysing employee trust in organisation. Journal of Global Responsibility, 9(1), 21-40.

4. McEvily, B., Zaheer, A., & Kamal, D. K. F. (2017). Mutual and exclusive: Dyadic sources of trust in interorganizational exchange. Organization science, 28(1), 74-92.

5. Seppänen, R., Blomqvist, K., & Sundqvist, S. (2007). Measuring inter-organizational trust—a critical review of the empirical research in 1990–2003. Industrial marketing management, 36(2), 249-265.

6. Williams, M. (2001). In whom we trust: Group membership as an affective context for trust development. Academy of Management Review, 26, 377–396.

7. Mayer, R. C., Davis, J. H., & Schoorman, F. D. (1995). An integrative model of organizational trust. Academy of Management Review, 20, 709–734.

8. Hansen, S.D., Dunford, B.B., Boss, A.D., Boss, R.W. & Angermeier, I. (2011). Corporate social responsibility and the benefits of employee trust: a cross-disciplinary perspective. Journal of Business Ethics, 102(1), 29-45.

9. Raminta Pučėtaitė, Aurelija Novelskaitė, & Laura Markūnaitė. (2015). The Mediating Role of Leadership Relationship in Building Organisational Trust on Ethical Culture of an Organisation. Economics & Sociology, 8(3), 11-31.