Do High Levels of Trust Between Management and Workers Lead To Better Performance - Coursework Example

Do high levels of trust bеtwееn mаnаgеmеnt and workers lеаd to better реrfоrmаnсе” Your name:   Course name:         Professors’ name: Date: Introduction Over 10 years, trust has been recognized as a central category in explaining the dynamic and structure of business relationships. Recent developments in organizational science ad HRM reflect the importance of interpersonal trust for sustaining organizational and individual effectiveness (Clases et el, 2004). Many studies have recognized the influence of trust on control and coordination at the interpersonal and institutional levels of organization (Clases et el, 2004). Many researchers agree that trust is the most important factor of a successful workplace, according to Fink and Kessler (2010). Organizations whose staffs trust them tend to have a high efficiency work environment and a more engaged workforce. On the other hand, companies that have lost employee trust tend not to be successful (Roger et el, 2005). This essay begin by discussing if trust between management and employees can lead to better performance. The second part of the essay will discuss consequences of management high trust on its employees. Finally, a conclusion will be made in relations to the above discussion. Importance of Trust Employee’s trust is an important consideration for the stability and growth of communities and markets because trust has been found in many studies to guide decisions about interactions between organizations and humans (Audun and Glenn, 2010). Several studies have found that organizations that have high levels of trust tend to develop high quality goods and services at a lower cost because these organizations are found to recruit and retain highly motivated workers (Morga and Zeffane, 2003). Employees in these organizations that motivate them have been found to enjoy their work, make their own decisions, take the time to do their jobs correctly, innovate; take risks; embrace the organization’s mission, vision, and values; and display organizational citizenship behavior such as helping a co-worker. As a result, employees are free do other tasks. Theories of trust have indicated that highly trusting person in a workplace environment believe that other persons are at all the time trustworthy, regardless of the situation (Clases et el, 2004). Many researcher have approached the issue of trust from two different perspectives. Researchers outside of the criminal world argue that interpersonal trust should be maximized. For example, Morga and Zeffane (2003) have highlighted the importance of interpersonal trust in the development of both large organizations and closely affiliated smaller organizations. Morga and Zeffane (2003) argued, natural sociability is promoted in some societies by the development of professional, social, religious and political organizations. Association in these corporations enables employees to develop trusting business relationship that encourages growth and help the organization to produce wealth (Rose and Jacob, 2010). Individual organizations that can maximize constituents’ interpersonal trust in their employees have been found to garner competitive advantage over those organizations which don’t trust their employees (Roger et el, 2005). In this regard, Audun and Glenn (2010) have argued that interpersonal trust can be used to solve many of contracting problems emphasized in economic scholarship and traditional law. Where interpersonal trust can be harnessed (Clases et el, 2004), it can considerably reduce inefficiencies or problems that are associated with both team production and agency relationships. “Interpersonal trust allows transactions to be carried out on the basis of a handshake rather than a complex formal contract” (Gustafson et el, 2010). In other words, trust in a workplace will reduce the need to use organizational resources on constant monitoring of staffs (Fink and Kessler, 2010). Trust avoids the expense and uncertainty associated with trying to enforce informal and formal agreements in the court of law (Roger et el, 2005). Further, Roger et el (2005) have argued that employee’ trust reduces losses from other unpunishable or undetectable opportunistic looses, behavior that could discourage the formation of team production relationship and valuable agency in the first place. Trust in top management and an organizational strategy is the most important component in creating employee commitment toward a common objective or goal. Sometimes achieving that trust can be difficult. In an workplace environment, a company can force its staff to show up for duties, especially in difficult times, but the company cannot, by definition, for a staff to contribute his or her imagination and passion on a regular basis. Nowadays, most corporations have a vision statement. The question though is whether employees in an organization “trust” and support the vision. If an organization vision is too broad or vague, unattainable, or ignores the role that employees play in achieving the intended outcome, the employees in an organization will find it difficult to “trust and own” the direction in which their company is heading (Gustafson et el, 2010). On the other hand, if the corporation’s vision is clear and emphasizes on the importance of employees contributions in achieving the intended objective, then staffs in the organization will find it easier to place their trust in the company (Gustafson et el, 2010). In best cases, employees translate the organization’s vision into their own individual vision. Finding from several studies has found trust to be a fundamental enabler of many workplace benefits (Rose and Jacob, 2010). If trust level in an organization is high, the organization has been seen to experience more, and superior, cooperation and problem-solving, increased information sharing and a reduced need for constant monitoring and quality checks. Also, trust has been found to create a climate of well-beings amongst all employees in the workplace with greater motivation and satisfaction as beneficial outcomes (Rose and Jacob, 2010). In economics, interpersonal trust among the employees is seen as an economic lubricant, because it reduces the transaction cost among the exchanging parties. High level of trust between management and labor is an important precursor of a cooperative relationship pattern, and has been found to play an important role in integrative bargaining and problem solving. According to Audun and Glenn (2010), a low trust response of one person or party in an organization can be countered with a low trust response of another person or party, and this can run in opposite direction where there is high trust among employees. Lack of trust between the management and employees can create an information vacuum. A common problem among employees in many companies is that they are not informed appropriately. As distrust as a result of lack of trust, most workers become insecure, filling the information with their negative perceptions and fears (Rose and Jacob, 2010). Thus, distrust will cause the employees to react defensively by spreading false rumors or distasteful information about their supervisors or managers, undermining them by going over their heads to communicate with upper management and working hard to influence other employees in the blame game. This behavior can be toxic and destructive to an organization (Rose and Jacob, 2010). Consequences of high employee’s trust Interpersonal trust sometimes has a dark side. Managers need to question the role of “blind trust”. Perhaps it is the ability to trust too much that in some part caused the financial crisis that was experienced in 2007 (Rose and Jacob, 2010). In America, many aspects that related to corporation sabotage have remained constant over the past 10 years. Approximately half of all organizations record an insider incident, about quarter of these companies report these incidents to law enforcement. Yet a report on economic fraud in the financial institutions published in U.K marks a potential departure from the past: approximately three quarter of all fraud incidents involved trusted employee (Morga and Zeffane, 2003). This has been an increase over the past years, according to the according to the Software Engineering Institute (SEI) at Carnegie Mellon University. Considering that fraud incidents involving trusted employees caused over 500,000 dollars in actual damage on average. Therefore, companies should stop giving their trusted employees carte blanche access to their systems (Rose and Jacob, 2010). Rogue managers or employees not only cause so much damage, but they have been found to get away with economic crimes for a long period, according to the same report. The average crime committed by these employees lasted nearly four years. Conclusion Depending on the organizational structure, the leadership in an organization may have several tiers or may be very flat. Either way, how directors and managers interact with their workers has a direct impact on productivity and morale. Trust plays a vital role in the organizational culture. Trust is built overtime and is very sensitive in the workplace. So the challenge is to find appropriate balance. Companies need to understand how to repair their relationships so that they can trust their employees enough to bolster their competitive strength in the global economy. Reference List Audun, J and Glenn, B 2010, “Trust and Trust Management,” Journal of Theoretical and Applied Electronic , 5;2.   Clases, C., Bachmann, R., and Wehner, T 2004, Studying Trust in Virtual Organizations, Int. Studies of Mgt. & Org., vol. 33, no. 3, Fall 2003, pp. 7–27. Fink, M and Kessler, M 2010, Cooperation, Trust and Performance –Empirical Results from Three Countries., British Journal of Management, Vol. 21, 469–483. Gustafson, M., Smyth, H., Ganskau, E. and Arhippainen, T 2010, ‘‘Bridging strategic and operational issues for project business through managing trust’’, International Journal of Managing Projects in Business, Vol. 3 No. 3, pp. 422-42. Morga, D and Zeffane, E 2003, Employee inyolvement, organizational change and trust in management, Int. J. of Human Resource Management, 14 (1) 55-75. Rose, A and Jacob, R 2010, The Effects of Trust and Management Incentives on Audit Committee Judgments, American Accounting Association , Vol. 22 (2); 87–103. Roger C. Mayer and Mark B 2005, “Trust in Management and Performance: Who Minds the Shop while the Employees Watch the Boss? The Academy of Management Journal, Vol. 48, No. 5, pp. 874-888. Read More