An Era of Eroding Trust: Facing the Organizational Trust Crisis

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Abstract: The article examines the dramatic erosion of trust between employers and employees in recent decades, driven by factors such as job insecurity, organizational restructuring, and a focus on profits over people. It reviews research demonstrating the critical importance of trust for individual and organizational success, while highlighting how fragile trust can be. The article outlines the key dimensions of the current trust crisis, including low employee trust in leadership, concerns over job security, and a lack of voice and input. Finally, it presents strategic approaches leaders can employ to rebuild trust in a sustainable manner, such as fostering transparency, psychological safety, fairness, and a culture of mutual care and loyalty. The article contends that regaining lost trust represents an urgent challenge but also an opportunity to catalyze innovation, cooperation, and resilience within organizations.

While trust has always been a crucial element of successful organizations, the past several decades have seen a dramatic erosion of trust between employers and employees. What was once taken for granted is now a scarce commodity in many workplaces. The reasons for this organizational trust crisis are manifold and complex, with contributing factors such as increased concerns over job security, widespread restructuring and downsizing efforts, and a greater emphasis on the bottom line over humanity in business practices. However, its consequences represent an urgent challenge for leadership that demands a thoughtful, empathetic, and solutions-oriented response.

Today we will explore the research on trust in organizations, outlines the dimensions of the current trust crisis, and share strategies that leaders can employ to rebuild trust with their workforce in a sustainable manner.

Research on Trust in Organizations

A wealth of literature validates the importance of trust for individual and organizational success. Trust has been shown to increase job satisfaction (Dirks & Ferrin, 2002), commitment (Mayer & Gavin, 2005), discretionary effort (Whitener et al., 1998), and knowledge sharing (Bates & Holton, 1995). It also reduces turnover intentions (Dirks & Ferrin, 2002), costly conflict (Deutsch, 1958), and stress levels (Dirks & Skarlicki, 2004). At the organizational level, high-trust workplaces tend to outperform their low-trust counterparts in key metrics like productivity, profitability, and customer satisfaction (Friedman, 2008; Costa, 2003).

However, trust is a fragile commodity that can take years to build but only moments to break (Budd, 2019). It involves a willingness to be vulnerable to another party based on positive expectations of their intentions and behaviors (Rousseau et al., 1998). This vulnerable stance means trust is easily undermined by even well-intentioned actions that could be perceived as untrustworthy, such as sudden changes, lack of transparency, or unfair treatment (Dirks & Skarlicki, 2009). Once broken, regaining trust is an uphill battle.

Dimensions of the Organizational Trust Crisis

The Current State of Distrust: Several studies point to alarmingly low levels of trust currently present in many workplaces. According to an Edelman survey (2019), only 53% of employees trust their employers, down from 60% two years earlier. Separate research by the Conference Board (2018) found that only 33% of workers strongly agree their organization acts with honesty and ethics. However, trust issues cut deeper than survey data indicates. Interviews with hundreds of employees across industries uncovered frustration over a lack of voice, perceived prioritization of profits over people, uneven enforcement of rules, and fears of impending layoffs - all eating away at trust in leadership over time (Budd, 2019).

Job Security and Loyalty Concerns: For many employees, concerns over job security are a core driver of distrust (Conference Board, 2018). Decades of cost cutting through restructuring, outsourcing, and automation have left workers anxious about the durability of their roles (Harari, 2016). In such an environment, loyalty seems a one-way street that provides no guarantees. As a result, employees manage their careers transactionally rather than through long-term commitment to their employer. Without a sense of stable, mutual loyalty, trust cannot take root.

Performative vs. Authentic Leadership: Employees also report growing distrust of phony, self-interested leadership behaviors aimed more at appearance than substance (Gallup, 2017). Transparent, purpose-driven leadership anchored in strong values fosters trust, while empty gestures and secret agendas breed skepticism (Covey, 2006; Kouzes & Posner, 2012). Leaders must walk the talk through consistent modeling of integrity, concern for people, accountability, and willingness to admit weaknesses if they hope to regain lost credibility.

Lack of Voice and Input

Additionally, autonomy and input are core dimensions of psychological safety and trust in the workplace (Edmondson, 1999). However, many businesses fail to genuinely solicit or consider employee perspectives, instead pushing top-down mandates and blaming workers for problems they had no role in creating (Kahn, 1990). This fuels a power imbalance that corrodes trust over the long run.

Rebuilding Trust - Strategic Considerations

Transparency and Communication: Above all else, rebuilding trust requires open, frequent, and honest communication from leadership (Whitener et al., 1998). Transparency about goals, challenges, decision making, and financial realities fosters understanding during times of change. It also curtails the spread of damaging rumors that fester in an information vacuum. Sharing both positives and negatives while actively soliciting two-way dialogue shows respect and builds credibility (Sinek, 2014).

Psychological Safety and Inclusion: Along with transparency, trust is strengthened through a workplace culture of inclusion and psychological safety where people feel respected, supported, and comfortable bringing their whole selves and full thinking to work (Edmondson, 2019). Leaders reinforce this through open-door policies, respectful conflict norms, and zero tolerance for bullying, cliques or scapegoating (Schein & Schein, 2016). Diversity of thought and a cooperative "we're all in this together" mentality supplant divisiveness and turf wars.

Predictability, Fairness and Accountability: Trust also thrives on predictability of leadership behaviors and fair, consistent application of rules without favoritism (Dirks & Ferrin, 2002). This means honoring commitments to employees, owning mistakes, holding all people equally responsible, and rewarding merit over politics or popularity. It further implies stability, steady decision making and a long-term, sustainable view of trade-offs rather than knee-jerk reactions (Coyle, 2018).

Mutual Care and Loyalty: A climate of high trust depends on leaders showing authentic care for employees as people rather than disposable assets (Mayer et al., 1995). This means advocates rather than adversaries - protecting workers during downturns, investing in their growth, and establishing true two-way loyalty where the organization looks out for people as much as they give their all in return (Murphy, 2019). Employees then feel intrinsically motivated to reciprocate through discretionary effort rather than purely self-interest.

Heading: Strategies in Action - Industry Examples

Tech Company: Radical Transparency

At various tech firms like Github, Buffer and Fairware, transparency has become a core operating principle. Leaders share financials, post-mortem analysis of failures, future roadmaps, and reasoning behind sensitive decisions like layoffs publicly on company blogs, quashing rumors. Salaries are openly discussed. Leaders subject themselves to live video Q&As, honestly addressing criticism. As a result, employees widely trust that "what you see is what you get," fostering psychological safety and collaboration.

Healthcare Organization: Inclusive Governance

ThedaCare, a Wisconsin healthcare network, overcame distrust after mergers by implementing inclusive Shared Governance councils. Representing all levels, these bodies participate meaningfully in strategic planning, policy setting and process improvement. Meeting minutes, project updates and results are transparently communicated system-wide. As a result, employees feel ownership over organizational challenges and successes. Physician and frontline staff report high trust in leadership and each other due to role in decision making.

Manufacturing Company: Predictable Integrity

When facing industry disruption, Illinois toolmaker Strippit rebuilt trust through consistent modeling of shared values like respect, accountability and stewardship. Leaders held transparent "state of the company" townhalls, honestly addressing financial realities while protecting jobs through lean transformation. Rules were consistently, fairly applied to all regardless of level. Managers were trained and evaluated based on integrity, ownership of their areas and caring for people. As a result, employees demonstrated flexibility, resilience and dedication through difficult change with high morale.

Conclusion

While trust has steadily eroded in workplaces over decades, the current organizational trust crisis represents an opportunity for far-sighted leadership committed to rebuilding this vital resource through strategic action. Radical transparency, inclusive governance, consistent integrity and genuine care for people as individuals can help foster sustainable high-trust cultures where employees feel respected, heard, secure and dedicated to a shared purpose. Though challenging, regaining lost trust yields innumerable rewards for both organizations and communities in terms of innovation, cooperation and weathering uncertainty. The time is now for leaders to roll up their sleeves, get to the root causes of distrust, and start crafting solutions through empathy, accountability and consistent modeling of their values in action.

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Jonathan H. Westover, PhD is Chief Academic & Learning Officer (HCI Academy); Chair/Professor, Organizational Leadership (UVU); OD Consultant (Human Capital Innovations). Read Jonathan Westover's executive profile here.

Suggested Citation: Westover, J. H. (2025). An Era of Eroding Trust: Facing the Organizational Trust Crisis. Human Capital Leadership Review, 18(2). doi.org/10.70175/hclreview.2020.18.2.3