Mutual trust between managers and staff boosts performance

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Organisations with a high level of trust between management and employees are more likely to perform well financially and productively, according to a study.

Durham University Business School and the University of Coimbra in Portugal found that a strong sense of trust in the management-employee relationship also correlated with higher levels of productivity and greater feelings of harmony and understanding among the workforce.

Senior managers and employees were asked what they thought of each other’s contribution to the workload, wider company performance, and about trust in each other’s abilities.

The researchers found that as employee trust in management increased by one unit, on a scale of 1 to 5, the likelihood of observing very good economic and financial performance would increase by 4 to 5 percentage points.

The likelihood of observing the highest relative productivity in comparison with other organisations in the same sector increased by 6 percentage points as trust rose by one unit.

Data came from the European Company Survey and involved 28 countries including the UK. Researchers concluded that organisations with poor productivity and financial performance should encourage managers to review their relationships with employees and attempt to collaborate with them more.

They said the study highlights the importance of strong industrial relations – ensuring that managers trust staff and allow them to work autonomously, and employees feel that their managers are competent and trusting of them.

Durham University Business School economics professor John Addison, said: “Trust between the parties (and no less an important absence of trust or disaffection) are important drivers of good – and bad – firm performance. And good industrial relations trumps any specific type of employee representation”.

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