How Your Org Structure Impacts Your Trust Levels

Kevin Lynch, Ph.D.
Leadership Executive-in-Residence
Center for Values-Driven Leadership at Benedictine University
 
More than 10 years after Enron’s memorable collapse, and five years after the start of the Great Recession, business publications still talk at length about how to restore public trust in corporations. I find it interesting that something that on face value appears so basic is so difficult to achieve. 
 
A recent edition of Corporate Responsibility Magazine offers four strategies for restoring corporate trust. Interestingly, the four strategies are each associated with one of the C-Suite officers. These four strategies include: 
  • CEOs speaking in their own voice (responsibility of the chief marketing officer)
  • Empowering employees to be the company’s biggest champion (responsibility of the chief HR officer)
  • Expanding collaboration amongst industry peers (responsibility of the chief social responsibility officer)
  • Making a business case to investors (responsibility of the chief financial officer)
 
I can’t argue with any of these strategies, however, I think this issue runs deeper. The C-Suite will find it impossible to restore external trust if they have not first restored internal trust in the organization. 
 
Building trust with those you work with results in an environment which is less prone to ethical breakdowns. If trust exists in a group, members may be more likely to raise concerns when they notice questionable decisions or actions. Trust can abate or replace fear in organizations, in turn, creating better and more open communication.  On more than one occasion I brought concerns to other members of senior management.  I did this with full confidence that raising such concerns would not impair my standing with the organization because I was fortunate to work with others whom I could trust to do the right thing.
 
Rebuilding internal trust requires all C Suite leaders – not just those identified in the CR Magazine article – to create trust both within and of the organization. Jim Kouzes and Barry Posner in their book A Leaders Legacy, say that leading requires trust, and that trust is a prerequisite to getting anything done. However, they also say that trust cannot be taken for granted. It requires continuous work to build, nurture and sustain trust. 
 
A new article in the Leadership and Organization Development Journal by Dr. Joseph Krasman of the University of Ontario highlights that trust in superiors creates higher job satisfaction, greater citizenship behavior and less deviant behavior. These attributes would seem to contribute to the overall effort to build organizational trust by improving employee attitudes toward the organization and lowering the risk of unethical behavior within the organization.  
 
So the question becomes, “How do we build trust within our organizations?”.  Krasman suggests that structural influences explain about 20 percent of the influences on trust and examined how certain structural attributes within the organization can impact subordinate trust of supervisors. He specifically looked at whether the following structural attributes influence trust:
  • Formalization – the formal rules surrounding a job such as job codification, job specificity and rule observation.
  • Routinization – the degree to which jobs are repetitive.
  • Centralization – where power to influence decisions resides in an organization: the higher up this power is the more centralized the organization is.
  • Span of control – the total number of employees a supervisor is responsible for.
Krasman concludes that more formalization resulted in a higher perception of superior trustworthiness. He also concludes that routinization positively impacts subordinate perceptions of superior trustworthiness. Somewhat surprisingly, Krasman did not find a positive relationship between centralization or span of control with perceptions of trustworthiness.
 
In most organizations, structural attributes like those listed above, are not likely to be easily changed.  Thus, when creating trust-building initiatives, with the goal of building both trust within, and of, the organization, we should consider structural implications a factor influencing trust. Issues such as subordinate perceptions of a leader’s ability, integrity and benevolence remain key issues related to trust beyond structural attributes. However, understanding your organization’s structural attributes can act as a head start in designing your next trust-building effort.  
 
Posted June 23, 2014 in CR Blog