Employee Trust and Workplace Performance

38 Pages Posted: 5 Jul 2014

See all articles by Sarah Brown

Sarah Brown

University of Sheffield - Department of Economics; IZA Institute of Labor Economics

Jolian McHardy

University of Sheffield - Department of Economics

Karl Taylor

University of Sheffield - Department of Economics

Daniel Gray

University of Sheffield

Abstract

We explore the relationship between employee trust of managers and workplace performance. We present a theoretical framework which serves to establish a link between employee trust and firm performance as well as to identify possible mechanisms through which the relationship may operate. We then analyse matched workplace and employee data in order to ascertain whether the average level of employee trust within the workplace influences workplace performance. We exploit the 2004 and 2011 Work Place and Employee Relations Surveys (WERS) to analyse the role of employee trust in influencing workplace performance in both pre and post recessionary periods.Our empirical findings support a positive relationship between three measures of workplace performance (financial performance, labour productivity and product or service quality) and employee trust at both points in time. We then exploit employee level data from the WERS to ascertain the determinants of employee trust as well as how trust is influenced by measures taken by employers to deal with the recent recession. Our findings suggest that restricting paid overtime and access to training potentially erode employee trust. In addition, we find that job or work reorganisation experienced at either the employee or organisation level are associated with lower employee trust.

Keywords: employee trust, financial performance, labour productivity, product quality

JEL Classification: J20, J50

Suggested Citation

Brown, Sarah and McHardy, Jolian and Taylor, Karl B. and Gray, Daniel, Employee Trust and Workplace Performance. IZA Discussion Paper No. 8284. Available at SSRN: https://ssrn.com/abstract=2462716

Sarah Brown (Contact Author)

University of Sheffield - Department of Economics

9 Mappin Street
Sheffield, S1 4DT
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Jolian McHardy

University of Sheffield - Department of Economics ( email )

9 Mappin Street
Sheffield, S1 4DT
United Kingdom
+44 0114 22 23460 (Phone)
+44 114 222 3458 (Fax)

HOME PAGE: http://www.shef.ac.uk/economics/staff/jmchardy/index.html

Karl B. Taylor

University of Sheffield - Department of Economics ( email )

9 Mappin Street
Sheffield, S1 4DT
United Kingdom

Daniel Gray

University of Sheffield

17 Mappin Street
Sheffield, Sheffield S1 4DT
United Kingdom

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