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Employee trust decimated in organisations with redundancy rounds

Employees whose organisations have been particularly hard hit by the recession have extremely low levels of trust in their CEOs and blame these troubles on poor management.

According to research from the Institute of Leadership and Management (ILM) and HR magazine’s sister title Management Today, organisations that have responded to the recession with office closures and involuntary redundancies have seen a sharp drop in CEO trust, with scores plummeting to 51 [on a scale of 1-100, against an average CEO trust score of 63].
But those who have taken a more measured response, such as flexible working and budget cuts, have seen trust in their CEOs rise, with a score of 68.

The findings are ominous for the public sector, where levels of CEO trust are down on private sector CEOs for the second year running. Local and national government CEOs are among the poorest performers of any sector with a trust index score of just 57. With sweeping budget cuts set to impact on jobs, pensions and service delivery, levels of trust are likely to sink yet further in the public sector over the coming months.

Female bosses have emerged well from the recession. Trust in female CEOs has increased by four points since the 2009 Index, with women more trusted as CEOs than men (index score of 66, compared to 63 for their male counterparts).

Male employees trust female CEOs more than they do male CEOs (68 compared with 63), with this figure rising eight points since 2009. Women score better than male CEOs in understanding employees’ roles (59 compared with 52) and are also rated strongly in terms of ability (71) and integrity (70).
Penny de Valk, Chief Executive of ILM, said: "It is clear that the actions of senior managers are scrutinised to a far greater extent during times of crisis, and major cuts are often seen as the direct result of poor management – even when this might be beyond their control. Yet in those organisations where impacts of the recession have been seen to be managed well, trust levels are significantly higher. Female CEOs in particular have fared well at driving trust during times of adversity.
"As CEOs strive to implement radical transformation there is little prospect of success unless they bring their workforce with them – employees have to trust their managers, at every level of the organisation. In the months and years ahead, CEOs – in particular those at the helm of large, hard-hit public sector organisations – will have to focus on building leadership competency and capacity.
"To boost trust it is important for senior managers to increase their visibility and communicate effectively with staff. Boards need to be aware that constant turnover of CEOs will also erode trust. Finally, CEOs need to be consistent in their behaviour. Constantly announcing different initiatives, saying one thing and doing another other and sending out mixed messages all lead to reduced trust within organisations which negatively impact organisational performance."

The Institute of Leadership & Management and Management Today polled 5,000 people – 2405 managers and 2501 non-managers – for the research. They came from the private, public and voluntary sectors, and their organisations ranged in size from SMEs to global corporations. The survey asked how much they trusted their line managers and their CEOs in light of the recession, presenting a snapshot of trust from within an organisation.