BUS603: Managing People

Trust influences organizational processes such as communication, cooperation, and information sharing, and it affects productivity. Accordingly, trust is one of the most frequently examined constructs in recent organizational literature. Following the well known definitions of Deutsch and Rotter, trust comprises a person's beliefs and expectations on how the trustee will behave. Interpersonal trust is defined as the individual's or group's expectation that the word or promise – verbal or written – of another individual or group can be relied upon.

Human resources management has become more and more competence-oriented in the knowledge-intensive society. Organizations focus on offering career opportunities for personnel and fulfill their motivational needs in order to build commitment. An employee's commitment to their work and the organization is related to mental well-being, and both affect the success of the organization. Trust appears at many levels, organizational or managerial, and is manifested in the way, frequency, and quality of interaction between employees and managers.

Trust is a basic element of functioning relationships in organizations. Employees in organizations create trustworthiness by their daily behaviour and actions. Feelings of insecurity appearing in workplaces may be often a reason for atmosphere- related problems such as teasing, conflicts, and disputes. All of them affect the level of trust. Mental well-being is largely sustained by emotional support such as appreciation, respect, openness, and feedback. A commitment to the work and the organization is reflected in employees' work motivation and satisfaction (i.e., work welfare).

Employees that trust their leader work effectively and have a high level of commitment. In addition, they share ideas and knowledge, tacit knowledge in particular. Trust in the behaviour of other people grows when cooperation is reciprocated. Psychologically, trust declines most often when positive expectations are disconfirmed (Lewicki et al., 2006). Respect and appreciation stimulate the development of trust, while poor leadership underestimates employees' personal competences and this eventually results in declining work and company performance.

Building trust is considered an essential activity in managerial leadership. However, the task of building and maintaining trust is complex. A leader's traits, behaviour, leadership style, and skills all matter in building trust and creating an impression of trustworthiness. By implication, a leader's mundane behaviour plays a key role; trust is built and maintained by a leader's "daily deeds".

In addition to leader behaviour, organizational culture plays a key role in the development of trust and distrust in an organization. Culture is largely influenced by leaders' actions. In the case of a very authoritarian management style, for example, employees become socialized by the actions of their leaders and adopt the style. As managers act as role models to subordinates, leaders who fail to behave in the expected ways earn disrespect and may block promotions in management careers. This has consequences to the entire organization. Further, subcultures within organizations play a role in employee socialization and commitment. Subculture may be even more strongly related to work commitment than the overall organizational culture.