BUS603: Managing People

Organizational trust refers to employees identifying with the organization and willing to establish long-term relationships with the organization. It refers to employees estimating and identifying with organizational policy and being willing to expose themselves to being hurt in job situations. Organizational trust is a type of institutional trust, including trust in supervisors and in organization as a whole. If employees trust in their organization, they not only have willingness to share risks created by the organization, they are also able to understand the dangers brought by the organization.

Employees' attitudes or psychological states could be influenced by EOR Settoon. Organization provides positive and beneficial incentives in response to employees who undertake positive behaviors. In the context of high-quality EOR, organizations tend to offer high incentives, such as long-term career plans and secure employment, in order to maintain long-term exchange relationships with employees. Therefore, employees will hold positive attitudes and engage in behaviors that are beneficial to the organization because of these inducements, such as organizational trust, high loyalty to the organization, and are more likely to perform their jobs with greater effort.

Contrarily, in the context of low quality employee-organization relationship, the organization tends to maintain short-term employment relationships with employees, and might terminate the employment contract at any time. Therefore, employees do not expect their employer to provide long-term investments or maintain long-term employment relationships with them, and deem their relationship with their employer as purely an economic exchange relationship. This economic exchange relationship emphasizes tangible rewards and rational self-interest, which leads employees and employers focusing on short-term interests. In organizations with low levels of employee-organization relationship, employers tend to provide short-term monetary compensation, less training and fewer welfare incentives for employees and, in turn, employees will reduce their loyalty and sense of trust in their organization. However, organizations with high-level employee-organization relationships tend to integrate the economic exchange and social exchange relationships to maintain long-term employment relationships with employees. Therefore, compared to a low level of employee-organization relationship (e.g., short-term and pure economic exchange relationship), high level EOR will result in employees having a tight connection to organization and trust in organizations more.

H2: EOR is positively related to organizational trust.