Tuesday, September 24, 2002

The Negative Effects of Losing Employees' Trust

Interesting little piece in the Harvard Business Review (Sept 2002) titled The High Cost of Lost Trust. The author and his colleague set out to discover what affects might occur when employees believe there is a disconnect between what their Managers say and what their Managers do. In other words, if the Managers don't "Walk the Talk" does the effect on employees negatively impact business.

The study was conducted by surveying 6500 employees in 76 different hotels (all Holiday Inns) in US and Canada.

As one might expect, the authors found that those Hotels where Employees felt their Managers walked the talk significantly outperformed the hotels where employees felt their managers said one thing and did another.

I don't know the details on the study but I wonder if the authors controlled for other negative factors. I would guess that if a Manager is being perceived as lacking in integrity, he or she might also be lacking in other important managerial traits. Could it be that Managers who don't walk the talk ALSO don't offer the appropriate level of praise and rewards or make employees feel appreciated/valued? Those are both two of the areas that generally receive the lowest satisfaction ratings by employees on exit interviews.

It certainly is an interesting study that deserves some attention from the HR community-particularly because the hotels' profitability increased dramatically with even just a small increase in the the "walk-the-talk" factor. A .125 improvement in this trust factor equated to an increase in the hotel's profitability by 2.5% of revenues. With financial improvements like that, this is definitely something worth exploring further. Those of you who use Nobscot's WebExit or other Exit Interview systems might consider adding a question or two to test the waters in this area.

Reprints of this article are available at the Harvard Business Review website Click Here to Order. Unfortunately, HBR doesn't offer the material for free. There is a $6.00 charge. Note that the article is only two pages long so not sure if it makes sense to purchase it or not.

A better bet might be to go to the author's website where there is even more detailed information on this study. Click Here for the author's PDF Executive Summary and Here for the author's website.

PS. I emailed the author with my questions about controlling for other managerial weakness. I'll let you know how he responds and how that was handled.

Beth C.

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