A Breach of Trust: Enron Case Will Cause Some Americans to Question How Much They Trust Their Employers

Release Date: January 23, 2002

BUFFALO, N.Y. -- In the wake of the Enron debacle, many Americans will begin to question how much they trust their employers, says a University at Buffalo School of Management professor who researches the development and consequences of trust in the workplace.

"I expect that a number of people will reevaluate their relationship with their company and consider whether the trust they placed in their leaders in the past still is warranted," says Donald Ferrin, associate professor of organization and human resources.

"It's the people who have even the smallest suspicions about their own company who will be affected most by the Enron situation," he adds.

According to Ferrin, there are several factors that contribute to the breakdown of trust at companies. The most damaging factor, he says, is the one perpetrated by Enron's leadership: failing to meet the expectations of employees.

"Unmet expectations lead to a breach in the psychological contract between employee and employer, which is defined as 'what the company owes us, and what we owe the company,'" Ferrin says.

The breakdown of trust has obvious negative consequences for both employee and employer, such as poor job satisfaction and poor job performance, says Ferrin. But, he adds, the most underreported result of employee mistrust could be the one that's most damaging to a company: a decline in what Ferrin calls "organizational citizen behavior."

"These are the duties that we perform on the job that fall outside of our formal job description," he explains. "If you think about it, much of what we do in our jobs falls outside of our job description. We do them for the good of the organization."

"When there's mistrust, we're much less likely to perform those duties." According to Ferrin's research, there are several actions and practices that promote employee trust in a company and its leadership. The most influential is "transformational

leadership," where leaders gain trust by showing concern and respect for employees.

Other key trust-building factors include: how much support a leader has, or is perceived to have, within an organization and whether employees feel they are treated fairly by company policy and in their personal dealings with their employer.

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