The Changing Work Experience: Trust and the Psychological Contract

We may ask, why is trust now being talked about as such a matter of concern? It seems clear that the Social and Economic context has changed dramatically over the past two decades. Some of the more recent economic problems such as the global financial crisis, and the resulting loss of trust in the banking system have played their part; The demise of high profile banks such as Lehman Brothers has profoundly destabilised public confidence; So also has the unsettled budget difficulty in the USA and the recurrent Eurozone crisis; Government cuts to national and local authority provision of public services and large scale jobs and pension cuts; Cuts being implemented within the public sector have caused high job insecurity; and contagion from outside the workplace is affecting internal workplace trust. However, it should be appreciated that workplace relations were already strained before the financial crisis. The 'flattening' of organisations had the effect of reducing contact between senior management and the workforce and of them becoming more and more remote; Merger and acquisition activity from the 2000's onwards resulted in organisations growing bigger and bigger: For those working for multinationals feelings of remoteness are exacerbated by geographical distances, with corporate centres frequently being located in other countries. In addition many organisations had already experienced successive job cuts, or threats of downsizing before the global financial crisis. A fear of losing one's job was present in this climate. Since the 1990's employers have been reconsidering psychological contracts in an attempt to wean employees off relational contracts which carried an expectation of a job for life. It will be appreciated that trust is fundamental to the psychological contract. Breaches in a relational contract can alter the nature of the social relationship, eroding trust on the part of both the employer and employee. This paper explores this aspect of trust and discusses how an understanding of how to maintain and not lose trust in the first place becomes a key management contributor to better business performance.