Topic: Employee Trust and Organizational Crisis Management

Author(s), Title and Publication

Gillespie, N., & Dietz, G. (2009). Trust repair after an organization-level failure. Academy of Management Review, 34(1), 127-145.

Summary

This article proposed a framework for understanding how an organization can repair employees’ trust in the organization after an organization-level failure, such as avoidable accidents, accounting frauds, massive job losses, and bankruptcies etc. Based on systems theory, this article conceptualized organizations as multilevel systems and identified six components that contribute to employees’ perceived trustworthiness of their organizations. These include four internal components (leadership and management practice; culture and climate; organizational strategy; and structures, policies and processes) and two external components (external governance and public reputation).

Based on previous research, this study proposed that these six components influence employees’ trust and contribute to organizational-level failures, but only internal components contribute directly to organizational-level failures. In terms of trust repair, this article proposed that after an organization-level failure, employees would perceive their organizations trustworthy if 1) the organization voluntarily regulates faults that led to the failure, and demonstrates ability to overcome the failure, and 2) the organization’s responses or actions are consistent across organizational components, and address the organization’s ability, benevolence and integrity rather than only one of the three dimensions.

The study also indicated that trust repair involves a four-stage process: immediate responses, diagnosis, reforming interventions, and evaluations, and the researchers argued that trust repair would be more effective if an organization 1) gives timely initial responses, expresses regret, promises and takes actions to prevent reoccurrences of same failure in the future; 2) provides an accurate, transparent, and timely diagnosis of causes of failures, rather than a rushed or delayed diagnosis; 3) apologizes to and compensates stakeholders harmed; 4) demonstrates ability to overcome failure after ability failures, but regulates faults that cause failure after integrity and benevolence failures; and 5) evaluates the effectiveness of failure handling and acts on the results.

Implications for Practice

This article provides a systematic framework for organizations to manage trust losses and repair trust among employees after organization-level failures. According to the framework, organizations may want to pay more attention to the timeliness of responses and diagnosis after failures—responses that are too rushed and too slow may damage the effectiveness of trust repair.

Location of Article

The article is available online at: http://amr.aom.org/content/34/1/127 (abstract free, purchase full article)

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Heidy Modarelli handles Growth & Marketing for IPR. She has previously written for Entrepreneur, TechCrunch, The Next Web, and VentureBeat.
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