Distrustful employees blame bosses for recession woes

01 September 2010

5,000 employees were surveyed for the second annual Index of Leadership Trust. The research reveals that organisations who have responded to the recession with office closures and involuntary redundancies have seen a sharp drop in CEO trust, with scores plummeting to 51 [on a scale of 1-100, against an average CEO trust score of 63].

By contrast, those who have taken a more measured response, such as flexible working and budget cuts, have seen trust in their CEOs rise, with a score of 68.

The findings are particularly ominous for the public sector, where levels of CEO trust are down on private sector CEOs for the second year running. Local and national government CEOs are among the poorest performers of any sector with a trust index score of just 57. With sweeping budget cuts set to impact on jobs, pensions and service delivery, levels of trust are likely to sink yet further in the public sector over the coming months.

On the other hand, women bosses have emerged well from the recession. Trust in female CEOs has increased by four points since the 2009 Index, with women more trusted as CEOs than men (index score of 66, compared to 63 for their male counterparts).
Male employees trust female CEOs more than they do male CEOs (68 compared with 63), with this figure rising eight points since 2009. Women score better than male CEOs in understanding employees’ roles (59 compared with 52) and are also rated strongly in terms of ability (71) and integrity (70).

Penny de Valk, Chief Executive of ILM, said:

“It is clear that the actions of senior managers are scrutinised to a far greater extent during times of crisis, and major cuts are often seen as the direct result of poor management – even when this might be beyond their control. Yet in those organisations where impacts of the recession have been seen to be managed well, trust levels are significantly higher. Female CEOs in particular have fared well at driving trust during times of adversity.

“As CEOs strive to implement radical transformation there is little prospect of success unless they bring their workforce with them – employees have to trust their managers, at every level of the organisation. In the months and years ahead, CEOs – in particular those at the helm of large, hard-hit public sector organisations – will have to focus on building leadership competency and capacity.

“To boost trust it is important for senior managers to increase their visibility and communicate effectively with staff. Boards need to be aware that constant turnover of CEOs will also erode trust. Finally, CEOs need to be consistent in their behaviour. Constantly announcing different initiatives, saying one thing and doing another other and sending out mixed messages all lead to reduced trust within organisations which negatively impact organisational performance.”

Other key findings of the 2010 Index of Leadership Trust include:

• Overall trust in CEOs has increased by four points, suggesting that well-led organisations have emerged from the recession with a more trusting workforce.

• Employees believe the most important drivers of trust are ability, integrity and understanding.

• The least trusted senior managers are employed by national/local government.

• Senior managers in the charity sector enjoy the highest levels of trust. 

• CEO trust in the leisure and wholesale, distribution, travel and transport sectors has improved considerably in the past year from below average to average.

• However, CEOs still lag behind line managers in the trust stakes. Line managers’ score 69 on the Index, significantly higher than CEOs at 63.

• Size of organisation has a major impact on trust levels. The greater the distance between employee and line manager, whether geographical or hierarchical, the lower the level of trust.

The Institute of Leadership & Management and Management Today magazine polled 5,000 people – 2405 managers and 2501 non-managers – for the research. They came from the private, public and voluntary sectors, and their organisations ranged in size from SMEs to global corporations. The survey asked how much they trusted their line managers and their CEOs in light of the recession, presenting a snapshot of trust from within an organisation.

ENDS
The full report, ILM/MT Index of Leadership Trust 2010 is available to download from ILM’s website: http://www.i-l-m.com/.

Ends/..

For further information or copies of the full report please contact:
Amy MacLaren, Rebecca Griffiths or Ellie Backhouse at Colman Getty:
020 7631 2666 amy@colmangetty.co.uk / rebeccagriffiths@colmangetty.co.uk / ellie@colmangetty.co.uk

Lauren Franze, PR Manager, ILM: 020 7294 3054 lauren.franze@i-l-m.com

Spokespeople available for interviews (contact Colman Getty):
• Penny de Valk, Chief Executive, ILM
• David Pardey, Head of Research & Policy

Notes to editors

The ILM/MT Index of Leadership Trust 2010 will be launched on Wednesday 1 September at 6:30pm at a reception at One Alfred Place, London.  The keynote speaker will be Dame Barbara Stocking, Chief Executive of Oxfam.  For a press pass, please contact Colman Getty.

The Institute of Leadership & Management (ILM) is Europe’s leading management organisation. We believe that good leadership and management holds the key to organisational effectiveness and social and economic prosperity.

Our fast-growing community of over 30,000 practising leaders and managers, gives us a real insight into the issues affecting the management community day-to-day, both in the UK and globally.

Each year we help over 85,000 practising and aspiring managers to fulfil their potential and achieve success through a range of flexible leadership and management development solutions.

Backed by an in depth programme of research, ILM operates internationally, improving leadership and management skills, across all sectors, from financial services to the armed forces.

Institute of Leadership & Management (ILM)
http://www.i-l-m.com/

Management Today (http://www.managementtoday.com/) is Britain’s leading business magazine.  A feature on the ILM/MT Index of Leadership Trust will be published in the September issue of Management Today, the UK’s leading business magazine, out on 3 September 2009, priced £4.70

FreshMinds
FreshMinds Research work across industries to help their clients better understand their markets, competitors and customers and to explore new market opportunities.

Their strength lies in providing strategic insights through comprehensive and robust research, and their holistic approach enables them to deliver analytical and creative solutions to meet a wide range of needs.

FreshMinds’ innovative approach to research and consultancy has not only seen them named the Market Research Society’s ‘Best Agency’ two years running, but they were also last year’s London winners of the Bank of Scotland’s £35m Entrepreneur Challenge.
http://www.freshminds.co.uk/

About the research
The study was conducted via an online survey administered by FreshMinds Research in May and June 2010. A total of 5,000 people participated, drawn from three distinct sample groups:

• A general population sample of employees was sourced from an online panel provider. This included a control for the proportions of managers to non-managers (one in five respondents having people management responsibilities) and was chosen to be broadly representative of the employed population;
• ILM members were invited to participate in an identical survey during the same fieldwork period;
• Management Today readers were also invited to participate in the survey via references in the hardcopy editorial and in electronic mail-outs

The Index measures trust in relation to six defined dimensions of a trusting relationship. These dimensions are based on significant amounts of robust research and align with ILM’s framework of leadership and management. 

The six dimensions are:
1. the manager’s ability to do their job (Ability)
2. displaying knowledge and understanding of their employees’ roles and responsibilities (Understanding)
3. behaving fairly and showing concern for the welfare of employees (Fairness)
4. being accessible and receptive to ideas and opinions (Openness)
5. striving to be honest and fair in decision making (Integrity)
6. behaving in a reliable and predictable manner (Consistency)

The survey asked respondents to assess the importance they placed on these dimensions, distributing a total of 60 points across the six factors. Respondents were then asked to rate their CEO and line manager against these measures on a 1–10 scale.

The relative importance that respondents applied to the six dimensions was then applied to the scores. This ensured that the qualities they thought most important in establishing trust in their managers were commensurately indicated. The resulting trust index scores lie between a minimum of 0 and a maximum of 100.