Regaining the trust of investors isn't the only challenge that companies face in the wake of the worst corporate scandals in a generation. They're also losing the trust of the employees they'll have to rely on to help win back the public's confidence, reports a soon-to-be released survey by human resource consultants Watson Wyatt.
The Washington firm polled some 12,750 employees from all job levels and all major industries in February -- before the full force of the scandals hit. Only 39% of those surveyed said they trust senior leaders in their companies -- and just 45%, down from half in 2000, said they "have confidence in the job being done by senior management."
Additionally, the share of workers who said they believe that their "companies conduct business with honesty and integrity" fell to 63%, from 68% in 2000. "With fewer than half of employees expressing confidence in senior management, no company has been left untouched by the fallout from recent turmoil in the business environment," says Ilene Gochman, the study's author and Watson Wyatt's national practice leader for organization measurement.
It isn't fair, however, to blame worker skepticism entirely on number-fudging by companies such as Enron or Tyco, says Gochman. The intractable conflict in the Middle East, September 11, and the abuse of children by Catholic priests have all contributed to the employee funk.
Moreover, in the current environment it's only human for employees to assume the worst about their companies, Gochman says -- even those that do business on the up-and-up. Gochman likens the infectious nature of pessimism to people who think they are happily married until they start hearing about their friends who are getting divorced. "You start thinking, 'Are things really as good as I think they are?'" she says. "It makes it more acceptable to be cynical." As more companies begin to fall under suspicion, she adds, it's only normal for an employee to wonder, "is my company next?"
All this suspicion isn't good for the bottom line. Corporations that ranked high in employee confidence experienced a 20% return to shareholders over the three years ending in 2001, Gochman says. By comparison, companies with low employee trust only saw a 7% return to shareholders over the same period.
So what are companies to do to restore trust? For starters, they need to talk to employees, says Gochman. Managers must continually chat with employees, both about job performance and to explain important corporate decisions. Soliciting suggestions from employees is key, too, she says.
"When employees aren't in the loop, it's hard to have confidence," says Gochman. "If they don't know where they're headed, how can they accomplish anything?"
Unsurprisingly, new corporate reforms are in part aimed at keeping many different constituencies more in the loop about what senior managers are up to. That may be at least a start toward raising the trust of employees.
By Billy Cheng in New York