Research

Mutual trust boosts financial performance

2 Sep 2021 By Jyoti Rambhai

Study finds businesses that see a good relationship between staff and managers perform better economically

Businesses that have a high level of mutual trust between their management and employees are more likely to perform better economically and financially, according to new research.

Researchers analysed data from the European Company Survey of 28 countries, which asked managers and employees their opinion of each other’s contribution to the workload, the wider company performance, and trust in each other’s ability.

The study, which was conducted by John Addison, professor of economics at Durham University Business School and Paulino Teixeira, professor of economics at the University of Coimbra, revealed a strong link between manager-employee trust and company performance. 

Mutual trust also resulted in higher levels of productivity, increasing by six percentage points if trust went up by one unit.

Addison said: “Trust between the parties (and no less an important absence of trust or disaffection) are important drivers of good (and bad) firm performance. And good industrial relations trumps any specific type of employee representation.”

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