3 minute read
Trust between workers and management plays an incredibly important part in the productivity of organisations, but how does it affect the way delegation is distributed?
It is well known that the degree to which management trusts workers is a key factor in determining delegation to workers. However, new research from the ANU Research School of Economics’ Professor Kieron Meagher finds that workers’ trust in management is just as important.
“Management’s trust of a worker is undoubtedly important; if management believes that a worker is untrustworthy, they would not delegate authority to that worker (assuming there is no recourse to formal sanctions to mitigate these agency issues),” explains Kieron.
“However,” he continues, “a worker’s trust in management is also crucial, particularly when contracts are incomplete. For instance, if a worker places little credence on management’s promises, that worker will have scant impetus to fulfil any implicit obligation.”
The study shows that the effect trust has varies markedly based on the type of delegation. It also seems that on average, worker trust in management is lost over time rather than earned. “This relationship is a bit like a marriage: if management cheats, the trust can be gone forever.”
This has implications for how organisations structure their systems, highlighting the importance of a focus on individual-level relationships. By better understanding the dynamics of delegation, organisations can make better use of their workers’ skills and knowledge.
“Our results are suggestive of trust within firms as being better understood as an individual-level relationship between an employee and management, rather than as organisational culture,” says Kieron.
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