COURSEWORK ASSIGNMENT
Academic Year 2018/19
Module Code:
BHM 349
Module Name:
Employee Relations in Context
Module Leader:
Dr. Vidu Badigannavar
Coursework Title:
A 3000 word essay on the following topic:
Critically examine the role of the State (government) as an actor in
employment relations.
Task Details/Description:
Students are expected to write an essay not exceeding 3000 words on the given essay
topic.
Module Learning Outcomes Assessed:
1. Demonstrate understanding of basic concepts, theories and perspectives of employee
relations
2. Critically evaluate the impact of local, national and global contexts shaping employee
relations.
3. Examine the roles and functions of different groups or stakeholders in employment
relationship
Presentation Requirements:
Word Count: 3000
Font Size: 12
Line Spacing: Double
The word count includes citations within the main body of your essay. However, it
excludes the list of bibliographic references at the end of your essay, any tables and
graphs.
Submission Date & Time:
14 December 2018 by 12 noon.
Assessment Weighting for the Module:
Percentage: 100%
Assessment Criteria
1. Ability to engage in a critical review of relevant literature
2. Demonstrate wider reading and ability to engage in independent research which
goes beyond lecture materials.
3. Ability to think laterally across topics covered on this module to answer the essay
question
4. Argue analytically, logically and coherently.
5. Wherever possible, support arguments with evidence from published sources
6. Cite and/or quote sources of information appropriately in the main body of the
essay. Provide full list of bibliographic references at the end of the essay.
Ethical Requirements
Students are not expected to collect primary data for this essay. However, if they choose
to do so, they will be required to follow the University’s ethical regulations and seek written
approval from the tutor.
Essential Reading for Coursework Task
(if in addition to reading provided in the module outline):
Please note that this is not intended as an exhaustive or definitive list of readings for this
piece of coursework. Instead, the articles/chapters listed below should be viewed as core
or essential readings that may act as a start point as you prepare to tackle this
assignment:
Frege, C. and Kelly, J. (2013) ‘Comparative Employment Relations in the Global
Economy’ Routledge, London and New York
Williams, S. (2014) ‘Introducing Employment Relations – A Critical Approach’, Oxford
University Press, Oxford, UK.
Dundon, T. and Rollinson, D. (2011), ‘Understanding Employment Relations’ 2 nd edition,
McGraw-Hill, Berkshire, England.
Frege, C. and Kelly, J. (2004) ‘Varieties of Unionism – Strategies of Union Revitalization in
a Globalizing Economy’ Oxford, Oxford University Press.
Badigannavar V. (2017) ‘Is Social Partnership the Way Forward for Indian Trade Unions?
Evidence from Public Services’ International Labour Review, Vol.156 (3-4): 367-394
Badigannavar,V. and Kelly, J. (2012) ‘Do Labour Laws Protect Labour in India? Union
experiences of workplace employment regulations in Maharashtra, India’ Industrial Law
Journal vol.49 (4): 439-470
Workplace Employment Relations Survey 2011-12.
https://www.gov.uk/government/publications/the-2011-workplace-employment-relationsstudy-wers
Website of the Trades Union Congress UK http://www.tuc.org.uk/
Website of the International Trade Union Confederation (ITUC) http://www.ituc-csi.org/
Website of the American Federation of Labor-Congress of Industrial Organizations (AFLCIO) http://www.aflcio.org/
China Labour Bulletin http://www.clb.org.hk/en/
Solidarity Federation http://www.solfed.org.uk/
European Trade
confederation
Union
Confederation
http://www.etuc.org/european-trade-union-
Confederation of British Industry (CBI) http://www.cbi.org.uk/
Involvement and participation association of UK http://www.ipa-involve.com/
Institute of Directors www.iod.com
Institute of Employment Rights www.ier.org.uk
This is not an exhaustive list of readings or internet sources. Please do your own
independent research in addition to the readings & information sources listed above.
Please refer to the module outline/specification for a list of useful journals recommended
for this module.
Critically examine the role of the Government as an actor in employment relations
Post financial crash there was an increase in job insecurity despite the unemployment rate
being better than initially expected (Gardiner, 2013). This is often linked to the rapid growth
of the number of workers who were on less hours than they needed to support themselves,
a group frequently referred to as the ‘working poor’ (Bell and Blanchflower, 2013). Popular
opinion, supported by statistics, links this rise to the concurrent rise in the use of zero hour
contracts (ZHCs). A ZHC is where there is no obligation for the employer to provide work,
due to there being no working hours stated on a contract, and no obligation for the
employee to accept work that has been offered (Williams, 2014). Individuals on ZHCs are
deemed ‘underemployed’, explaining the better than expected unemployment figures postrecession. Figures indicate a rise from 2.3 million workers on ZHCs in the UK in 2008, to 3.3
million in 2012 (TUC, 2012). Public opinion, trade unions and a vast number of employees
on ZHCs felt they suffered a detriment in comparison to those on permanent contracts with
guaranteed hours, and historically had hugely limited rights. The rise in use of ZHCs and the
increasing coverage of their use caused Labour to commit to banning ZHCs in their
manifesto for the 2015 general election. This notion was due to negative public opinion,
employees, and trade unions wanting them banned, despite employers valuing them and
wanting to maintain the freedom they had in their use due to a lack of imposed regulations.
It became clear that anger was rising surrounding the Conservative Government’s inaction.
Because of the above, the Government at the time were compelled to play the role of the
mediator between both parties, employees and employers, and did so through the
introduction of the legislation change in 2015. This change aimed to allow employers to
continue the practice of offering ZHCs, whilst protecting employees from the financial and
sociological effects of being on a ZHC. The change ensured that employees on ZHCs can
work for multiple employers, as opposed to being confined to working for one employer,
even if no hours are provided over a period of time. The necessity of this Government
intervention will be discussed, through a consideration of the positives and negatives of the
Government’s previous inaction for employees and employers.
Employers benefitted from the governments’ previous inaction on the matter for a variety
of reasons. Most notably, having employees on ZHCs enables employers to be able to
organise workers hours around changes in demand for their products/services (Williams,
2014). This creates a much more cost effective way to deploy staff as it gives employers the
ability to reduce the wage bill in periods of lower profit, therefore reducing their labour
costs considerably (ibid.). It creates a flexible culture and variable wage bill, in which staff
only need to be paid for the specific hours of work that they do. Research suggests that
flexibility is the biggest benefit for employers, as demonstrated by Dickens (1997) who
found that out of the 36 organisations surveyed that used ZHCs, 94% gave ‘the ability to
deal with fluctuations in work’ as their rationale for doing so. ZHCs don’t only reduce the
employers fixed wage bill, they also reduce costs for employee benefits as it is less likely
someone on a ZHC would receive benefits such as sick and holiday pay, company pensions
etc, than someone on a permanent contract (Brinded, 2014). It is clear, therefore, that
employers benefitted from these contracts, and therefore from the lack of regulations
imposed by the Government. One could argue that the Government’s inaction indicated
support for the employers, as we know that another one of the Government’s role in the
labour market is one of an economic manager. The Government’s action in 2015 to impose
a regulation on ZHCs does not affect employers wage bill, because the regulation simply
means employees are able to, and cannot be penalised for, working for another employer.
Therefore the company will not be paying increased wages, or increasing their spending on
employee benefits, but may suffer from employees on ZHCs being less available to work,
thus stifling the company’s flexibility.
The Government’s decision to regulate ZHCs will have no negative impact on the small pool
of employees who value the flexibility the contracts provide. These individuals value the
ability to only work when suitable to them, as they are able to work around other
commitments and family responsibilities more than they would if they were full time
(Williams, 2014). This group of people are more likely to be students, for whom ZHCs work
well due to the fact they are less likely to be solely dependent on the income received
through wages, as they may be supported by family or student loans. Brinded (2014)
discusses survey evidence from the CIPD, which found that those on ZHCs are more satisfied
with their work-life balance (65%) than those on permanent contracts (58%). It is clear,
therefore, that there are pools of employees who value the use of ZHCs, and these people
will not suffer a detriment from the new regulations. Had the Government banned ZHCs,
these individuals would not have been able to work as flexibly. It is likely the Government
considered this factor in implementing regulations, and recognised that a ban would have
reduced the work life balance and flexibility for those employees who value the benefits of
ZHCs. Finally, for the argument against an outright ban, Gardiner (2015) reminds us not to
overplay the effect ZHCs have on the labour market as those on ZHCs are only a small
minority, which Koumenta and Williams (2016) highlight is contrary to popular opinion and
what is portrayed in the media. Based on this, it was not the Government of the day’s
priority until the opposition party pledged to ban ZHCs entirely. Additionally, ZHCs are not
always negative, even for those who are solely dependent on the income they bring. De
Graaf-Zill, Van den Berg & Heyma (2011) found that temporary jobs, in this case including
ZHCs, had a positive effect on an employee finding regular employment. In other words, it
was a good stepping stone onto something more stable (ibid., 2011). The effect was more
pronounced for the low rather than highly educated unemployed.
There are, however, strong arguments against ZHCs, leading to criticism of the
Government’s initial inaction, an increased discussion in the media and awareness in the
public, and the Labour party to include it in their manifesto. These arguments outline the
reasons for which employees wanted, and in some case needed, action, whether that be an
overall ban or the introduction of employer regulations. The first of these is the issue of
Diversity. The food and agriculture business make use of ZHCs as the work is typically
seasonal, with demand increasing at different points of the year. Using ZHCs in these
businesses is advantageous for the employers as above, however migrant labour is relatively
highly concentrated in this line of work (Williams, 2014). Unfortunately, this means that
migrants are more likely to be on ZHCs and therefore experience the unpredictability and
low income to be discussed shortly. Similarly, as ZHCs are predominantly used in low skilled
jobs, those on ZHCs are likely to be women as UK women in the labour market are more
likely to be in the lower skilled, lower paid jobs than men are. Over half of the organisations
surveyed by Dickens (1997) reported that the majority of employees on ZHCs in their
companies were women. Koumenta and Williams (2016) found that ZHCs are concentrated
in jobs involving physical tasks, with one in 5 ZHC jobs in the home carer/care assistant
profession, which is a largely female dominated profession. This is the case despite EU
Flexible working policy which highlights the need to “enhance equal opportunities between
men and women” (Perrons, 1999). Finally, young people are more likely to be on a ZHC than
older people (Koumenta and Williams, 2016), which is in line with the belief that ZHCs work
best for younger individuals who are not dependent on them as their sole income.
Importantly, the samples used in Koumenta and Williams’ 2016 study were small, so care
needs to be taken when generalising. The introduction of the Government regulations is
unlikely to solve the problem in diversity, as the concentrated groups in certain industries is
a symptom of the wider society. In this way, the Government’s action had no effect.
However, there are various other arguments against ZHCs, on which the new regulations
have a positive effect. One of the main problems of ZHCs was often cited as the pay
disparity between those on ZHCs and those on permanent contracts. Brinded (2014)
described a two tier workforce; it was found that ZHC workers earn approximately £300 a
week less than those on permanent contracts. Although this data is unpublished ONS data,
and therefore requires careful application, it points to a problem that anecdotal evidence
would support. This is linked to the research above that those on ZHCs are typically in lower
skilled, lower paid jobs, however differs from the above situation, which outlines a symptom
of society on which the new regulations cannot change, and upon which the legislation
change could make a difference on pay disparity. This is because, previously those on ZHCs
could not work for multiple employers, even if they had no, or very few hours offered week
on week. The Government’s decision to take action on ZHCs - by introducing the regulations
– has not changed the fact that ZHCs are typically low paid, but it has meant that employees
are able to increase their income by working for more than one employer. This gives
employees on ZHCs more opportunity to increase their standard of living by earning more
money.
Similarly, since the Government’s introduction of the regulations, the uncertainty and
unpredictability is reduced, again because employees can now work for multiple employers,
reducing this problem considerably. Irregular and uncertain income were causes of stress
for those on ZHCs (Shelley, 2007). The work is not guaranteed, which often leads to
exploitation, and the unpredictability of hours makes it hard to plan family life,
commitments and activities, for example arrange childcare, around the hours as there is no
guarantee and certainly no routine (Williams, 2014). Blyton and Jenkins (2012) conducted
interviews with those on part time, flexible contracts including ZHCs. The effects of
unpredictability were highlighted by an interview of a hotel receptionist, who spoke about
cancelling health appointments last minute due to a last minute request for work, and being
completely unable to book a future one due to not having a schedule (Blyton and Jenkins,
2012). A BBC newsnight programme in 2012 drew attention to the problem of ZHCs and the
lack of guaranteed regular income. The documentary featured two individuals, one who
only found out 2 hours before a sift was about to start whether she was required to go into
work, and the other who worked for McDonalds and explained that only managers were
given guaranteed, regular work (Williams, 2014). The uncertainty stretches further than in
regards to which shifts employees can work and be paid for, as there is also uncertainty
surrounding employment status, as employment can be terminated with little or any prior
notice from employers (Lavery, 2014). Although, as above, the new regulations do not
resolve this issue in its entirety, the new regulations mediate the issue of certainty as
employees can look for a job with more regular, guaranteed, routine hours, while working
on a ZHC too. This reduces employees’ flexibility in a positive way, as we know that
employees suffer financially and sociologically from the lack of predictability and guarantee
of work.
The sociological impact of ZHCs are another reason employees and trade unions wanted a
ban or regulation on these contract types. Lavery (2014) categorises ZHCs as a form of
“precarious employment” because they are ‘atypical’, unlike contracts involving standard,
regular hours which are ‘typical’. Sociologically, precarious employment is linked to feelings
of isolation, insecurity and uncertainty (Lavery, 2014). Lopes and Dewan (2014) looked at
these effects in higher education, a field where there has been an increase in the use of
ZHCs. They conducted interviews and focus groups with lecturers and tutors on ZHCs and
found experiences of “job insecurity, exploitation, lack of support, research and
opportunities for career progression and feelings of exclusion” (ibid., pg 40). The authors
recommend an increase in support for these individuals, in addition to an attempt to
increase continuity and integration of those individuals (Lopez and Dewan, 2014). Although
Lopez and Dewan (2014) note that in the higher education sector a significant minority as
opposed to majority are on ZHCs, Butler (2013) reported the headline that universities are
twice more likely to use ZHCs than other employers. The sociological problems still exist
with the prevalence of ZHCs, however the new legislation helps to resolve the feelings of
isolation, insecurity etc as employees can now apply for more stable work to conduct
alongside their ZHC job. Given, however, the severity of these issues and the psychological
effect they are bound to have had on employees, it is surprising that the Government did
not choose to intervene sooner.
Finally, the confusion with and concerns around employment status, and therefore
employee benefits, was another reason for the Government to impose a ban or some
regulations on the use of ZHCs. Dickens’ (1997) survey indicated that zero hours employees
were often not given non contractual benefits such as sick pay, car allowance and company
pension, despite the fact that 80% of the employers surveyed that used ZHCs said that those
on them were employees. This demonstrates that typically, those on ZHCs do not just suffer
financially due to a low pay for few hours, but they also suffer financially by having to fund
amenities that an employer would fund if they were permanent, ‘typical’ employees. The
new regulations, again, fail to address this, however by enabling employees to work for
multiple employers, individuals can earn more to be able to afford benefits themselves, for
example a private pension. Also, if they have an additional job where they are treated and
rewarded as ‘typical’ employees through employee benefits, they have access to otherwise
missing benefits from this employer.
It is clear from the above that both parties, employees and employers, had different
demands and concerns around ZHCs. For employers, ZHCs provide a cost efficient, flexible
solution to supply, demand and the link with wage bill. ZHCs increase the variable wage bill
while reducing the fixed wage bill, a positive for employers who want to dominate a market
by increasing their profit and market share. One of the state’s roles in employment relations
is as an economic manager, therefore by advocating the use of ZHCs through their inaction,
the Government have helped to boost the flexibility of the labour market post-recession.
There is an argument to say that this inaction, paired with the rise in the use of ZHCs gave
the economy the boost it needed at this time, but we can see from the above that it had
largely negative effects on affected employees. Employees on ZHCs suffered from
sociological effects of isolation and uncertainty, the financial effects of unpredictable and
unguaranteed hours/income, heightened pay disparity between themselves and permanent
equivalents and a lack of rights. This rise of underemployment and uncertainty among the
labour market caused the Government to play the role of the mediator, as the argument
prevailed that the Government had been supporting employers as opposed to employees.
The regulations the Government brought in served as somewhat of a compromise. Had the
Government banned ZHCs altogether, the effects on the labour market could have been
negative, and would likely have increased unemployment levels which would have impacted
the welfare budget. The regulations brought in have no negative impact on employers,
therefore avoid the dangers outlined, whilst giving employees an opportunity to find
additional work should ZHCs not suit them. This additional work gives employees an
opportunity to earn more, gives them a more predictable and stable routine with a
guaranteed outcome and should also have a sociological impact. Unfortunately, to improve
the diversity of those on ZHCs, the Government needs to take a wider look at society as a
whole. Above all, this change in legislation mitigates the negative effects outlined, whilst
maintaining the positives for employers, however, the Labour Government’s leaked 2017
manifesto allegedly promises an outright ban on ZHCs if Labour win the general election.
This will move the Government’s role from a mediator to an enforcer, and it will be
interesting to see how employers and the economy reacts. The fact that it is still a major
election promise for the second election running may indicate that the previous
Government’s action on ZHCs, the removal of exclusivity clauses from ZHCs, was not
perceived as action enough.
References – Employee Relations Essay
Bell, D. N., & Blanchflower, D. G. (2013). Underemployment in the UK Revisited. National
Institute Economic Review, 224(1), F8-F22.
Blyton, P. and Jenkins, J. (2012). Life after Burberry: shifting experiences of work and nonwork life following redundancy, Work, Employment and Society, 26(1), 26-41.
Brinded, L. (2014). Zero-Hour Contract Workers Earn£ 300 Less per Week Than Permanent
Staff. International Business Times.
Butler, S. (2013). "Universities twice as likely to use zero-hour contracts than other
employers." The Guardian.
de Graaf-Zijl, M., Van den Berg, G. J., & Heyma, A. (2011). Stepping stones for the
unemployed: the effect of temporary jobs on the duration until (regular)
work. Journal of population Economics, 24(1), 107-139.
Dickens, L. (1997). Exploring the Atypical: Zero Hours Contracts. Industrial Law
Journal, 26(3), 262-264.
Gardiner, L. (2015). The rise and rise (?) of zero-hours contracts. British Politics and Policy at
LSE.
Koumenta, M., & Williams, M. (2016). An Anatomy of Zero-Hour Contracts in the United
Kingdom.
Lavery, S. (2014). The Politics of Precarious Employment in Europe: Zero Hour Contracts and
The Commodification of Work. Precarious Employment in Europe içinde, FEPS Young
Economics Network Working Paper, Brussels, 6-16.
Lopes, A. and Dewan, I. (2014) Precarious pedagogies? The impact of casual and zero-hour
contracts in Higher Education. Journal of Feminist Scholarship, 7 (8). pp. 28-42.
Perrons, D. (1999). Flexible working patterns and equal opportunities in the European
Union. European Journal of Women's Studies, 6(4), 391-418.
Shelley, T. (2007). Exploited: Migrant Labour in the New Global Economy. London: Zed
Books.
The Guardian, (2013), ‘Zero hour contracts cover more than 1,000,000 UK workers’, The
Guardian http://www.theguardian.com/uk-news/2013/aug/05/zero-hourscontracts-cover-1m-uk-workers
Trades Union Congress (TUC) (2012). Underemployment Crisis – A TUC Analysis of
Underemployment Across the UK. London. TUC.
Unite the Union (2013), ‘Research uncovers growing zero hour subclass of insecure
employment’, http://www.unitetheunion.org/news/research-uncovers-growingzero-hour-subclass-of-insecureemployment/
Williams, S. (2014) ‘Introducing Employment Relations – A Critical Approach’, Oxford
University Press, Oxford, UK.
MEGATRENDS
The trends shaping work and working lives
Are organisations
losing the trust of
their workers?
WORK
WORKFORCE
WORKPLACE
Championing better work and working lives
The CIPD’s purpose is to champion better work and working lives by improving practices in people and
organisation development, for the benefit of individuals, businesses, economies and society. Our research work plays
a critical role – providing the content and credibility for us to drive practice, raise standards and offer advice, guidance
and practical support to the profession. Our research also informs our advocacy and engagement with policy-makers
and other opinion-formers on behalf of the profession we represent.
To increase our impact, in service of our purpose, we’re focusing our research agenda on three core themes: the future
of work, the diverse and changing nature of the workforce, and the culture and organisation of the workplace.
WORK
WORKFORCE
Our focus on work includes what
work is and where, when and how
work takes place, as well as
trends and changes in skills and
job needs, changing career
patterns, global mobility,
technological developments and
new ways of working.
Our focus on the workforce includes
demographics, generational shifts,
attitudes and expectations, the
changing skills base and trends
in learning and education.
WORKPLACE
Our focus on the workplace includes how organisations are
evolving and adapting, understanding of culture, trust and
engagement, and how people are best organised, developed,
managed, motivated and rewarded to perform at their best.
About us
The CIPD is the professional body for HR and people development. We have over 130,000 members
internationally – working in HR, learning and development, people management and consulting across private
businesses and organisations in the public and voluntary sectors. We are an independent and not-for-profit
organisation, guided in our work by the evidence and the front-line experience of our members.
cipd.co.uk/megatrends
#megatrends
MEGATRENDS
Are organisations losing the trust
of their workers?
Foreword
In our recent Megatrends publication, we set out some
of the big economic and social trends that have helped to
shape work and working life in recent decades, such as deindustrialisation and demographic change. While the future
is uncertain, it seems likely that many of these trends will
continue to have an impact for years or even decades to
come. Equally, past trends can stop having an impact – or
even go into reverse – and new trends will emerge.
In this turbulent and changing environment,
organisations need to be agile – to spot changing trends
affecting them, work out how to respond to them and
by doing so make them work to their benefit and thus
maintain an advantage on the competition.
In Megatrends, we identified four potential emerging
trends – issues where the data suggest there might
have been a shift in practice, attitudes or outcomes that
would have a significant impact on work and working
lives. However, precisely because these are relatively
new developments, it is still unclear whether these
really are new trends or whether they are short-term
disturbances to established patterns due to factors such
as the economic difficulties that the UK and many other
countries have faced in recent years.
In this series of publications, we take each of these
four potential emerging trends and review the relevant
evidence, discuss the potential explanations and
explore the potential implications for work and working
lives – including for business, for HR practice and for
policy-makers. The aim is to draw the attention of our
stakeholders to these issues, present the relevant facts
and provide a platform for further discussion.
employees think trust in senior management is strong at
their workplace. Trust is particularly lacking in the public
sector. The recession and its aftermath damaged trust and
the improvement in measures of trust that we have seen
recently in both public and private sectors may be due to
economic recovery.
A lack of trust is costly. Managers and employees spend
time making sure they cover their own backs. More
checking is needed because people feel nervous about
relying on someone else. Employees are much less likely
to be engaged and go the extra mile for their employer.
Many will be looking to move on.
The world takes notice of how employees are treated
– just ask Apple about the scrutiny given to working
conditions and employee well-being in its supply chain.
Discontent and distrust in the workforce can erode
public trust with potentially catastrophic effects.
Precisely how employers maintain and improve trust
among the workforce will depend on the organisation
and the context in which it operates. However, there
are some common steps involved in repairing trust. In
particular, regular and honest communication and a
culture that encourages behaviour in line with corporate
values and holds senior leaders to account as much as
those on the shop floor.
In this publication, we provide more evidence on these
issues as the basis for a strategic conversation. We
encourage every reader to say what you think.
This second publication in the series asks whether we are
seeing a breakdown in trust between organisations and the
people who work for them. Trust in many organisations is
weak – the latest survey findings show that just 29% of
MEGATRENDS
The trends shaping work and working lives
Chief Executive, CIPD
1
Summary of key findings
• The latest CIPD data for autumn 2013 show that
37% of employees say they trust their organisation’s
senior management and 31% say they do not trust
senior management.
• Similarly, 29% of employees think trust is strong
between employees and senior managers in their
workplace and 33% of employees think trust is
weak.
• A tracking measure collected since 2009 shows that
trust levels fell between 2009 and 2011, with some
recovery during 2012 and 2013.
• Weaknesses in trust appear to pre-date the recession.
• Employees working in smaller organisations and in
management positions tend to have more trust in
senior managers. Public sector employees have much
less trust in senior managers than their counterparts
in the private sector. Union members have lower
trust levels. The vast majority of employees who are
disengaged from their employer and/or dissatisfied
with their job do not trust their employer.
• Trust in general may be in decline. Public trust in big
business has been falling for some time and this has
implications for the trust employees place in their
leaders.
• The recession damaged employee trust, especially
where the workplace was affected by the
recession or its aftermath (for example, through
closures, redundancies or cuts in funding). Recent
improvements in measures of trust may in part be
due to economic recovery. The damage to trust is
especially marked in the public sector.
• Employees are more likely to trust senior managers
when they feel they are listened to and when their
views are taken into account when decisions are
made. The evidence suggests employers have made
modest improvements over the last 10–15 years in
keeping their employees informed and listening to
their views.
2
•
Leadership, culture and behaviour make a
big difference to trust. Trust is stronger when
management and ‘the system’ are seen to treat
people fairly, when people (including senior leaders)
behave in line with corporate values and when
leaders also show trust in their employees. Across
most of these issues, the majority of employees
appear to have positive views about management,
but this leaves substantial room for improvement.
• When trust is lacking, this affects productivity and
organisation performance. Employees spend more
time watching out for management and covering
their own backs. Managers spend more time
checking up on employees. Employees who do not
trust their employer are more likely to want to leave.
• Employees in low-trust environments are discouraged
from sharing knowledge and taking risks – wasting
innovation potential. Employees may also be reluctant
to challenge the behaviour of leaders or colleagues –
creating risks for both an organisation’s performance
and its reputation.
• How a business treats its employees is one of the
most important factors the public consider in
deciding whether to trust a business. Employees
are sometimes seen as more credible sources of
information about a business than CEOs.
• Rebuilding trust can take time. The first step is to
acknowledge trust as an issue – in autumn 2013,
38% of employees said trust is a word often used
within their organisation.
• Employee surveys suggest key elements in rebuilding
trust include improved communication, a stronger
employee voice, more meaningful consultation and
ensuring that systems and individual behaviour
reinforce corporate values.
• Economic recovery might see further improvement in
measures of trust in the short term. The longer-term
outlook is likely to remain challenging and requires
an approach based on the elements of trust-building
identified above.
#megatrends
cipd.co.uk/megatrends
1 What does the evidence say?
Trust is fundamental to sustainable and effective
relationships. In this report, we ask whether
organisations are losing the trust of those who work
for them. If the degree of trust underpinning the
employment relationship is indeed weakening, why has
it happened and what are the implications?
The focus is on whether individuals trust those responsible
for leading their organisation – senior management –
rather than trust in the person who directly supervises
the employee or in colleagues more generally. We do
this for two reasons. First, the evidence shows clearly
that employees have much greater trust in colleagues
and line managers. Second, the evidence suggests that
trust in the organisation’s leadership – or a lack of it – has
quite distinct and important consequences both for the
individual and for their employer.
What do we mean by trust?
A definition commonly used in academic research is:
‘Trust is a psychological state comprising the intention to
accept vulnerability based upon positive expectations of
the intentions or behaviour of another.’1 Employees who
place their trust in their employer are taking a risk – to
their well-being as well as their current and future
livelihood. They do this in the expectation that their
employer will have regard to their interests and welfare
– as well as the organisation’s goals – in how it conducts
its business and how it treats them personally. Similarly,
employers who trust their workforce take risks – that
employees will not abuse the discretion they are granted
to pursue individual goals that conflict with corporate
objectives or indeed to engage in activities that endanger
the financial health or reputation of the organisation
(such as treating customers inappropriately, failing to
follow procedures, stealing or disclosing commercially
sensitive information).
In order for someone to place trust in another, there are
some common requirements on the person/organisation in
whom trust is being placed that feature repeatedly in the
research literature: ability – demonstrable competence at
doing their job; benevolence – a concern for others beyond
their own needs and having benign motives; integrity
– adherence to a set of principles acceptable to others
encompassing fairness and honesty; and predictability – a
regularity of behaviour over time.2 When employees lose
trust in their employers, this tends to be because one or
more of these requirements are seen to be lacking.
MEGATRENDS
What is the current state of
employee trust?
Since its inception in 2009, the CIPD Employee Outlook
survey has included a tracker question measuring
employees’ trust in their senior leadership.3 The latest
data using this question, collected in a special CIPD
Employee Outlook Focus survey in autumn 2013, found
that 37% of employees expressed a degree of trust in
their senior management and 31% expressed a degree
of distrust, with the remainder neutral or in the ‘don’t
know’ category (see Figure 1).4 For every employee who
says they trust their senior managers, there is another
one who does not trust them, with roughly as many
waiting to be convinced one way or the other.
Alternative survey questions expose how fragile trust can
be. In the autumn 2012 survey, when presented with the
statement ‘I am not sure I can fully trust my employer’,
15% of employees agreed with it to ‘a great extent’ and
40% of employees agreed with it ‘to some extent’. This
suggests that many people who are neutral according
to the tracker question still have misgivings about the
trustworthiness of their employer.5
The autumn 2013 Employee Outlook Focus survey also
found that 29% of employees rated the overall level of
trust between employees and senior managers in their
organisation as strong or very strong – but a higher
proportion (33%) rated it weak or very weak.6
What has happened to employee
trust over time?
The tracker question can be used to assess how trust in
organisations has changed since 2009. A summary
measure of trust – the net difference between the
proportion of employees saying they trust their senior
managers and the proportion of employees saying they
do not trust their senior managers – has varied between
plus and minus 10% for most of the period since 2009
(see Figure 2).
The trends shaping work and working lives
3
Figure 1: Employee trust in senior management by sector, autumn 2013
100
90
80
% of employees
70
60
Strong distrust
Distrust
50
Neutral
40
Trust
Strong trust
30
20
10
0
All employees
Private sector
Public sector
Voluntary sector
Totals do not add up to 100% because of small numbers of ‘don’t know/not applicable’ responses.
Source: CIPD Employee Outlook Focus survey, autumn 2013.
Figure 2: Employee trust in senior management by sector, 2009–13
Net balance (% expressing trust minus %
expressing distrust)
40
30
20
10
0
–10
–20
–30
–40
–50
–60
Total
Private sector
Public sector
Voluntary sector
* This is a bespoke Employee Outlook Focus survey using a larger sample than usual but with the identical tracker question.
Source: CIPD Employee Outlook survey.
MEGATRENDS
The trends shaping work and working lives
4
Figure 3: Employee perceptions of management trustworthiness, 2004–10
60
% of employees in agreement
50
40
2004
30
2007
2009
20
2010
10
0
Management at the workplace
can be relied upon to keep their
promises
Management at the workplace
are sincere in attempting to
understand employees' views
Management at the workplace
deal with employees honestly
Source: British Social Attitudes Survey.
The data show significant differences between public
and private sectors.7 Trust among private sector
employees edged down slightly between 2009 and
2011 before it started to improve in early 2012.
The private sector net balance in autumn 2013 – at
+12% – exceeds the net balance when the survey
commenced in spring 2009.
Public sector employees are much less likely to profess
trust in their senior leaders. This appears to be a longstanding trend.8 Nevertheless, the deterioration of trust
in the sector between 2009 and 2011 was especially
sharp. By winter 2011/12, three-fifths (61%) of public
sector employees said they did not trust their leaders.
This finding is consistent with the Institute for Leadership
and Management’s (ILM) Index of Leadership Trust, which
found that employees in the public sector had lower
levels of trust in their CEO than employees in the private
and voluntary sectors, with the gap widening between
2009 and 2011.9 Trust measures in the public sector
also improved during 2012 and 2013 although the net
balance remains negative.
Previous research has suggested that weakening
employee trust is an issue that pre-dates the recession.10
Over the period between 2004 and 2010, the British
Social Attitudes Survey found that just over half of
employees thought the management at their workplace
5
dealt with them sincerely and honestly, although a
somewhat smaller proportion agreed they could be relied
upon to keep their promises (see Figure 3).
Who trusts the most – and who
trusts the least?
Trust in senior management varies greatly across
the workforce (see Figure 4). While gender makes
little difference, employees are more likely to trust
management if they are under 35, as are those with
higher qualification levels (up to honours degree level)
and those with relatively short length of service with their
current employer. The relationship between trust and
earnings is ambiguous. Union membership is associated
with distrust. The public–private sector difference shows
itself in the strong negative net balances for public
administration, education and healthcare with trust
levels greatest in hotels and catering and in real estate
and business services. There is also a clear relationship
between organisation size and trust. Employees in small
organisations are much more likely to trust their leaders,
possibly because they tend to have much closer personal
contact with them than their counterparts in large
organisations. Greater personal contact may also explain
why senior managers are more likely to trust their leaders
than those in more junior positions.
#megatrends
cipd.co.uk/megatrends
Figure 4: Employee trust in senior management by personal and workplace
characteristics, spring 2013
Personal characteristics
20+ years
15 –20 years
10–15 years
5–10 years
2–5 years
1–2 years
6–12 months
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