A matter of trust: How to build back employees’ confidence in organisations 

A decline in trust is one factor depleting productivity in Australian workplaces. How can organisations repair employee trust, and unlock their full potential?

Mercers’ 2024 Global Talent Trends study found employee trust in their organisation has declined from 81% in 2022 to 72% two years later. In addition, those who believe their employers will do the right thing for society is also down 10 percentage points to sit at 74% currently. And Australia’s HR leaders are feeling it – one in two rate their organisational culture as ‘low trust’.

Our research has found that when trust is eroded, so too is employee productivity, energy, collaboration, and retention. In other words, trust is one of the greatest predictors of employee success.

What is eroding employee trust?

Employees expect a fair exchange between the contributions they make and the rewards they receive. But this exchange seems to be off balance. Organisations are asking a lot of employees and problems are coming to the surface. Two in five workers believe the world of work is fundamentally broken – 41% feel overwhelmed by the mental and emotional demands of their jobs and 57% report working longer hours than ever before.

Eight out of ten employees feel at risk of burnout this year and 20% of them attribute this to a misalignment between their own values and the values of their employer.

Employees are also increasingly looking to their organisations to prioritize social issues, DEI (diversity, equity, inclusion) and environmental impact. Nearly all Australian employees (99%) expect their employer to pursue a sustainability agenda, and one in three say setting goals is not enough. They want leaders to be held accountable for sustainability outcomes. But only half of Australian executives (52%) feel confident that they will deliver on their DEI commitments.

It’s no surprise that employees point to broken promises and unfair treatment as top reasons for the erosion of trust.  An example of this is the recent WGEA publication of gender pay gaps which shines a light on unfair approaches to pay which many organisations are now grappling with.

As organisations continue to respond to the urgent need to digitalise and increase productivity, business transformation will remain at the forefront in 2024. In fact, every organisation in our study is planning some enterprise-wide transformation this year and this hasn’t gone unnoticed – employees in Australia cited frequent organisation changes as the #2 reason for erosion of trust. Transformation demands high energy and commitment from workers but when employees feel that the ground is constantly shifting under their feet, they may be less likely to buy in to the changes and try to “ride it out” until the next restructure.

An explosion in AI-enabled tech tools is also putting employees under pressure. Thirty-seven percent are overwhelmed by too many tech tools and platforms. A rising tide of AI anxiety means nearly two in five also feel they’re more replaceable and less valued than prior to 2020 and one in four say AI is creating job uncertainty.

Against this backdrop, it’s hardly surprising that one in three employees are planning to leave their jobs in the next 12 months.

Trust impacts executives’ decisions to leave
C-suite executives are less likely than their employees to say they intend to stay with their organisation this year (46% versus 68%). One in three senior leaders plans to leave in the next 12–18 months, and a further 20% think they may be let go or see their role eliminated. Of those who do plan to leave, one in three cite a loss of trust in their organisation.

How can employers earn greater trust?

Employees’ trust in their organisation is the strongest variable in influencing how energised they feel at work, their sense of thriving, and their intent to stay – and these factors fuel performance. Therefore, what actions can organisations take to address the erosion of employee trust?

Our Global Talent Trends study found that job security is naturally the top reason that people stay at their current employer; and this year, fair pay, positive work culture, and growth opportunities trended next. Investing in these areas demonstrates an organisation’s trust in its employees and willingness to commit to their long-term success.

Build better relationships and work cultures

As employees reshaped their relationship with work during the pandemic they learned to depend less on their manager and built a more direct relationship with their organisation’s brand. This shift makes focusing on DEI expectations and holding leaders accountable to outcomes (not just setting targets) increasingly important in building employee trust.

Psychologists have uncovered three factors that make up trusted relationships: benevolence, competence and integrity. You need all three to strengthen trust. For example, you cannot make up for a lack of integrity by being more competent and benevolent.

Benevolence is about trusting that your organisation will do the right thing by you. This means listening to employees, understanding what they want, and designing work that brings out the best in them. “I trust that you are telling me the truth.”​

Competence is about trusting that people know what they are doing and that leaders are held accountable. “I trust that you know what you’re doing.”​

Integrity is about trusting that action will follow words. This underscores the importance of companies living up to their pay philosophies, recognising workers for their unique performance, contributions, experience, and skills. - “I trust that you will do right by me.”​

If we think of trust in this construct, it helps to focus on activities that will build each of these elements. For instance, our survey found that only 37% of employees in Australia feel valued for their contributions. Listening to employees to learn what fairness means to them, and taking action to meet their expectations will help improve integrity.

Fair pay and opportunity in the spotlight

Fair pay is one of the main reasons employees now choose to stay with an organisation. But globally, only one-third of employees think the pay and promotion decisions in their organisation are made fairly, equitably, and without bias. People not only want compensation that reflects their contributions, they also expect pay equity relative to their colleagues. This is less about market-competitive pay (which ranks as number six on the list of why people stay), and more about the perception of fairness, which goes well beyond just salary and benefits. Employees are getting better at evaluating the entire deal, and one of the things they look for is transparency of opportunity.

In Australia, the Workplace Gender Equality Agency‘s (WGEA) gender pay reporting is exposing the gaps around diversity and equity in organisations. All employers with 100 or more employees must report their gender equality data to WGEA, and those with over 500 employees must have a policy or strategy for gender equality indicators, putting DEI initiatives in the spotlight.

It’s important to take a broad view on fairness beyond pay because inequities can show up across many dimensions. Take location of work for example. More than a third (34%) of employees think that remote working will have a negative impact on their career prospects. Yet Flex Working is in the top 5 reasons of why employees stay but for HR it is ranked 15.

Age is another dimension that stood out in our research with a staggering 76% of employees reporting they have witnessed age-based discrimination at work. HR leaders are aware of the problem, with 49% already measuring and addressing age discrimination in talent decisions and a further 34% planning to start this year.

How to address unconcious bias (1 minute)

Career opportunities: keep your people employable and motivated

Career development opportunities is one of the top reasons employees stay at an organisation. Helping them understand available opportunities, the gaps they have and the skills they can bring to the table can create better employer–employee partnerships.

A way to democratise opportunities is to use skills as the currency of work. This approach requires a skills-first talent model, radical transparency and a belief that with enough effort and support, people can upskill and add value in new ways. Implementing an internal talent marketplace is a solution 27% of Australian employers are exploring today, with almost one-third (30%) already benefiting from this approach.

Globally, employees who trust their organisation are twice as likely to report they are thriving. That trust will be critical for driving positive, healthy and productive workplaces – and for ensuring the success of organisational transformation efforts.


Global Talent Trends Study 2024

This year’s trends identify what leading organisations are doing to build more agile and sustainable people practices that will enable workforces to thrive. Learn how WorkSafe Victoria is reimagining the EVP to strengthen trust and belonging.
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