AIM Northern Territory - ABLS Key Findings

Key findings from the Australian Business Leadership Survey are now available. Download the PDF document [550K].

Corporate Australia in crisis of trust new study finds

Australian business is facing a 'crisis of trust' threatening productivity and performance the initial findings of a new study into leadership and organisational culture have revealed.

The joint study by the Australian Institute of Management and Monash University shows that while trust underlies all aspects of organisational culture, it is the lowest ranked job outcome for managers across a range of industries and levels.

In terms of job outcomes, trust and loyalty by others in the company rated the lowest in the survey. Simply put, managers don't feel their staff trust them.

"This is not likely to change in the foreseeable future unless we see a dramatic change towards a more positively affirming approach to leading people and corporations. Leaders need to be able to link organisational goals to the needs and beliefs of staff to create a positive and productive environment", says Monash University Associate Professor James Sarros.

"Nor should the challenges of improving our leadership skills be underestimated. The continuing trend to downsize, hierarchical management structures and a highly litigious industrial relations framework makes it extremely difficult for leaders to consistently act in a way that engenders employees' trust", Dr Sarros said.

"The findings of this survey should set the alarm bells ringing for senior management in Australia. Trust and loyalty should be a priority for organisations, from the top down, as they have serious implications for individual and enterprise performance," said Chief Executive Officer of the Australian Institute of Management in Queensland, Ms Carolyn Barker.

The survey shows a strong correlation between trust and a positive workplace culture that emphasises reward, supportiveness and stability. Managers surveyed admit, however, that the trust which should underlie this culture is at a low ebb in their organisations.

"The findings of this study clearly demonstrate that trust is strongly linked to leadership attributes such as caring for colleagues, actively involving them in the company's vision, mentoring, role modeling and inspirational motivation.

This highlights the importance of assisting managers at all levels of the organisation to understand and display the leadership behaviours that foster positive values in employees", said Ms Barker.

And the larger the organisation the more difficult this becomes. The correlation between an organisation's size and its culture also provides important insights for leaders when structuring larger organisations.

Smaller organisations consistently showed higher outcomes for job satisfaction, commitment, trust, loyalty and respect.

The survey reinforces findings of similar research projects around the world. The more high tech, impersonal and sophisticated organisations become, the greater the need for leaders who can build a culture of trust in the organization.

"Creating smaller business units, flattening the management structure, involving staff in decision making and opening up timely and transparent channels of communication is central to creating trust in larger organisations. However, there are salutary lessons in this research for organisations, irrespective of size.

"Fortunately, most leadership skills can be learned. Except for innate skills such as intelligence, drive and enthusiasm, leaders can learn how to manage people and situations so as to instill a sense of trust within organisations," Dr Sarros said.

"Increasingly, managers in organisations are recognising that people are their competitive edge and that attracting and retaining a smart, stable and loyal workface is paramount. Managers are coming to understand that, as in any relationship, trust is central to stable and productive workplace relations," Ms Barker concluded.

Leadership, Organisational Culture and Job Outcomes in Australian Enterprises: a joint Australian Institute of Management - Monash University research project.

Research Director: Associate Professor James C. Sarros, Monash University
Co-researchers: Dr Judy H. Gray, Monash University & Dr Ian L. Densten, University of NSW (ADFA)

The survey used a random national sample of 5,000 members of the Australian Institute of Management, with a total final sample of 1,918 responses, or a 39 per cent return rate.

Some of the world's best known research instruments were used to collect the data. Leadership was measured using the Multifactor Leadership Questionnaire (MLQ). Organisational culture was measured using the Organisational Culture Profile (OCP) and the job outcomes of job stress, job satisfaction, trust, loyalty, respect, and commitment were measured as outcomes of organisational leadership and culture.

The questionnaire was self-assessed, looking at the way respondents rated their own leadership skills, organisational culture and job outcomes.