"The High Cost of Lost Trust"
Harvard Business Review
September 2002, pp. 18-19
The author of this article "hypothesized that when employees sense an inconsistency between what their bosses say and do, it triggers a cascade of effects, depressing employees' trust, commitment, and willingness to go the extra mile. These effects, we reasoned, would reduce customer satisfaction and increase employee turnover, harming profitability."
To measure this expected chain reaction, employees were surveyed at 76 Holiday Inn hotels. Using a number of statements, their managers' behavioral integrity (how closely their managers' words and actions were aligned) was assessed. Secondly, employees were asked about their commitment and the service environment at their hotels. Finally, the responses were correlated with the hotels' customer satisfaction surveys, personnel records, and financial records.
The results of this study were as follows: "Hotels where employees strongly believed their managers followed through on promises and demonstrated the values they preached were substantially more profitable than those whose managers scored average or lower. So strong was the link, in fact, that a one-eighth point improvement in a hotel's score on the five point scale could be expected to increase the hotel's profitability by 2.5% of revenues-in this study, that translates to a profit increase of more than $250,000 per hotel. No other single aspect of manager behavior that we measured had as large an impact on profits."
The article also identifies several reasons why maintaining behavioral integrity is hard: (a) Credibility is slow to build and quick to dissipate. It takes only a single lie for a manager to be branded a liar; (b) Managers must manage the expectations of different stakeholders, each with its preferred language and distinct interests. People may perceive a message intended for one group of stakeholders as hypocrisy compared to what was expressed to them; (c) Management policies shift, and the manager may have to convey different messages at different times; (d) Management fads come and go, and this fuels cynicism in employees; (e) Confused managers may behave inconsistently; and (f) Some managers have blind spots where they are unable to see an integrity problem within themselves.
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