How Do Controls Impact Employee Trust in the Employer?

• Author: Deanne N. Den Hartog,Denise Skinner,Rosalind Searle,Nicole Gillespie,Frédérique Six,Antoinette Weibel
• Date: 01 May 2016
• DOI: http://doi.org/10.1002/hrm.21733
• Published date: 01 May 2016

Human Resource Management, May–June 2016, Vol. 55, No. 3. Pp. 437–462

© 2015 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI:10.1002/hrm.21733

*Both authors have contributed to the same degree and their names are listed in alphabetical order.

Correspondence to: Antoinette Weibel, University of St. Gallen, School of Management, Dufourstrasse 40a,

9000St.Gallen, Switzerland, Phone: +41 71 224 23 80, E-mail: Antoinette.weibel@unisg.ch

HOW DO CONTROLS IMPACT

EMPLOYEE TRUST IN THE

EMPLOYER?

ANTOINETTE WEIBEL, DEANNE N. DEN HARTOG*,

NICOLE GILLESPIE*, ROSALIND SEARLE,

FRÉDÉRIQUESIX, AND DENISE SKINNER

Do organizational controls facilitate or hinder employees’ trust in their organi-

zation? We addressed this question through a mixed-methods design using

three studies. Based on a literature review and an open-response survey study

(Study1), we developed a theoretical model proposing that organizational con-

trol is positively related to employees’ trust in their organization, and that this

relationship is mediated by procedural fairness and organizational prestige.

This mediated model was tested and supported in a quantitative survey of 582

European managers and professional employees from a range of organizations

(Study 2). A complementary, qualitative interview-based study (Study 3) con-

fi rmed that well-implemented controls facilitate trust in the organization; how-

ever, poorly implemented control systems that are inconsistent, overly rigid,

or incentivize untrustworthy behavior can undermine trust in the organization.

©2015 Wiley Periodicals, Inc.

Keywords: trust, control, procedural fairness, organizational prestige

Over the last decade, a wide range of

events have eroded internal and exter-

nal stakeholders’ trust in organizations

(Kramer & Lewicki, 2010). Scandals and

trust violations by firms across different

industries have raised questions about organiza-

tional trustworthiness and increased demands for

stricter regulation in the governance, compliance,

and operations of companies. This, in turn, influ-

ences internal organizational control systems,

increasing formalization, tightening evaluation

and audit practices, and revising reward and sanc-

tioning systems. Yet, how such organizational

controls affect employees’ trust in their organiza-

tion is not clear.

Research attests to the benefits of high

employee trust. Trusting employees are more

committed and stay with the organization lon-

ger, work harder and more cooperatively, share

knowledge, and problem solve more effectively

(e.g., Coyle-Shapiro, Morrow, Richardson, &

Dunn, 2002; Fulmer & Gelfand, 2012; Tremblay,

Cloutier, Simard, Chenevert, & Vandenberghe,

2010; Whitener, 2001). In addition, trust in the

employer enhances the effectiveness of high-

performance work practices by moderating the

effects of these HR practices on justice percep-

tions and feelings of commitment (Alfes, Shantz,

& Truss, 2012). In contrast, those who do not trust

their employer may reduce the effectiveness of

438 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2016

Human Resource Management DOI: 10.1002/hrm

We propose that

when focusing

on trust in the

organization,

control systems

generally function

as a protective

mechanism for

employees, reducing

risk and vulnerability

in relation to their

organization, and

hence controls

will typically

facilitate trust in the

organization.

monitoring or binding contracts (e.g., Malhotra &

Murnighan, 2002). In this article, we take a more

neutral and broader approach, focusing on three

different types of control systems and on the con-

figuration of control practices specified to direct

employees’ behavior into the direction of an orga-

nization’s objectives. By adopting a broader view

of organizational controls, our approach is closer

to the actual practices of companies and parallels

the approach adopted in the strategic HR field to

study HR systems as a bundle of practices (e.g., Pil

& MacDuffie, 1996).

Second, control may differentially impact on

trust depending on the referent (i.e., who or what

is being trusted). Fulmer and Gelfand’s (2012)

review showed that the antecedents and conse-

quences of trust depend on the referent (e.g., an

individual, a group, or an organization). Most

prior work on trust and control focuses on inter-

personal trust (i.e., how control relates to trust in

specific others). Here, we distinguish employees’

interpersonal trust from their trust in the organi-

zation, and extend the examination of the role

of control to employees’ trust in their employing

organization. This responds to calls for greater

specificity in the referent of trust (Fulmer &

Gelfand, 2012) and theoretical work arguing that

the assumptions for interpersonal trust are not

always readily transferable to trust in the organi-

zation (Gillespie & Dietz, 2009, p. 142). Trusting

an organization entails different types of vulner-

abilities, dependencies, and risks than trusting a

person.

We propose that when focusing on trust in

the organization, control systems generally func-

tion as a protective mechanism for employees,

reducing risk and vulnerability in relation to their

organization, and hence controls will typically

facilitate trust in the organization. Using data

from three studies, we examine this proposition

and explore the mechanisms through which the

control-trust relationship occurs. Our overarching

aim is to advance theoretical and empirical under-

standing of the role of organizational controls

on employees’ trust in their organization. To this

end, we first conduct an exploratory, open-ended

survey (Study 1, N = 62) to examine whether

employees spontaneously identify controls as a

factor that influences trust (or distrust) in their

employing organization and, if so, what control

practices are mentioned in this regard. This study

suggested that three types of control are perceived

to influence employees’ trust in their employer:

output, process, and normative control. In addi-

tion, respondents indicated that controls influ-

ence trust by engendering perceptions of fairness

and supporting organizational prestige. Based on

their work (Dirks & Ferrin, 2001); are more likely

to engage in counterproductive behavior, such as

obstruction or revenge (Bies & Tripp, 1996); or

decide to leave (Robinson, 1996).

The well-documented positive effects of trust

have increased interest in understanding its ante-

cedents. These include organizational variables

such as high-commitment HR practices (Hodson,

2004; Searle et al., 2011; Whitener, 1997, 2001),

fairness (Cohen-Charash & Spector, 2001;

Colquitt, Conlon, Wesson, Porter, & Ng, 2001),

and supervisory support (Zhang, Tsui, Song, Li, &

Jia, 2008). Yet organizational control—the most

ubiquitous feature of formal organizations and a

central feature of HR systems (Snell,

1992; Snell & Youndt, 1995)—

remains underexplored in relation

to employees’ trust in their organi-

zation. Indeed, despite Whitener’s

(1997) call for greater attention on

the effect of bundles of HR prac-

tices on trust in the employer, little

empirical work has occurred.

Prior work on control and

(interpersonal) trust has engen-

dered a heated debate. Some schol-

ars argue organizational control can

complement and enhance trust. For

example, performance management

systems may create opportunities

for positive interaction histories and

signal “we care for your advance-

ment” (e.g., Byrne, Pitts, Wilson, &

Steiner, 2012; Sitkin, 1995; Weibel,

2007). However, other scholars pro-

pose that control and trust are nega-

tively related, arguing control either

forms a substitute for trust (i.e.,

control becomes redundant once a

certain level of trust is present) or

control actively undermines trust,

as it signals suspicion (e.g., Das

& Teng, 1998; Ghoshal & Moran,

1996). Bachmann, Knights, and

Sydow (2001, p. v) conclude that “while there are

numerous examples in the literature where con-

trol chases out trust, there are equally as many

examples of trust and control being complemen-

tary, or going hand in hand.”

This set of conflicting findings may be due to

two reasons. First, prior work on trust and control

typically examines only one or two select control

mechanisms (e.g., performance appraisal or moni-

toring), suggesting that the divergent findings may

reflect the specific type of control examined. Also,

studies often focus only on the tight implementa-

tion of these control mechanisms, such as close