Paul Merage Study Stresses Importance of Corporate Transparency

UC Irvine Work Study

A new study from co-authors Jone L. Pearce and Kenji Klein of the Paul Merage School of Business at UC Irvine explores the relationship between long-tenured employees and the organizations they serve. Unlike interpersonal relationships, which have been shown generally to yield greater trust in both parties over time, the study finds that employees are more likely to mistrust their organization the longer they work there.

The study delves into the co-authors’ theory that a lack of transparency about company policy may be a driving force in eroding employee trust. To support the idea behind their hypothesis, Pearce and Klein cite the reason for public court proceedings:

“Openness more effectively holds decision makers and claimants accountable for truthfulness and unbiased decisions, demonstrates that the rich or powerful have not bought off the weak, supports adaptation to changing norms, and enhances the legitimacy of state authority.”

Pearce and Klein suspect this truth translates to the workplace, and that organizations that shroud their policies and decisions in secrecy are apt to lose the trust of their staff.

A BenefitsPro article that featured the study raised the point that it is essential to examine what builds workers’ trust, as mistrust of an organization can infiltrate mentor/trainee relationships and leave new talent with a biased view of the company. Additionally, organizational secrecy leaves employees to speculate whether policies are being enforced consistently, and can lead to office gossip.

This possible consequence is particularly troubling, since and HRDIVE study found the, in the US, 79 percent of employees use their peers as their main source for company news.

In the conclusion, the authors express their hope that the study will lead to more exploration of the harmful effects of bureaucratic secrecy with regard to company policies. The study speculates that a lack of transparency in addressing policy violations stems from organizations’ risk of embarrassment.

The researchers denounce the validity of this attitude, writing, “As the Renaissance kings discovered, avoiding embarrassment comes at a price, and that price is a loss of trust in the authorities and their policies.”


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