Americans Have Lost Trust in Institutions. What Can Organizations Do?

Fuqua researchers suggest ways to ease the tensions

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This is a summary of a story that first appeared on the Duke Fuqua School of Business.

From the rule of law to security, Americans rely on trusted institutions to manage and minimize the risks in their lives. This includes everything from government to financial to workplace institutions.

But new Duke research states that there’s been an erosion of public trust in institutions over the past two decades.

The study explores why the quest to rebuild trust in institutions has failed: There’s no clear understanding of how to reset confidence because of the institutional contradictions that eroded trust in the first place.

Those contradictions are embedded in how modern organizations function, said study author Sim Sitkin of the Fuqua School of Business. Health care companies, for example, are expected to be transparent, but sometimes the managerial call for efficiency may clash with the expectations of patient care. Financial service companies act as stewards of client money, yet their professional logic can at times appear in conflict with investor or depositor expectations.

Over time, these competing demands create friction that stakeholders notice and can interpret in ways that erode trust.

As an example, the article states that the way organizations responded to the COVID-19 pandemic may have strained relationships with its employees. Those tensions occurred during a period when institutional policies became divisive and polarizing.

The research identified five recurrent contradictions that inform how people judge institutions, including inclusiveness versus exclusiveness, and authority versus participation. Those contradictions create tension and can feel like betrayal.

To build trust, “Institutions need to demonstrate to stakeholders that they are making efforts to eradicate the contradiction in ways that allay fears of future inconsistencies,” Sitkin said. “Organizations become trustworthy when they show they are willing to initiate policy or organizational changes that promote consistency, while also adapting to complex and evolving issues.”

To learn more about the study, visit the Duke Fuqua School of Business.