Dr Wen Wang

University of Wolverhampton Business School

Wen is a senior lecturer in Managerial Economics in the Business School at the University of Wolverhampton. Before joining the Business School in 2011, Wen was a lecturer in Economics at the University of East Anglia where she gained a fully-funded Doctoral degree in Labour Economics in 2010.  Prior to moving to the UK, Wen worked as a visiting lecturer in Human Resource Management at the University of Auckland, New Zealand in 2003.  Wen had been a lecturer in Human Resource Management at the China University of Geosciences since 2001.

Wen actively pursues research in the area of Employment Relations and Human Resource Management, labour market and public policy. She is currently undertaking the European Commission project “Gender –Equal Management Approach “with partners from Slovenia, Bulgaria, Croatia and Macedonia.  Wen was involved in a project funded by the Economic and Social Research Council entitled “Gender and Careers in Science in the British Higher Education”; She also won two Early Researcher Grant Schemes from the University of Wolverhampton in the UK and China University of Geosciences in China.

Investigation Employee Commitment and family Business Sustainability

Executive summary

The proposed ERAS 2013/14 fellowship project is to investigate “Employee Commitment and Family Business Sustainability”. This broad topic was developed during the ERAS workshops to a more plausible research project “Employer’s Trust and Workforce Outcomes in the UK”.  The project intends to examine the impact of employer’s trust on employee behaviour within the social exchange theory framework (Blau, 1964), with a focus on Small and Medium sized Enterprise with employee numbers between 10 and 249. The justification to choose such type of business is that micro firms (1-10 staff) have less concern on employment relations. This research project undoubtedly includes family business which comprises of considerate proportion of SMEs in the UK.

Using 2004 Workplace Employment Relations Survey data, 688 independent SMEs in the private sector are extracted.  In the data set, senior managers/ owners were asked to rate their trust in workforce.  By controlling a wide range of firm characteristics, such as sector, size, Accredit as Investor in People,  history, workforce composition, the empirical results show that employer’s high trust in workforce  is negatively associated with workforce absenteeism (measured by percentage of working day loss in the last 12 months). In addition, when take these senior manager’s personal characteristics into account, such as gender, age, job tenure, professional qualification and formality of HR practices (such as having HR assistant) and job title, the empirically result shows that owner-manager is significantly and negatively associated with low trust in workforce.

These findings were presented at the International Family Enterprise Research Academy (2014) in Finland (see appendix 1).  A few constructive feedbacks were given, in which  it is the mechanism how manager’s trust have an impact on employee’s behaviour needs to be examined; second the causal order between workforce absenteeism and manager’s trust is not clear. Thirdly, it is not convincing to use one item to measure manager’s trust in workforce.  These comments were taken into account for further development. In September 2014, I went to Timberlake (London) to attend Structural Equation Modelling in order to untangle the causal direction. Currently, I work on a further developed article in which I examine the relationship between senior manager’s trust (perception of reliability, identify, concern of its workforce), High Performance HR practices (training, empowerment, incentive pay); and workforce outcomes (see the abstract in appendix 2)

During the ERAS period, there were two attempts to take this research further. First, what is the mechanism for family business to generate trust? Initially, three family businesses were contacted to carry out one day observations. After discussion during ERAS workshop, the effectiveness of this approach was questioned. How to avoid Horn thorn effect, employees and owners “perform” in front of the observer? What is the incentive for both manager/owner and employees tell the trust worthy towards each other to the observer? It was suggested to carry this topic out in the future project. Second, to carry out a survey in order to identify the impact of family employee on trust in workforce, due to the time constraint of the fellowship, it is not plausible within this project.

The project empowered me to explore an independent research project; the critical thinking which I developed helps me to finish one research paper (with Professor Pervaiz Ahmed), the paper was sent to Journal of Management (4* in my discipline) in July 2014 (see appendix 3). The awareness rose via the workshop, a news release based on the paper submitted (see appendix 4). In addition, the skills I learnt to manage a project enable me to play a part to win the EU project (with Silke Machold, £80,000) for 2014-2016 (see appendix 5).

Main research: Trust in Workforce at SMEs in the UK

Introduction

SMEs are important: Engines of innovation and economic growth; Most started as family business which is considered to have a long-term perspective. In 2013, 99% of 4.9 million businesses are SMEs in the UK, employing 0-249 people; 95%, 4.7 million, are micro-business, employing 0-9 people (Rhodes, 2014). There were 270,000 business births in 2012 and 255,000 business deaths; give 5% survival rate (Rhodes, 2014); the lack of knowledge is particularly pronounced with respect to employment relations at SMEs (Block et al., 2014)

Trust has been empirically found to positively associated with good employment relations, high employee performance, designable organizational behaviour, and high firm performance (Mayer et al., 2007; Brower, et al., 2009; Dirks and Ferrin, 2001; Wang and Ahmed, 2014). SMEs has the potential to develop trust, therefore, take advantage of trust to facilitate its growth However, WilKinson (1999) states employment relations in SMEs are neither “small is beautiful” not “bleak house”, it is rather complicated.

Research questions

• What is the impact of trust in workforce on employee’s outcomes?
• Do owner-managers trust its workforce?

Literature review

Trust is level and context specific: interpersonal and organizational (within and between)  (Fulmer and Gelfand, 2012).Most studies has explored interpersonal trust (Mayer, Davis and Schoorman, 1995), particularly,  subordinates’ trust in their managers and its impact on subordinates’ behaviour (Colquitt, Scott & LePine, 2007; Dirks & Ferrin, 2001). Recently, the dark side of interpersonal trust has been recognised (for a review see Anderson and Jap, 2012). The definition issues to distinguish trust in management vs trust in organization as an entity/employer (Fulmer and Gelfand, 2012;Alfes et al., 2012). Trust within organization and its impact via trust climate (Shockley-Zalabak, 2000).  The dyadic nature of trust required to take both parties into account. A few articles used collective trust in management team to measure trust climate (Collins and Smith, 2006; Clapp-Smith et al., 2009). The research into manager’s trust is very limited, Brower et al. (2009) in which they examined the impact of trusted by manager on subordinate’ task performance and quit intention (self-reported).

Trust in workforce is more likely to lead HRM practices featured with empowerment and delegation. Empowered employees are more motivated (Seibert, et al. 2004; Spreitzer, 1996); Empowered employees are more committed (Kraimer etal., 1999; Spreitzer and Mishar, 2002). This leads to our first hypothesis:

• Proposed relations: it leads to lower absenteeism and high labour productivity

Family business is characterized with trust, but among family members since  “Blood is thicker than water!”(Davis, Allen and Haynes,  2010).  Using 1998 WES data, Harris et al. (2004) reported family business has lower level of employee involvement in the UK.  In addition, Miller et al. (2008) reported that owned and managed by a founder with no other relative involved in business (non-FOBs) tends to be conservative in Canada.

• Proposed relation: Owner-managers might be suspicious of its workforce at SMEs.

Methods

Dataset: Workplace Employment Relations Survey (2004), manager interview data. Only this survey includes manager’s attitude/belief towards workforce. Firm size: 10-249, 688 firms while 234 are family business (a single individual or family own at least 50% of the company (Astrachan and Kolenko, 1994) Indicators of Organizational outcome.

Measurement issues

Workforce absence is measured by percentage of work day loss due to employee sick leave in the last 12 months. An OLS regression was used.

Labour productivity is measured by senior manager’s rating on “compared with competitors in the same sector, the labour productivity at this establishment is a lot better, better, average, worse, and a lot worse”. An ordered probit model was employed.

Trust in workforce is extracted from the question “Given chance, employees here will take unfair advantage of management”, rate from “strongly disagree to strongly agree”. An ordered probit model is used. The empirical results were in Table 1 and Table 2.

Table 1: The Impact of Trust in Workforce on Employee Outcomes

Note: * P<0.1; ** p<0.05; *** p<0.001

Table 2: Owner-mangers and trust in workforce

Note: * P<0.1; ** p<0.05; *** p<0.001

Findings

• Highly trusted workforce are less likely to be absence
• Highly trusted workforce are productive workforce
• Owner-managers are significantly associated with lower trust in workforce
• Formality, having HR assistant, is positively associated with trust in workforce

Implication

Trust in workforce is beneficial. The growth stage of SMEs is critical, owner-mangers have to overcome emotional barrier. Managers have to learn to trust. A survey carried out  by Mishra and Morrissey (1990) in West Michigan of 143 managers in both public and private organizations responded to a survey 54 questions to determine how they could develop and increase trust. Managers agreed on 5 possible factors that lead to trust in organizations. 96.4% felt that open communication was a common factor that builds trust. 90.4% agreed on giving workers more share in decision making. 87.4% agreed with sharing critical information, 85.5% sharing of perceptions and feelings, and 83.6% not taking advantage of others' weaknesses and shortcomings. The survey indicated that top and middle managers have primary responsibility for building trust.   Formality, such as management professionalization, seems to increase trust in workforce.

Limitations and Future direction

How trust in workforce works, we did not directly examine these underlying processes. Lack of measurement on family involvement, therefore, can’t distinguish what recently so called really family firm (multi family members as major owners or managers) against lone funder (venture oriented) (Miller et al. 2006; Miller and Miller, 2007)

References

Alfes,K., Shantz,A. and Truss, C. (2012) The link between perceived HRM practices, performance and well-being: the moderating effect of trust in the employer. Human Resource Management Journal 22.4,409-427

Anderson, E., & Jap, S. (2012). The dark side of close relationships. Sloan Management.

Blau, Peter Michael. Exchange and power in social life. Transaction Publishers, 1964.

Block, J., Goerke, L., Millán, J. M., & Román, C. (2014). Family employees and absenteeism. Economics Letters.

Brower, H. H., Lester, S. W., Korsgaard, M. A., & Dineen, B. R. (2009). A closer look at trust between managers and subordinates: Understanding the effects of both trusting and being trusted on subordinate outcomes. Journal of Management, 35(2), 327-347.

Collins, Christopher J., and Ken G. Smith. "Knowledge exchange and combination: The role of human resource practices in the performance of high-technology firms." Academy of management journal 49.3 (2006): 544-560.

Colquitt, J. A., Scott, B. A., & LePine, J. A. (2007). Trust, trustworthiness, and trust propensity: a meta-analytic test of their unique relationships with risk taking and job performance. Journal of applied psychology, 92(4), 909.

Clapp-Smith, Rachel, Gretchen R. Vogelgesang, and James B. Avey. "Authentic Leadership and Positive Psychological Capital The Mediating Role of Trust at the Group Level of Analysis." Journal of Leadership & Organizational Studies 15.3 (2009): 227-240.

Department For Business, SME statistics: Business Survival rates, 1995-2004,

Dirks, K. T., & Ferrin, D. L. (2001). The role of trust in organizational settings. Organization science, 12(4), 450-467.

Fulmer, C. A., & Gelfand, M. J. (2012). At What Level (and in Whom) We Trust Trust Across Multiple Organizational Levels. Journal of Management, 38(4), 1167-1230.http://aalookup.bis.gov.uk/ed/survival/htm/Key%20Results1.htm

Harris, Richard ID, Renee S. Reid, and Rodney McAdam. "Employee involvement in family and non-family-owned businesses in Great Britain."International Journal of Entrepreneurial Behaviour & Research 10.1/2 (2004): 49-58.

Kraimer, M. L., Siebert, S. E., & Liden, R. C. 1999. Psychological empowerment as a multidimensional construct: a test of construct validity. Educational and Psychological Measurement, 59: 127-142.

Mayer, R. C., Davis, J. H., & Schoorman, F. D. (1995). An integrative model of organizational trust. Academy of management review, 20(3), 709-734.

Miller, D., & Breton‐Miller, L. (2006). Family governance and firm performance: Agency, stewardship, and capabilities. Family Business Review, 19(1), 73-87.

Miller, D., Le Breton-Miller, I., Lester, R. H., & Cannella Jr, A. A. (2007). Are family firms really superior performers?. Journal of Corporate Finance, 13(5), 829-858.

Miller, Danny, Le Breton‐Miller, and Barry Scholnick. (2008):  "Stewardship vs. stagnation: An empirical comparison of small family and Non‐Family businesses*." Journal of Management Studies 45.1 :51-78.

Mishra, Jitendra, and Molly A. Morrissey. (1990)."Trust in employee/employer relationships: A survey of West Michigan managers." Public Personnel Management.

Rohodes, C. 2014, Business Statistics, House of Commons, URL: www.Parliamnt.uk/briefing-papers/sn06152.pdf

Seibert, S. E.; Silver, S. R., & Randolph, W. A. 2004. Taking empowerment to the next level: A multiple-level model of empowerment, performance, and satisfaction. Academy of Management Journal, 47: 332-349.

Shockley-Zalabak, P., Ellis, K., & Winograd, G. (2000). Organizational trust: What it means, why it matters. Organization Development Journal.

Spreitzer, G. M. 1996. Social structural characteristics of psychological empowerment. Academy of Management Journal, 39: 483-504.

Spreitzer, G. M. & Mishra, A. K. 2002. To stay or to go: voluntary turnover following an organizational downsizing. Journal of Organizational Behavior, 23: 707-729.

Wang and Ahmed, 2014, Trust in management, job satisfaction and labour productivity. Submitted to Journal of Management, awaiting for comments

Wilkinson, A. (1999). Employment relations in SMEs. Employee relations, 21(3), 206-217.