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Do Employees Trust Their Employers?

by Dennis Jacobe

Although media coverage and investor furor over "Enronitis" and related accounting issues are waning, lingering concerns among consumers and investors continue to affect the stock market and the U.S. economy overall. The skittishness of the investing public is obvious at a time when any rumor of an accounting/reporting problem instantaneously sends a company's stock tumbling. The average American's fears are reflected in consumer/investor confidence numbers that have continued to fall even as the economy's first-quarter growth -- and many other economic measures -- have turned out to be much stronger than expected.

"Enronitis" does not involve just a few isolated cases. Many money managers know that the tendency of major companies to push the envelope when reporting earnings and portraying their overall financial condition was one of the factors that built the boom of the late 1990s. The fear is that a growing number of these accounting-related debacles could severely damage overall investor confidence in both the stock market and the economy as a whole.

The good news is that, according to the new Gallup/UBS Employee Outlook Index* (see "Gallup, UBS Launch New Employee Index" in Related Items for more discussion of the Index itself), the overwhelming majority (86%) of Americans working at private-sector-for-profit companies trust and respect the people who run their companies. Significantly, virtually the same percentage of employees (87%) trusts the people who handle the finances/accounting at their companies. That is, the people inside these companies -- employees who are by far the most knowledgeable about the real economic condition of their company-- are much more likely than investors and the general public to believe that the people running and reporting on their companies are trustworthy. This is an extremely important message for main street as well as Wall Street.

Of course, this doesn't mean that what happened at Enron won't happen to other companies. Clearly, most Enron employees were as surprised by their company's collapse as most outside investors and the general public. However, these results do suggest that accounting/reporting-related problems are not nearly as widespread as many on Wall Street fear. In turn, the impact of "Enronitis" may not be all that significant in real economic terms, particularly once some key reforms are made. And the sooner such reforms are made, the sooner the stock market and the economy is freed from the psychological drag of "Enronitis", the better for the economy.

Most Employees Trust Those Who Run Their Companies

In April, 86% of private sector employees at for-profit companies said they have a great deal or a moderate amount of trust in the people who run their company.

Also in April, 87% of private sector employees at for-profit companies said they have a great deal or a moderate amount of trust in the people who handle the finances/accounting at their companies.

Most Employees Respect Those Who Run Their Companies

As part of the Employee Outlook Index, private sector employees of for-profit companies were asked whether a number of different characterizations describe the people who run their companies.

  • 90% say the top executives in their company are trying to do what is best for the company's customers
  • 86% say they are honest and ethical
  • 81% say they are good leaders
  • 72% say they are trying to do what is best for the company's employees
  • 71% say they are worth the money they earn
  • 68% say they are trying to do what is best for the company's stockholders

When asked whether most top executives in their company are only interested in looking out for themselves even if it harms the company, or whether they are interested in doing a good job for the company, four out of five employees (80%) said they are interested in doing a good job for the company.

Given Gallup's extensive research on employee engagement, I am not surprised that 17% of employees have such a cynical view of their company's executives. Sixteen percent (16%) of employees in the United States are "actively disengaged" at their companies and have a cynical view of just about everything.

*These results are based on telephone interviews with a randomly selected national sample of 663 adults, aged 18 and older, conducted April 8-11, 2002 and April 22-24, 2002. For results based on this sample, one can say with 95% confidence that the maximum error attributable to sampling and other random effects is ±4%. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.


Gallup https://news.gallup.com/poll/5965/Employees-Trust-Their-Employers.aspx
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