Why HR systems are now a workplace trust issue

Article Summary

• Why workplace trust is shaped by systems, structures and policies as much as leadership behaviour
• How AI, monitoring and hybrid work are making institutional trust a core HR issue
• What HR leaders can do to design people systems that feel fair, transparent and trustworthy

Trust at work is often discussed through relationships: whether employees trust leaders, whether managers help create psychological safety and whether people feel able to speak openly. These relationships matter deeply. Yet they are only part of the trust picture.

At the Make Work Better Conference 2026 IIP CEO Katherine Chapman described this as part of “lived trust at work”: the everyday experience that tells people whether they can rely on their leaders, their managers and the organisation itself. Increasingly, she argued, people are making those judgements through the systems and technology they use at work as well as through human relationships.

The The Trust Paradox whitepaper includes an important insight from Veronica Hope Hailey, emeritus professor at the University of Bath’s School of Management. She argues that organisations need to pay more attention to institutional trust: the extent to which people trust the systems, structures and policies of the organisation itself. As she puts it:

“Leadership behaviour matters, but an organisation also has to demonstrate trustworthiness in the way it organises itself.”

This distinction is becoming more important. As HR processes become increasingly digitised, automated and AI-enabled employees are no longer judging trust only through what leaders say or how managers behave. They are also judging whether decisions feel fair, whether systems are explainable, whether monitoring is proportionate and whether policies support autonomy or signal suspicion.

What is institutional trust?

Institutional trust is the confidence people have in the way an organisation works. It is shaped by the fairness of policies, the transparency of decisions, the consistency of processes and the extent to which people believe systems are designed with integrity.

Hope Hailey’s point is especially useful for HR because employees experience so much of working life through systems: recruitment, performance management, pay, promotion, flexible working, absence, learning, grievance, employee relations and now AI-enabled tools. Even where a manager is supportive confidence in the organisation can be placed under strain if the system around them feels opaque, inconsistent or unfair.

Employees rarely experience HR systems as neutral administration. They experience them as evidence of what the organisation values. This is why trust cannot be left to interpersonal skill alone. Good managers can do a great deal but they cannot fully compensate for systems that make people feel powerless, watched, confused or unfairly treated.

Why HR systems matter to workplace trust

The Trust Paradox research found that trust is widely recognised as important, with 93% of employees and 100% of HR leaders saying trust matters at work. Yet the same research also found strong signs of defensive behaviour, with 61% of employees saying they cover themselves at work at least occasionally and only 9% saying they never do so.

This kind of behaviour is often interpreted as a cultural problem, and sometimes it is, but it can also be a rational response to the way work is organised. If policies are inconsistently applied people may protect themselves before acting. If new monitoring tools appear without meaningful explanation people adjust their behaviour around the system rather than engaging openly with the work.

This is where HR has a strategic role. Policies and systems give employees evidence from which they judge the organisation’s trustworthiness. Clarity, autonomy and fairness may support trust, while ambiguity, bureaucracy and unexplained surveillance can place it under strain.

There is a strong business case for seeing trust in this way. Research by Dyer and Chu into automotive supplier relationships found that perceived trustworthiness reduced transaction costs and was associated with greater information sharing. Although the study focused on inter-organisational relationships the lesson travels well into organisational design. The broader implication is that lower trust can be accompanied by more checking, escalation, documentation and self-protection while greater trust may allow information and work to move with less friction.

Why AI makes institutional trust more important

AI raises the stakes because it can move people decisions further away from direct human explanation. Tools used in recruitment, performance, workforce planning, learning or employee listening may help organisations spot patterns and improve consistency but can also create anxiety if employees do not know what data is being used, how recommendations are generated, who can see the outputs or whether human judgement remains meaningfully involved.

The OECD has warned that trustworthy AI in the workplace needs to be safe, transparent and respectful of fundamental rights including privacy, fairness and labour rights. It also says employment-related AI decisions should be transparent and understandable to humans. This point is central for HR. Trust becomes more fragile when AI feels unevenly available or used to judge people without sufficient context.

The Trust Paradox research points to this emerging issue directly, citing concerns about how AI is used in HR processes and decision-making, as well as unequal access to AI tools and training. It also notes Mercer’s 2026 Global Talent Trends finding that 72% of employees believe some people in their organisation have better access to AI tools and training than others.

Uneven access can itself affect trust. If some employees are encouraged to experiment with AI while others are restricted, monitored or left behind, the technology can deepen existing doubts about fairness and opportunity. HR leaders need to consider who benefits from new tools, who is subject to them and who understands how decisions are being shaped.

Why monitoring can become a trust risk

Employee monitoring is another test of institutional trust. Many organisations introduce monitoring to understand productivity, manage hybrid work, improve safety or identify workload pressures. The same tools can also signal that the organisation does not trust people to do their jobs.

Harvard Business Review has warned that employee surveillance can erode trust and put managers in a difficult position, particularly where technology shifts their role towards policing activity rather than supporting performance. Earlier HBR coverage of research into monitoring found that monitored employees were more likely to break rules, linked to a reduced sense of personal responsibility.

The UK Information Commissioner’s Office has also emphasised the need for worker monitoring to be lawful, fair and transparent, reflecting the power imbalance in employment relationships and the risks created by new workplace technologies.

The issue for HR is purpose and proportionality. Monitoring that helps identify safety risks or unsustainable workloads may build trust if it is clearly explained, limited and used constructively. Monitoring that tracks activity without context can weaken autonomy and encourage performance theatre, where people focus on appearing busy rather than doing valuable work.

The role of autonomy in building trust

The We invest in people framework gives HR a practical way to think about institutional trust through work design. It highlights creating autonomy in roles, including clear decision-making authority and policies and practices that support people to make the decisions required in their specific roles. At higher levels, policies and practices are aligned to help people take ownership and act quickly and effectively and are regularly reviewed to speed up decision-making and increase individual ownership.

This is what it means to build trust into the way work is organised. When roles are clear, decision rights are explicit and policies support sensible judgement people can act with confidence. When structures are unclear employees may protect themselves by escalating decisions, seeking unnecessary approval or avoiding ownership.

The same principle applies to empowering and involving people. The framework describes a culture of trust and ownership where people have the knowledge and information they need, are involved in decisions that affect them and are trusted to make decisions in line with their responsibilities.

Autonomy is often treated as a benefit or engagement driver but, in trust terms, it is more fundamental. It tells people whether the organisation believes they can use judgement, whether information is shared widely enough for them to act and whether accountability is supported by real authority.

How HR can design systems people trust

Building institutional trust starts with reviewing people systems through the employee’s eyes. HR leaders need to ask how a process feels to someone subject to it, not only whether it is efficient, compliant or easy to administer.

That means looking at whether policies are understandable, whether decision-making criteria are visible, whether people know how to challenge decisions and whether managers have enough discretion to apply policies fairly without creating inconsistency. It also means testing HR technology for explainability, bias, privacy, accessibility and impact on autonomy before it is embedded into everyday work.

Institutional trust checklist – are your HR systems trustworthy?

Use this diagnostic to explore whether systems and structures are strengthening trust.

• Fairness: Are policies applied consistently, with enough flexibility to reflect real circumstances?
• Transparency: Can employees understand how decisions about pay, performance, promotion and flexibility are made?
• Autonomy: Do roles include clear decision-making authority, or do people have to seek permission too often?
• Data: Do employees know what data is collected about them, why it is collected and how it will be used?
• AI: Are AI-enabled HR tools explainable, proportionate and subject to human oversight?
• Monitoring: Is any employee monitoring lawful, fair, transparent and connected to a clear purpose?
• Challenge: Do people have safe routes to question decisions or raise concerns about systems?
• Review: Are HR policies and tools regularly tested for their impact on trust, ownership and performance?

Institutional trust is becoming increasingly important as more HR processes become digital, automated and data-led. As organisations adopt more technology, automate more processes and make more decisions through data trust has to be designed into the systems people experience every day.

Leadership behaviour will always matter. Manager relationships will always matter. But employees also judge whether an organisation is trustworthy by the way it organises work and makes decisions about people. When those systems are fair, transparent and designed around ownership trust may become easier to sustain because employees encounter evidence of trustworthiness in how the organisation works.

Related conference session: Watch Petra Velzeboer on the future of trust at Make Work Better 2026.

Sources

1. 1.Jeffrey H. Dyer, Wujin Chu, The role of trustworthiness in reducing transaction costs and improving performance: Empirical evidence from the United States, Japan, and Korea. 10.1287/orsc.14.1.57.12806
2. 2.OECD Employment Outlook 2023, Artificial Intelligence and the Labour Market. https://www.oecd.org/en/publications/oecd-employment-outlook-2023_08785bba-en/full-report/ensuring-trustworthy-artificial-intelligence-in-the-workplace-countries-policy-action_c01b9e49.html
3. 3.Mercer, Global Talent Trends 2026. Solving the human–machine equation. https://www.mercer.com/insights/people-strategy/future-of-work/global-talent-trends/
4. 4.Chase Thiel, Shawn McClean, Jaron Harvey and Nick Prince, Harvard Business Review, Surveilling Employees Erodes Trust — and Puts Managers in a Bind
5. 5.ICO, Employment practices and data protection: monitoring workers. https://ico.org.uk/for-organisations/uk-gdpr-guidance-and-resources/employment/monitoring-workers/