Employee Trust: A Risk Worth Disclosing?
Losing employee trust is something leaders worry about but rarely put on par with other risks. That could change.
“Employees… may experience a decline in morale, disillusionment, a loss of trust in leadership, or reduced productivity if they perceive we are not living up to our stated values.”
The company, a firm looking to go public, listed this as a significant item among its risk factors. The disclosure was small, only one sentence in a recent 300-plus-page prospectus, amid risks involving the company’s technology, competitors, and financing requirements. But it was enough to stick out for many experts because of how unusual it was to list as an official risk
How much do employees trust their firms? Not that the issue isn’t important, but it generally hasn’t been keeping leaders awake at night. Now a growing number of experts say it could become more of a front-burner topic, and even a matter to be included in legal disclosures. “I would love to see this at the front and center of conversations,” says Jenna Young, a Korn Ferry senior client partner and global solution architect.
Most firms, either in their initial public-offering documents or annual reports, will list trust as a risk—but typically they’re referring to the loss of customer trust. It’s rare for them to cite the loss of employee trust as a significant risk factor. But firms that commit to balancing profit with purpose are often able to thrive only if their employees believe in their mission. Against that backdrop, an increasing number of companies are acknowledging that losing worker trust is a major risk. In some cases, firms may begin mentioning the employee-trust risk in disclosures following a specific event that has brought scrutiny to their workplace culture.
Executives have acknowledged that employee trust is important. In a 2024 survey, at least 40% said that when their employees don’t trust them, their firm’s productivity, operational efficiency, and product quality are at risk; 38% said a loss of trust could jeopardize profitability. Workers who don’t trust a company’s leaders might put in less effort. For instance, they might be in the office for 12 hours, to keep up appearances, but work only for four, says David Vied, global sector leader of Korn Ferry’s Medical Devices and Diagnostics practice. “They’re just not committed.”
Low levels of employee trust can make the cost of doing business more expensive. In a firm in which employees have lost trust, executives can face both an exodus of high-performing talent and the burden, in time and money, of replacing them.
Engagement experts say there’s often a big disconnect between executives’ perception of employee trust in the firm and the reality on the ground. According to the same 2024 survey, 86% of senior leaders said they believed their employees “highly trust” them; in fact, only 67% of employees said they did (a decline of 3 percentage points from 2022). Newer surveys make those figures seem like relics of a happier time in the workplace: Less than half, 48%, of employees say they trust their senior leaders, according to a 2025 survey by Gartner. “We live in a low-trust environment,” says Bryan Ackermann, Korn Ferry’s head of AI strategy and transformation.
Experts say senior executives may need to closely monitor employee trust, even if they don’t go as far as listing it as a significant risk. Shifting levels of trust often signify future changes in employee engagement, retention, and productivity. “Those can start to drop after the trust is gone,” says Janet Mertens, managing director of AMS Research at the Korn Ferry Institute. The company could regularly survey workers’ perceptions of leadership’s integrity. They could also calculate an Employee Net Promoter Score, which measures the percentage of employees who would—or would not—recommend the company as a place to work.
Learn more about Korn Ferry’s Employee Experience capabilities.
