Restoring trust in the context of strategic change

The strategic change literature underscores the risk of loss of trust during change but does not address how trust can be restored once compromised. We conduct an inductive longitudinal study of an organization undergoing post-merger integration and examine how management worked to restore employee trust after a conflictual change process. We introduce the psychological contract perspective, which emphasizes relational explanations for loss of trust. We show that repairing trust can be conceptualized as a renegotiation of the psychological contract and develop a three-stage model of trust repair. In contrast to extant models of trust restoration, which emphasize diagnosis, explanation, penance, and reform, our model attends to relational dynamics that may emerge in the context of organizational change, with heightened uncertainty and ambiguity, and highlights the importance of restoring balance and renegotiating the contractual basis of the relationship.