Why Employees No Longer Believe Their Leaders (And How To Rebuild It)

Periods of distrust in leadership aren’t new. After the 2008 financial crisis, mass layoffs, executive bailouts, and frozen wages sparked serious skepticism about corporate decision-makers. Employees started asking whether leadership actually had their backs or were just protecting themselves. The same thing happened in the early 2000s. When the dot-com bubble burst, workers who bought into big startup dreams were left jobless as companies folded overnight. Each wave of collapse forced a reset in the employer-employee relationship.

But today’s trust crisis hits differently. It’s not just tied to economic downturns— it’s unfolding during an era of record profits and major labor shortages. Executives are reporting strong earnings, yet employees are still getting laid off, hit with chaotic return-to-office mandates, and left wondering if anyone at the top actually understands what life’s like on the ground. Add in the widespread rollback of DEI—starting with the federal government and echoing across corporate America—and it’s not just economic instability anymore. It’s cultural. It’s personal. And with a louder, more organized, and more empowered workforce, the trust crisis isn’t going away any time soon.

Why Employees No Longer Trust Leadership

Mass Layoffs in a Good Economy

One of the most jarring contradictions in today’s workplace is the disconnect between record profits and endless pink slips. Major tech firms, consulting giants, and big banks recently announced fresh layoffs, just weeks after posting blockbuster earnings. Walgreens, FedEx, and Macy’s employees felt the hit— no industry is safe. Workers are asking the obvious: If business is booming, why are we the ones getting cut?

Look no further than Elon Musk, now serving as President Trump’s unofficial adviser for the Department of Government Efficiency (DOGE). He’s been cheering on deep cuts across the federal workforce, even in critical areas like scientific research. Corporate America is taking the cue, treating layoffs like a smart business move instead of a last resort. Job cuts jumped 205% from March 2024 to March 2025. And when slashing jobs becomes the norm at the top, it gives everyone else cover to follow suit. The result? A workplace full of uncertainty, where employees feel expendable, and trust in leadership keeps slipping.

The Broken Psychological Contract

The psychological contract—the unspoken agreement between employers and employees about mutual commitment—has taken a serious hit. Workers once believed that loyalty and hard work would be repaid with job security, fair pay, and a clear path forward in career advancement. But today, as companies prioritize shareholder returns over workforce stability, that belief is starting to crack. A survey from 2024 found that over a quarter of UK employees no longer trust their CEO to be open and honest— 24% say the same about senior leadership more broadly.

And the distrust isn’t just about numbers— it’s about values. Few executives are standing firm on principle. Costco and Apple are rare examples of companies that are still investing in people-first policies. Most others are caving to pressure, even when it clashes with what they know is right. Nearly three-quarters of executives admit that return-to-office mandates are sparking internal conflict and could even lead to workplace incivility. That hasn’t stopped leaders like J.P. Morgan’s Jamie Dimon, who recently told employees they were “wasting their time” circulating a petition for flexible work. Comments like that don’t just dismiss feedback— they ignore the very real, very human toll of rearranging your life for a job that keeps moving the goalposts. When leadership keeps shifting expectations without listening, it only deepens the storm of mistrust already brewing across the workforce.

Lessons from Past Crises— and How Leaders Can Rebuild Trust

While each era’s trust crisis has its own flavor, history offers a clear takeaway: trust can be rebuilt. But it takes transparency, employee empowerment, and real investment in people.

Treat Employees Like Shareholders

Employees want to feel like they have a stake in their organization. Leaders can build trust in 2025 by:

• Holding regular town halls with open Q&A: Avoiding tough conversations about layoffs or policy changes only deepens suspicion. Instead of issuing vague corporate statements full of jargon, leaders who face questions head-on build credibility. Employees don’t expect you to have all the answers— they just want honesty. Gallup data shows that companies with strong employee engagement strategies, like regular town halls, see a direct 21% bump in productivity. These conversations also create space for employees to weigh in before leadership makes big decisions that affect their lives. It’s not just a meeting— it’s a chance to earn trust.
• Providing forward guidance: If companies can give earnings projections to investors, they can certainly do the same for their employees. Be upfront about hiring plans, growth opportunities, and potential risks. The market is volatile, and employees deserve clarity. Hiring may have slowed on a national scale, but most employers still want to retain their best people— so say that. Be honest about what’s possible, whether tuition reimbursement, internal mobility, or even those hard truths about future cuts. Giving your team time to prepare—financially and emotionally—shows respect. Tell the truth now, and people will remember it later.
• Make leadership pay public. Salary transparency is gaining ground, but it’s time to go further: make executive compensation public, too. Employees aren’t naïve— they see companies slashing budgets while the C-suite takes home handsome bonuses. Being transparent about how leadership is paid—and how it ties to performance—goes a long way in restoring trust. If workers are being told to do more with less while watching execs cash in, don’t be shocked when they check out— or check out entirely.

Co-Creating Workplace Policies

Top-down mandates might feel efficient, but they rarely build trust. The most successful organizations directly involve employees in shaping workplace policies. This isn’t just good ethics— it’s good business.

• Allowing departments to customize RTO policies: Letting individual teams decide what works best for them, whether fully remote, hybrid, or mostly in-person, gives employees a sense of control. A one-size-fits-all return-to-office mandate ignores the reality that every team operates differently. In 2025, RTO is a given for many, but that doesn’t mean it has to be rigid. When employees make a strong case for flexibility, leaders should listen. The best workplace policies are built with—not for—the people they impact.
• Requiring employee representation in major decision-making: Whether through employee councils, feedback loops, or even voting mechanisms, giving workers a seat at the table matters. Seventy-one percent of employees say they’d be less likely to leave their jobs if they felt more recognized. In industries with high turnover, just being invited into the room where it happens can make all the difference. Leaders benefit, too— more perspectives mean more informed decisions. And when employees feel heard, they’re far more likely to stay and produce good work for your company, not elsewhere.
• Experimenting with pilot programs: Rolling out major changes without employee input is a fast track to resentment. Instead, test ideas through short-term pilot programs. Gather feedback. Fine-tune. Then roll out a full policy. It’s not about slowing down— it’s about being thoughtful. People want to feel like they’re part of the process, not just subject to it. Try something new, but let your team tell you if it’s working. That’s what human-centered leadership looks like.

Restoring the Contract of Trust

If employees feel the traditional social contract is broken, it’s on companies to fix it and draft a new one— one that reflects the realities of today’s modern workforce. That starts with values, not just policies.

• Employee well-being as a business strategy: Mental health and work-life balance aren’t perks— they’re essentials in today’s workforce. Companies that invest in employee well-being see higher retention and engagement. When employees strongly agree that their organization cares about their overall well-being, they’re 53% less likely to be job hunting and 7 times more likely to recommend their company as a great place to work. There’s a business case for caring. Support your team at home, and word spreads fast— people want to work where they feel valued, not just used.
• Recognition beyond metrics: Hitting KPIs matters— but so does everything that happens behind the scenes to achieve that success. Mentorship, collaboration, creativity, team-building— these are the things that build long-term culture. Help employees connect their day-to-day work to the company’s bigger mission, and make space to listen when they have something to say. When people feel seen and heard, they show up stronger. A culture of recognition is contagious— and it starts at the top.
• Measure trust like you measure profits: Most companies track revenue, retention, and engagement. But trust? Not so much. If leaders want to rebuild it, they need to measure it. Run anonymous trust surveys. Track turnover and internal mobility. If people aren’t sticking around—or not even applying for internal roles—they probably don’t believe leadership has their best interests in mind. Make trust part of your performance metrics long before you ask the mandated question in an exit interview.

Rebuilding trust won’t happen overnight— but it starts with showing up differently and going against the status quo. In a world where employees are watching every move and have job applications at the ready, the best leaders won’t just talk values— they’ll prove them.