How can Psychological Safety improve your bottom line?
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Fostering Psychological Safety within teams and organizations can lead to tangible, measurable benefits that directly impact an organization’s bottom line, making it an essential ingredient for achieving impactful organizational outcomes.
In today’s fast-paced corporate world, managers and HR departments are constantly tasked with seeking ways to enhance performance and achieve better results. In such an environment, the concept of Psychological Safety might seem too abstract or of secondary importance when compared to initiatives that directly affect the P&L, and consequently a common question is: “Why should I prioritize Psychological Safety when I’m judged on tangible outcomes?”
But in reality, fostering Psychological Safety within teams and organizations can lead to tangible, measurable benefits that directly impact an organization’s bottom line. Moreover, discussed below, Psychological Safety is not just a “nice to have”, but an essential ingredient to achieving impactful organizational outcomes.
Risk vs reward
Productive and effective teamwork requires employees to engage in behaviors that most people find somewhat uncomfortable. This includes reporting one’s own mistakes or giving negative feedback to others when it is needed. The reason most people find these behaviors uncomfortable is because they are “risky”—that is, when they are performed they put the employee at risk of having their teammates react in a way that is distressing or causes unfair negative consequences.
For example, by reporting an honest mistake you made, you put yourself at risk of being yelled at, made fun of, having your competence questioned, receiving a bad evaluation, or even getting fired. Or, by giving negative feedback to your teammate, you risk having them start to dislike you, label you as mean or condescending, exclude you, or even attempt to undermine you.
On some teams, employees don’t merely see these behaviors as uncomfortable, but are genuinely afraid of them. And the more strongly employees expect these behaviors to result in negative consequences (that is, the higher the perceived level of risk), the more fearful and anxious they will feel when they consider having to engage in them.
When people expect negative consequences to occur, a few things typically happen. Employees will either avoid engaging in these behaviors, or they will spend time and energy planning for how to carry out the behavior in a way that reduces the chance of negative consequences. And through this whole process they will be experiencing feelings of stress, anxiety, and fear. Furthermore, if their teammates do have the expected negative response, they may spend days or longer feeling hurt, disrespected, or on edge.
The costs of low Psychological Safety
Things like avoidance, planning and maneuvering, and chronically high levels of negative emotions are what in the long run end up causing negative consequences for companies. Chronically high levels of negative emotions have been demonstrated to interfere with cognitive functioning, leading to mistakes and poor decision making, among other consequences. And if employees consistently feel stressed, anxious, afraid, hurt, and disrespected while at work, it is inevitable that they will end up feeling low levels of job satisfaction, commitment and engagement, and experience negative impacts on their wellbeing and health. Furthermore, the time and energy that may be spent on face- and career-saving manoeuvres that employees engage in to reduce the chances of experiencing negative outcomes is time and energy that they are not spending pursuing the team or organization’s goals.
“The time and energy that may be spent on face- and career-saving manoeuvres that employees engage in to reduce the chances of experiencing negative outcomes is time and energy that they are not spending pursuing the team or organization’s goals”
Most of us have had an experience where we’ve spent half a day or more crafting a work email, trying to find just the right words so as not to trigger a negative response in the recipient. Now imagine if an employee has to do this multiple times a week or, worse still, for virtually every interaction. The time and effort that goes into this kind of self-protection behavior can become enormously draining and significantly reduces the extent to which the employee is able to engage in productive work and focus on goal achievement.
Finally, worst of all is avoidance—rather than dealing with these negative emotions, or spending time trying to reduce their chances, most employees will simply avoid these behaviors. This is unfortunate because, as mentioned above, these behaviors are necessary for teams to be productive and effective, and for companies to be able to function and succeed.
This is where Psychological Safety comes in.
In a psychologically safe environment, the sense of risk associated with these beneficial and necessary behaviors is reduced, and employees no longer feel fearful or anxious about engaging in them—because they have positive expectations about how their engagement in these “risky” behaviors will turn out. Thus, they engage in them freely and without spending time on self-protection. When Psychological Safety is present, employees feel secure, valued and respected, and can focus their time and energy on achieving shared goals.
Two Key Behaviors Unlocked by Psychological Safety
As just discussed, low Psychological Safety can block companies from achieving desired outcomes by causing employees to avoid engaging in desirable behaviors. In order to more clearly demonstrate how this kind of avoidance can lead to negative outcomes that executives and managers care about, this section will provide in-depth examples of the role of avoidance and Psychological Safety in two employee behaviors that are critical to company success: knowledge/idea sharing and speaking up.
Knowledge & Idea Sharing
Knowledge sharing is a broad term that refers to the act of sharing ideas, information, and skills with the goal of helping one’s co-workers improve their performance, solve problems, and develop and implement ideas. In today’s knowledge-based economy and climate of rapid innovation, knowledge sharing has been characterized as a primary source of companies’ competitive advantage, and therefore critical to long-term sustainability and success. This is because knowledge sharing is the means by which an organization can exploit its intangible resources and build its human capital by transforming individuals’ knowledge and skills into the company’s knowledge and skills. In this way, the expertise of one employee becomes the expertise of many employees.
The intake of fresh knowledge—both explicit and implicit—provides employees with new perspectives that allow them to identify previously unconceived problems, ideas, and directions. Research backs up this notion by demonstrating that knowledge sharing contributes to an organization’s competitiveness via enhancements in cost reduction, speed of new product development, innovation capabilities, and sales and revenue growth via new services and products.
Companies can utilize formal training and development methods to build this kind of human capital, but constraints such as budget, workload, and geographic dispersion limits the utility of such approaches. In comparison, the informal process of knowledge sharing is free, occurs in conjunction with employees’ workloads and schedules, and is usually characterized as more meaningful overall. These characteristics explain why informal methods of learning have been found to account for 75% of the learning that happens in organizations.
“Informal methods of learning have been found to account for 75% of the learning that happens in organizations”
However, research consistently shows that one of the primary barriers to knowledge sharing is employees’ concerns about how their teammates will react to their knowledge-sharing behaviors. Employees worry about negative consequences arising from their knowledge and idea sharing such as encountering dismissive or sarcastic reactions, or making mistakes in the knowledge they share. Furthermore, they may worry that if they share an idea or knowledge with someone of higher status, or if the idea they share is out-of-the-box or different from the company norm, it will lead to them being seen as calling the practices of their boss or institution into question.
This is why Psychological Safety has been identified as one of the primary means by which companies can take advantage of their knowledge-based resources; because Psychological Safety unlocks employees’ willingness to share their knowledge and ideas in a way that translates into concrete benefits.
Speaking Up
Speaking up (or, as it is called in scientific literature, “voice behavior”) is a term that is used to refer to behaviors such as pointing out problems, expressing disagreement, saying “no”, giving negative feedback, and offering improvement suggestions. These are all behaviors that are informal and discretionary, challenge the status quo or call for change, and have an intention that is constructive or pro-social.
Research has shown that these kinds of speaking up behaviors are associated with enhanced performance, productivity, innovation, and safety performance. There are a number of possible explanations for this. First, they are the defining features of productive conflict—that is, an openness and willingness to engage in the kind of back-and-forth open discussion that is necessary for teams to take decisions, work, or ideas that are subpar or narrow, and to hammer it into something that is strong and viable by identifying problems and incorporating diverse perspectives.
These voice behaviors are also good for the identification and solving of problems. Employees are often the first to notice issues or inefficiencies in their daily tasks, and by voicing these observations, organizations can address and rectify problems more promptly, leading to smoother operations. Furthermore, when employees are involved in the process of coming up with solutions, it increases the likelihood that identified solutions will end up being successful. This is because employees are the ones with firsthand knowledge of what works and what doesn’t for the minutiae of the work they do. Thus, they are in a much better position to make judgments about what will help and what will not than executives and others who don’t understand the day-to-day. Furthermore, when employees feel that they are being heard and their suggestions are implemented, it will boost their motivation to engage in that behavior, increasing the likelihood that improvement efforts will be implemented effectively.
“When employees feel that they are being heard and their suggestions are implemented, it will increase their motivation to engage in that behavior, increasing the likelihood that improvement efforts will be implemented effectively”
Again, one of the major barriers to employees speaking up is their fears of how their co-workers will react to them. The idea of pointing out a problem with your teammate’s plan, saying “no” to your team leader, or offering a suggestion for how your teammate can do their work better leads many employees to imagine significant negative reactions such as being labeled difficult to work with or a complainer. There are also real fears about the speaking up behavior being perceived as threatening by those in power, who may feel that it is a direct attempt to criticize them or cause unrest in the organization. If such a perception exists, it can lead to individuals being given negative evaluations, taken off or blocked from desirable projects and roles, or even fired.
This is why Psychological Safety is so crucial for encouraging behaviors that allow companies to utilize productive conflict and enhance problem detection and solving, because it removes one of the primary barriers to improvement.
The bottom line
In conclusion, fostering Psychological Safety within an organization is paramount for optimizing team performance and, ultimately, the company’s bottom line. Employees often face “risky” situations where they must admit mistakes, share knowledge, or provide feedback which can lead to fears of negative repercussions. Such fears can stifle essential behaviors, leading to decreased productivity, innovation, and overall team effectiveness. Psychological Safety alleviates these fears, encouraging open communication, knowledge sharing, and constructive conflict.
By creating an environment in which employees feel secure and valued, organizations can unlock the full potential of their teams, driving innovation, improving problem solving, and ensuring long-term success. Embracing Psychological Safety is therefore not just a moral imperative but a strategic one that directly impacts a company’s competitiveness and resilience in the long run.
Psychological Safety is not something you can see or easily measure. Or rather it wasn’t until now. Using Attuned’s new Psychological Safety Assessment you can now know the level of Psychological Safety for your team definitively, and at-a-glance.
Psychological Safety is a crucial consideration for any modern business, but what does it mean? In this article, Melissa goes back to the basics and covers psychological safety, why it’s important, and how can you implement in within your teams.
October 11, 2023
By Melissa Tarantola 
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