The Direct Link between Psychological Safety and Business Results


Most Business Leaders are trying to lead in an environment that nobody has ever seen before.pych-safety There are no patterns or best practices. The combination of being in a global pandemic at the same time there is accelerating inflation, global supply chain shortages, environmental issues, the “great resignation,” employees working remotely, and a despot leader in Russia threatening to start World War III is presenting leaders with unprecedented challenges.

One of the areas our Advantexe clients are seeking help in is helping develop environments and cultures of psychological safety in the midst of all this chaos. Psychological safety is defined by a workplace climate enabled by emotional intelligence that allows people to take risks, learn from mistakes, give candid feedback, and innovate. When your environment is not psychologically safe, people tend to keep ideas to themselves out of fear of being ridiculed, they don’t give candid feedback, and because they fear for their job, they enter into self-preservation mode. None of that is good for business.

We are about to launch a new Psychological Safety business simulation and over the past few weeks, I have conducted a lot of research to finalize the content and the best practices of the simulation. This is a topic area that has many leading consulting firms investing time and resources and some of the findings are extremely interesting. Firms like McKinsey, Deloitte, BCG, and Forrester offer extensive research that confirms companies with high order psychological safety or ‘inclusion’, in conjunction with diverse leadership teams and workforces, are more likely to achieve better business results. Research by the Australian HR Institute (AHRI) reveals that these businesses boost financial results by as much as 35%, increase entry into new markets by 70%, and improve revenue by 19%. All while reducing risk by 30%.

One of the books I read on the topic that helps to drive home the direct correlation between psychological safety and business results is called The 4 Stages of Psychological Safety by Timothy R. Clark.

Clark offers some great tips on creating the type of psychological safety that will result in strong business results. Here are a few of the highlights:

Stage 1: Achieve Inclusion Safety through connection

This stage occurs when the environment is sufficiently safe for employees to be themselves, and they’re accepted for who they are. The key here is for managers and leaders to truly connect with their teams personally, not just at a transactional level. Indeed, teams with Inclusion Safety feature strong, equal, and trusting connections between team members and their leader.

Stage 2: Achieve Learner Safety through coaching

The second stage occurs when employees feel safe to ‘learn’ by asking questions and making (appropriate) mistakes. Leaders who balance accountability and coaching provide the optimal balance of support and direction, enabling people to refine their knowledge, skills, and performance. In addition, conscious curiosity and humble inquiry, rather than fear and blame, make it safe for teams to share challenges, unlearn and relearn.

Stage 3: Achieve Contributor Safety through collaboration

Achieving Contributor Safety provides individuals with autonomy and permission to use their unique skills and strengths to make a meaningful contribution. By encouraging collaboration, a manager unlocks ‘Individual Intelligence’ and ‘Collective Intelligence’. The Former can see employees potentially deliver twice the usual level of individual performance, and the latter emerges through multiplying the effect of multiple contributions within a team, during this stage, wellbeing and belonging increase due to higher degrees of contribution and autonomy.

Stage 4: Achieve Challenger Safety through constructive conversations

Building Challenger Safety creates an environment where it is safe to speak up and challenge the status quo without fear or embarrassment. Caring but candid conversations set the scene for robust discussion, debate, and decision-making. In this environment, risks are recognized early, and teams unlock their ‘Disruptive Intelligence’, driving organic innovation from observations and ideas, which are recombined, to renew and reinvent business processes, models, or products. By making a difference and having a meaningful impact, employees build on their higher-order wellbeing and belonging.

In summary, every day presents new challenges and new opportunities for leaders to create environments of psychological safety. These four tips can do the right thing for your people and drive your goals and objectives.

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Robert Brodo

About The Author

Robert Brodo is co-founder of Advantexe. He has more than 20 years of training and business simulation experience.