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Why psychological safety leads to high-performing teams and lower turnover

March 4, 2022, 3:30 PM UTC

Psychological safety as an organizational construct isn’t new. But it’s experiencing a rebirth as companies become more geographically dispersed and seek out new ways to motivate and retain employees, increase productivity, and promote an inclusive culture.

Defined by the Center for Creative Leadership as the belief that employees “won’t be punished or humiliated for speaking up with ideas, questions, concerns, or mistakes,” research shows that psychological safety plays a significant role in engaging workers and reducing employee turnover—even more than pay. However, McKinsey found that most leaders do not demonstrate traits that encourage such an environment.

A recent study from MIT Sloan School of Management analyzed data from 34 million employees who had resigned from their jobs during the pandemic. It found that a toxic culture was 10.4 times more likely than compensation to be a predictor of attrition, followed by job insecurity, failure to recognize employee performance, high levels of innovation, and a poor response to COVID-19—all of which align with the concept of psychological safety.

Separately, a survey by the employee feedback platform AllVoices found that personal responsibilities like caregiving, changing career paths, and re-evaluation of priorities were more significant drivers of attrition than pay.

David Rock, founder and CEO of the NeuroLeadership Institute, a workplace consultancy that works with Netflix, Microsoft, and Adobe, breaks down psychological safety into five components: status (how you are compared to others), certainty (job security, confidence in company), autonomy, relatedness (a sense of shared goals), and fairness. “Psychological safety means that none of these are too negative,” he tells Fortune.

These five attributes describe how the brain processes psychological safety in social interactions, Rock says. The goal for business leaders is to do no harm, minimize any threats to these dimensions and create positive experiences. Failing to do so can dramatically affect cognitive performance, Rock says.

When employees feel left out at work or that they can’t share their input in meetings, it can can create feelings of anxiety and lead to decreased executive function. “Put simply, there’s an inverse relationship between threat response and IQ,” Rock says. “People literally become less intelligent, not just less engaged, but actually less intelligent when they’re feeling very anxious.”

How can employers create psychological safety at work? One way is to expand feedback channels for managers to identify any threats. Companies often utilize employee surveys to gauge workplace satisfaction and engagement, but this strategy has limitations when it comes to the amount and honesty of feedback received. While annual or quarterly engagement surveys are said to be anonymous, many employees don’t believe they truly they are. Anonymous feedback channels are a divisive topic but they can help leaders understand the severity and the extent of any culture issues.

Claire Schmidt, founder and CEO of AllVoices, notes that policies to enhance psychological safety are all the more important in a remote or hybrid work structure, in which collaboration and communication are closely tied to employee performance.

“Not every employee feels comfortable speaking up in meetings,” Schmidt says. “Sometimes, going along with the group is viewed as loyal by employees, but that may not lead to the best product or service outcomes.”

Jesus Mantas, senior managing partner at IBM agrees. He tells Fortune that he’s had to create an atmosphere on his largely remote team where members feel comfortable speaking up in meetings and pushing back on big decisions, without fear of judgement.

It’s worth noting that creating a psychologically safe climate does not equate to the absence of conflict or negative feelings. Rather, it means employees feel comfortable airing their feelings without fear of retaliation.

“What you ideally want is not just the absence of negative signals, but the addition of positive safety signals,” Rock says. “That’s where better collaboration happens.”

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Aman Kidwai
aman.kidwai@fortune.com

Headlines

Brace yourselves. The U.S. Department of Homeland Security sent a letter to the National Association of Corporate Directors on Wednesday urging members to prepare for increased cybersecurity risk amid Russian attacks on Ukraine. The federal agency also encouraged C-suites and boards to empower their chief information security officers and encourage senior management to lower thresholds for reporting cyber incidents. The NACD has since refreshed its Russia-Ukraine resource center.

Fran Rosh, CEO of cybersecurity solutions company ForgeRock, encourages boards and C-suite leaders to: 

  • Ensure people are using strong passwords
  •  Use multi-factor authentication for sensitive information
  • Refresh and re-communicate cybersecurity training
  • Turn up the sensitivity of monitoring systems
  • Put the help desk on high alert

Leadership inspo. Ukraine's president, Volodymyr Zelenskyy, has been praised for his handling of the Russia-Ukraine conflict, thanks to his calm demeanor, open communication and willingness to fight alongside his people. His leadership style offers key lessons for business heads in corporate America. Fortune

Businesses repudiate Russia. An incredibly long list of the world’s largest and most influential companies, including Apple, UPS, Google, Microsoft, and Nike are breaking ties with Russian clients, cutting off services and severing joint venture deals. Reuters

REI workers unionize. Eighty-six percent of workers at REI’s flagship store in Manhattan voted yes to unionization on Wednesday. The unionization drive follows similar efforts at Amazon and Starbucks that are starting to gain traction nationwide. Vice 

Bank exec bids adieu. Wells Fargo hired Bari Rafferty in 2020 to improve the firm’s reputation after a major fraud account scandal. (The bank agreed to pay $3 billion to settle criminal and civil charges that year.) Rafferty is reportedly leaving the company after less than two years as head of the communications and brand management group. WSJ

Board moves. Intel executive Michelle Johnston Holthaus is joining the board of 3D printing company Carbon. Paige Erickson, managing director at Adobe International, has joined LeapPoint's board. Bill McDermott, CEO of ServiceNow, has joined Zoom's board. The investment firm Carlyle has added Walgreens' former CMO Linda Hefner Fillert and Mark Ordan, CEO of Mednax, to its board. David Feinberg, Cerner CEO, is joining Humana's board.

One Good Idea

Humanizing candidate rejections

Few things are more demoralizing than putting your heart and soul into a cover letter, customized resume, and detailed job application than to receive a form-letter rejection or, worse still, no response at all. Today, a growing number of employers are putting more effort into making their recruiting process candidate friendly.

Instead of a run-of-the-mill rejection form, some recruiters are sending candidates a quick message outlining what they need to improve to be considered in the future. Job seekers who receive thoughtful responses from a real person, instead of an automated email, are more likely to maintain a positive view of the company.

Numbers That Matter

48%

HR departments are burnt out. In a survey by AllVoices, 48% say they’ve seen over 30% of their staff leave in the past year, with mid-level millennials representing most of the departures. About 48% of HR personnel also report that they are looking for a new job.

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