Finance + EDI: Psychological safety, the secret to good leadership
Catch up on our webinar in which speakers discussed psychological safety, its positive impact on business performance and the steps that can be taken to create effective change.
A McKinsey Global Survey conducted at the height of the pandemic found that only handful of business leaders foster a climate of what’s known as, psychological safety, where employees, “feel comfortable asking for help, sharing suggestions informally, or challenging the status quo without fear of negative social consequences.” This is despite of research that has shown that organisations with psychological safety at their heart are “more likely to innovate quickly, unlock the benefits of diversity, and adapt well to change.”
As we ease out of the pandemic it’s becoming clearer that there should be no return to ‘normal’ and that now is the time to think about the climate that people work in and how we can increase psychological safety within our own teams.
To explore the topic, our Finance + EDI webinar brought together Tracey Rob Perera CA, Start Up Business Mentor & Chair of the EDI Committee, Holiday Phillips, a Diversity, Inclusion & Belonging consultant and coach, and Samantha Frost CA, Director at ThinkWellbeing & member on the ICAS Members Board.
They shared their personal leadership experiences and the practical steps that can be taken to improve psychological safety in the workplace. Read on to learn more or watch the video.
Key to better business performance
Tracey Rob Perera CA opened by highlighting the fortunate position that CAs are in, from which they can have a directly positive impact on the culture of their organisations, and in turn improve business performance. She stressed that leading people properly through inclusive leadership is key to delivering that improvement and that the secret to being an inclusive leader is psychological safety.
Psychological safety, she explained, helps get to the root causes of issues within a workplace. In doing so it helps achieve greater collaboration, team harmony and team results, drives better mental wellbeing, helps ensure employees are motivated and empowered to perform at the best of their abilities and helps to attract and retain high-quality talent.
What psychological safety looks like in practice
To help us understand what psychological safety looks like in practice, Tracey painted a picture of how a psychologically safe organisation would feel to an employee who worked there:
“You have no major anxiety issues because you know that any problems that do arise will be solved with collaboration. You feel listened to. You have a sense of belonging. You feel that you can speak up and positively challenge your leaders. You feel that you can learn from your mistakes without negative consequences to your career, with no risks of blame or humiliation. Your strengths and skills are utilised and credit is given where credit is due.”
The impact on the bottom line
Samantha Frost CA was next to speak and began by suggesting that, from an organisation’s perspective, psychological safety means having a workforce that feels engaged and safe to speak up.
She also explained that previously we have mainly thought of psychological safety through the lens of whistleblowing but there’s another simple reason why psychological safety is so important for an organisation, and that’s because it impacts the bottom line.
Samantha cited the example of Google and how internal research into the success of their teams and their organisation as a whole revealed psychological safety as the number-one driving factor.
“How does psychological safety improve your business performance? Great ideas don’t go unused. People make more intelligent risks. They raise concerns sooner. They are more willing to ask for help, so fewer mistakes get made and, more importantly, when mistakes do get made people feel safe to learn from them. It also helps your business reputation. Your employees are your biggest advocates and if they are safe and happy at work, they will talk about it.”
She also explained that implementing psychological safety can lower an organisation’s costs, because low psychological safety will lead to a disengaged workforce and a high degree of churn.
“If an organisation is losing people to churn, because they don’t feel safe or valued, the estimates are that it costs about 20% of an average salary to recruit someone new and a further 10% of that salary cost to train someone up.”
The framework provided by ISO 45003
Moving onto solutions and how organisations of all sizes can seek to achieve psychological safety, she referenced ISO 45003. This occupational health and safety management international standard is focused on psychological safety at work and provides a framework and guidelines that will take managers through how to build and embed it in their organisation. It details what psychological safety will look like for them and their teams, includes policies and procedures and explains how to understand if it’s working and report on progress.
And on that point of reporting, Samantha suggested this is not only key to understanding if the changes an organisation has made are working but also provides metrics upon which an organisation can be judged by third parties, including investors.
“Over the last few years, we have seen companies now have to report on sustainability. I think it’s almost inevitable that we are going to move to a place where companies have to report on their workforce wellbeing and psychological safety.”
Psychological safety is central to EDI
Final speaker, Holiday Phillips, began by outlining why psychological safety is central to equality, diversity and inclusion (EDI) and how in an unequal society, not everyone experiences psychological safety.
She shared a story from her personal experience of feeling compelled to straighten her naturally curly Afro-Caribbean hair in preparation for a job interview, fearing that otherwise she would not be seriously considered for the role. She explained that whilst that story was personal to her it was not unique and was in fact the story of everyone who’s ever felt marginalised or under-represented.
“It’s the story of the person that doesn’t feel they can talk about their partner at work for fear that people will see them differently because of their sexuality. It’s the story of the person who hides their disability because they think it will mean people see them as less capable. It’s really just the story of everyone who’s continually given the impression that part of themselves is less worthy, so they hide that part of them, cut that part off or change themselves.”
Holiday talked about how a lack of psychological safety really hinders EDI, how we need to think about EDI as a journey and why for some organisations psychological safety feels so difficult to achieve. To understand this difficulty, she explained that psychological safety is not unique to the culture of an organisation.
“We actually live in a culture where it really isn’t safe to be fully expressed. We live in a polarized, highly vigilant culture, where things like cancel culture exist.”
“However,” she continued, “whilst the same time as that is true, organisations are like closed eco-cultures where we can create microclimates that are different to wider society.”
Requires commitment from the top down
For an organisation to successfully create this type of ‘microclimate’, she suggested, it must ensure that the commitment to psychological safety is genuine and comes from the top down. Then, having leadership recognise its importance, psychological safety must become part of the foundation of the wider business agenda, placed alongside, considered and implemented in the same manner as other, more traditional strategic objectives or initiatives.
Watch the full video to hear more from the speakers or visit our Finance + EDI pages to explore our latest insights on equal and inclusive cultures for inspiring workplaces.