Picture the scene: At a mid-sized tech company, employees gather for a weekly project review. There are teammates in the conference room and others dialing in remotely. During the meeting, Sarah, a developer who just finished their third month at the company, suggests a new approach to improve the efficiency of the team’s current workflow. However, before she can finish explaining her idea, her manager, Mike, interrupts her. He dismisses the suggestion without consideration, explaining, “That’s not how we do things here. Stick to the plan.”
As the meeting continues, Sarah remains quiet. She feels embarrassed. “That’s the last time I offer to help,” she thinks. Other team members, who had been thinking about offering their own ideas, now stay silent, afraid of receiving the same negative response. Ashley, one of her teammates who works remotely, sends Sarah a message to bolster her spirits. Yet, the team sticks to the original plan, as Mike demands, which results in missing out on potential improvements and creative solutions.
While this scenario is fiction, it is drawn from examples that happen countless thousands of times a day at companies all over the world. The lack of psychological safety is evident. Employees don’t feel safe to share their ideas or challenge the status quo. Mike’s behavior signals to the team that mistakes or new ideas are unwelcome, essentially stifling innovation and employee engagement. Over time, this culture discourages people from contributing, leading to disengagement and a lack of motivation across the team.
What can leaders do to mitigate this kind of exchange, which is costing them real dollars, not only through disengagement, but in talent retention if Sarah or one of her teammates decides to leave the company and go to a competitor?
The answer is creating a workplace based on psychological safety.
In a recent discussion between Bob Batchelor, Vice President of Global Communications at Workplace Options, and Oliver Brecht, Vice President and General Manager of Enterprise Solutions, and a registered psychologist with a decade of experience in corporate mental health and well-being, the two explored the best practices for building psychologically safe workplaces. Drawing on their global expertise, Batchelor and Brecht shared actionable insights that business leaders can implement to drive engagement and foster inclusive, safe environments.
Understanding Psychological Safety
Brecht explains that a psychologically safe workplace is one where individuals feel free to contribute ideas, share their thoughts, take risks, and make mistakes without fear of negative consequences. The opposite of what Sarah experienced when Mike shut her down in front of her teammates. “Psychological safety exists when individuals feel safe to learn, which inevitably involves making mistakes,” Brecht explains. “But more importantly, it’s a place where those mistakes are seen as learning opportunities rather than something to punish.”
Instead, leaders can build a foundation of psychological safety by focusing on four key safety pillars:
- Safe to contribute: Employees can share ideas and participate fully.
- Safe to learn: Mistakes are viewed as part of the learning process, not as failures.
- Safe to challenge: Constructive challenge and innovation are encouraged.
- Safe to be authentic: People can bring their full, authentic selves to work without fear of discrimination.
These factors are critical because they create an engaged workforce where individuals feel valued and connected. “An environment where employees feel safe enough to innovate and take risks is crucial for keeping up with today’s technological advancements and shifting client expectations,” Brecht adds.
The Link Between Psychological Safety and Employee Engagement
Psychological safety is not just about making people feel comfortable—it directly impacts employee engagement. “If you can create an environment where people feel safe to contribute, challenge, and learn, you’re more likely to have an engaged workforce,” says Batchelor.
In fact, disengagement can have significant financial consequences. Recent statistics demonstrate that disengagement costs the average S&P 500 company over $225 million annually. When employees are disengaged, they do not bring their full selves to work, which not only affects morale, but also leads to lower productivity and higher turnover. Psychological safety, on the other hand, giving employees the confidence to take ownership of their roles and engage more deeply with their work.
Psychosocial Risk: The Overlooked Component
While psychological safety is often discussed, psychosocial risk—a concept that’s more prevalent outside the U.S.—is just as important. “Psychosocial risk refers to the factors in a workplace that can cause psychological harm, such as high levels of stress, harassment, or poor task design,” Brecht explains.
He emphasizes that although psychological safety and psychosocial risks are related, they are distinct. Psychological safety is about creating a space for contribution and learning, while psychosocial risks deal with factors that can harm employees’ mental health, such as anxiety or depression caused by poor work conditions. Brecht says that in countries like Australia, psychosocial risks are now legislated, requiring organizations to actively manage and mitigate these risks. He warns: “Failure to address psychosocial risks can raise the risk profile of your business and lead to long-term harm.”
Global Approaches to Psychological Safety and Psychosocial Risk
Different countries approach psychological safety and psychosocial risks in varied ways. For example, Australia’s legislation focuses on holistic well-being, while Japan places an emphasis on stress management. European countries have stringent laws around the right to disconnect, reflecting their broader focus on controlling organizational change and protecting employees from burnout.
In the U.S., Batchelor says, the dialogue around psychosocial risks is still evolving. “There’s a tendency here to shy away from terms that sound overly technical, but the importance of managing psychosocial risk is starting to gain traction. The cost of disengagement and the mental health crisis are forcing organizations to take these issues more seriously.”
Best Practices for Leaders to Foster Psychological Safety
So, how can leaders create psychologically safe workplaces? Batchelor and Brecht emphasize the importance of intentional, consistent actions from leadership.
Here are their top recommendations:
- Model Vulnerability and Openness:
Leaders need to demonstrate that it is okay to make mistakes and learn from them. “When leaders openly admit their own mistakes and share how they plan to learn and grow,” Brecht says, “it signals to the team that the workplace is safe for continuous improvement.”
- Encourage Constructive Critique:
Psychological safety thrives when employees feel comfortable challenging ideas or raising concerns. Leaders should create a space for open dialogue and constructive feedback, where challenging the status quo is viewed as a path to innovation.
- Listen Actively:
Inclusive leadership requires more than just talking—it’s about listening. Batchelor emphasizes the importance of active listening, noting that many leaders miss opportunities to engage employees because they fail to truly hear them. “Listening is key to unlocking innovative ideas and building trust,” he says.
- Recognize and Reward Contribution:
A lack of recognition is one of the top reasons employees disengage. Regularly acknowledging and celebrating employee contributions can reinforce the message that their efforts are valued.
- Create Safe Spaces for Feedback:
Leaders should ensure there are regular opportunities for employees to provide feedback and voice concerns without fear of reprisal. Whether it’s through one-on-one meetings, anonymous surveys, or group discussions, employees need to know their input matters.
The Role of Inclusive Leadership
Batchelor and Brecht both agree that inclusive leadership is a core component of building psychological safety. “An inclusive leader isn’t trying to be perfect; they’re trying to improve every day,” Brecht explains. The continuous improvement mindset enables leaders to create environments where diversity of thought is embraced. The outcome is that all employees feel valued and respected.
The ability to actively listen, admit mistakes, and demonstrate empathy are all key traits leading to enhanced inclusive leadership. These behaviors foster psychological safety, while also creating a workplace culture where people from all backgrounds may thrive.
A Path Forward for Leaders
Creating a psychologically safe workplace isn’t a one-time task or something that can be checked off a list. Like all culture transformation, building psychological safety is an ongoing process that requires commitment, consistency, and strong leadership.
Senior leaders can take an active role in changing culture by modeling vulnerability, encouraging open dialogue, and actively recognizing contributions from those who have made them. In doing so, organizations can unlock the full potential of their workforce, drive innovation, and foster long-term success. As Batchelor and Brecht highlighted, the benefits of psychological safety are clear, and the time for leaders to take action is now.
