The Benefits of Psychological Safety: Boosting Employee Well-Being and Performance

It’s thrilling to work at a company where ideas flow fast and furious, where innovation and teamwork abound, where people try new ways of working, and where voicing opinions is not just tolerated but encouraged.

How do leaders build an organization where this kind of magic happens? It’s actually not magic: it’s an organization that has purposefully built a sense of psychological safety for employees and leaders alike.

This vital component of high-performing teams and organizations has incredible benefits — but you must put in strategic and thoughtful work to build this kind of culture.

What is Psychological Safety?

Harvard Business School professor Amy Edmondson coined the term “psychological safety” in 1999, and it’s been increasingly recognized as a critical part of innovative, engaging workplaces.

Psychological safety at work means feeling unafraid to share thoughts, feelings, and opinions — especially dissenting ones — related to work. Edmondson defines it as “a shared belief that the team is safe for interpersonal risk-taking.”

Essentially, it means that people at all levels of the company can speak up freely with new ideas, comments, and even constructive criticism without worrying that colleagues, managers, and leaders will shame or dismiss them.

The Importance of Psychological Safety in the Workplace

The benefits of psychological safety are well-studied and extensive. Psychologically safe workplaces have:

• 76% more engagement
• 27% reduction in turnover
• 50% more productivity
• 57% workers more likely to collaborate
• 29% more life satisfaction
• 74% less stress
• 67% higher likelihood that workers will apply a newly learned skill on the job
• 26% greater skills preparedness since workers learn faster when they feel psychologically safe

And a stunning 89% of workers believe it’s up to business leaders to create a psychologically safe environment at work, according to McKinsey research, so this is a task your leaders need to actively tackle.  

Psychological Safety and Employee Well-Being

One of the most exciting benefits of psychological safety is on employee well-being. It makes sense — it’s hard to feel mentally well and unstressed and satisfied when you work in a place that’s bristling with hostility and toxicity. When your ideas are met with laughter, shaming, or putdowns, it’s hard to be truly creative, and it’s hard to even enjoy being at work.

Creating a psychologically safe workplace, on the other hand, lets employees feel confident and valued for their input and ideas, and their whole selves. That’s a much more pleasant place to be, and more conducive to overall mental health and wellness while reducing burnout and disengagement.

(Looking for more ways to improve employee wellbeing? We’ve got a wellbeing checklist that covers even more ideas!)

Psychological Safety and Employee Performance

If your employees feel there may be negative consequences for speaking up with new ways of getting things done, or surfacing problems, or suggesting a different approach, they’re less likely to say anything. And that’s just not bad for well-being, but also engagement and performance too.

Psychologically unsafe workplaces come in many forms too — some are overtly hostile to criticism or ideas, while some simply ignore or demean those who try to work in a new and different way because they’re attached to the status quo.

Working at a place that refuses to make changes to keep up with the times can be frustrating for the top performing members of a team, and they will eventually leave for a more forward-thinking company where their input is valued.

Strategies for Creating a Psychologically Safe Work Environment

Open Up Communication Channels

To create an environment of open communication and idea sharing, you need to make it easy for employees to communicate with each other and with leaders, when appropriate. Internal channels like Slack and Teams play a big part here. And don’t forget about the importance of internal communications as well to share your company values of transparency, trust, and problem-solving across the org.

Increase Transparency

Of course, you can’t tell employees everything — but most organizations could do a much better job of keeping employees in the loop. Knowing that your company will tell you what’s going on around big decisions, changes, and innovations helps foster a sense of trust and safety.

Transparency around failures is also critical — not telling employees every time someone messed up, of course, but admitting to mistakes when they’re made or pilot projects that didn’t work out shows employees that interpersonal risk-taking and experimental projects are happening all around them, and that failing smartly shouldn’t be a source of shame.

Give Employees Autonomy

A major factor in employee engagement and satisfaction is having a sense of autonomy at work. You’ve spent a lot of time and money hiring the best people, after all — why micromanage them? Showing employees that you trust them to accomplish their work tasks on time and with excellence, and letting them work in the way that works for them and their team members, builds trust. And trust is a vital part of psychological safety.

Autonomy is best when paired with accountability, of course. When employees feel they have accountability for the results of their work, they’re motivated to work harder and have more incentive to tackle problem-solving too. Just be sure that accountability doesn’t become blame or shame, especially if the employee was trying something new and innovative.

Genuinely Listen to Employee Feedback  

Giving employees the opportunity to voice their opinions to your leaders is essential for creating a culture of psychological safety. You can do this through regular employee surveys, focus groups, and less formal measures, but all this feedback will only increase psychological safety if your leadership actually takes in, and genuinely acts on, it. Otherwise, employees will start to feel discouraged and ignored, and will be less eager to share ideas.

The Role of Leadership in Fostering Psychological Safety

One particularly critical element in creating a psychologically safe work environment is your leadership team. Many companies in the past used to base leadership evaluations and promotions on who brought in the biggest financial results.

But effective leadership these days takes much more — leaders must have high levels of empathy and self-awareness to know how their approach impacts their whole team, strong listening skills, and the ability to receive and act on negative feedback.

A culture of psychological safety at work starts from the top, so be sure you’re promoting and supporting leaders who make that kind of work culture possible.

Case Studies and Research on the Benefits of Psychological Safety

While psychological safety can sound like a new fad, the concept of organizational and team psychological safety is actually very well-studied, and the benefits are firmly established in research over the past three decades. This meta-analysis provides a great breakdown of all the research on psychological safety up to 2017, and Google’s own research in Project Aristotle also dove deep into high-performing teams and found that psychological safety was the defining factor in their team effectiveness and success.

Conclusion

Psychological safety at work is all about making all of your team members feel like they can speak up, experiment, and innovate without facing unnecessary criticism or negative consequences. It enhances team effectiveness, increases employee retention, and has so many other benefits — it helps transform your company from a solid performer into a truly fearless organization.

At Cooleaf, we understand the pivotal role of psychological safety in fostering a thriving workplace. That's why we strategically partner with HR managers and leadership teams to deploy effective eNPS surveys, gaining insightful feedback directly from your team. But we don't stop there. Our expertise lies in not just gathering data, but in helping you implement meaningful change. Together, we can transform insights into action, creating a more engaged, productive, and psychologically safe workplace.

Connect with Cooleaf today!