Other parts of this series:
Building psychological safety in teams can help financial services firms be more open to innovation, collaboration and agility, while increasing employee engagement, team performance and company performance.
In the storms of disruption, it’s natural for the crew and captain to get frightened, but if they have built resilience and psychological safety as a high-performing team they can pull together and set a new course ahead.
In my last post, I talked about how if left unchecked, fear and anxiety could stand in the way of transformation for financial services (FS) organisations. The good news is that employees can unlearn fear, feel safer in teams and build greater trust across the organisation.
One of the key mechanisms through which trust can be built is what Harvard professor Amy Edmondson calls ‘psychological safety.’ At its simplest form, psychological safety is the ability to fully be yourself within your team. In teams where this is prevalent, people are more creative, feel empowered take reasonable risks, and feel able to speak their minds. They do not fear that there would be retaliation or punishment for making a mistake, raising an issue or suggesting a new idea.
Speaking up is particularly paramount in FS, where a traditional hierarchical culture has been the norm historically. FS firms have been known to rely on centralised decision-making and command-and-control management styles. Hierarchical authority and bureaucracy are insufficient in today’s more challenging environment.
Psychological safety enables people to raise questions, voice concerns and challenge practices, even when these go against the grain of the organisation. In a study of hospitals, psychological safety was linked to identifying, diagnosing and solving the root causes of process problems. In financial services, where unchecked problems can have serious financial and customer consequences, being able to correct process problems could be critical.
Today’s disrupted environment requires FS firms to have increased agility, innovation and collaboration. Studies in manufacturing and service sectors reveal that psychological safety increases collaboration, communication and knowledge sharing.
In environments characterized by psychological safety, curiosity is welcomed, people are comfortable to be vulnerable and to share information and perceptions, employees can share their views through upward communication structures, and healthy conflict and debate are encouraged. All of these abilities are crucial for setting a direction for future change.
Psychological safety also creates the space for creative challenges, peer review and failure in the pursuit of innovation. As new entrants challenge incumbent banks and insurers, FS workers need to be able to come up with new ideas, experiment with new ways of doing things and challenge the status quo.
Last but not the least, a study at Google found that psychological safety was the most important and underpinning factor in the performance of 180 teams. Psychological safety improves the performance of both more geographically dispersed and diverse teams, making colleagues more included. Accenture’s “Getting to Equal,” research found that 85 percent of people were unafraid to fail in pursuit of innovation in the most equal company cultures (compared to 36 percent in the least equal cultures).
Above the team level sits trust in leadership and vision. On a boat facing a massive storm at sea, the crew will always look to the captain to see if she can be trusted with the right vision to chart a course to safety. In my next post, I will take a look at how change leaders are creating these environments of trust.
To learn more register to download: Fearless: How safety and trust can help financial services thrive even during disruption and transformational change