Other parts of this series:
Practical ways to build psychological safety at work
With artificial intelligence (AI) and automation taking over routine cognitive tasks, people in the financial services (FS) workforce will be able to focus on something that AI can’t do yet: relate to people.
Managers currently oversee detail-oriented, repetitive tasks. In the future, they will be using the analytics generated by AI to understand customer needs better. To realize these benefits, teams will have to learn new skills.
Key to unlocking the benefits of AI will be psychological safety in teams. Right now, as discussed in other blogs in this series, there is a lot of fear in the FS industry.
One of the reasons is the structure of the work: The industry is highly detail-oriented and regulated. Traditionally, it is also a very stable industry. To drive performance in this environment, firms relied on positional authority, hierarchy, command-and-control and paternalistic management styles. There was one perfect way to do things, which means the carrot-and-stick approach to incentives worked really well. There were consequences for “getting it wrong”, which meant that workers paid attention to detail and made sure they got it right. And when they did that, they could be rewarded.
The world is becoming more nuanced and complex: financial service workers collaborate 50% more than they did 20 years ago. This means the environment is more ambiguous, and the carrot-and-stick approach is losing effectiveness.
The carrot-and-stick approach has another downside. It produces fear, which inhibits the very skills that people need to learn and adopt in order to thrive in the next 20 years.
One key dynamic behind team level performance is psychological safety, a term used by Harvard professor Amy Edmondson.
Psychological safety improves learning, problem solving, risk management, communication, collaboration and creativity. That’s a long list of very desirable traits. Those cognitive and emotional skills improve innovation, employee engagement and performance. We’ve seen how fear in organizations can cost up to 50% of the payroll. Now we see how to reduce that cost to zero – and even improve performance beyond that.
The main way to build psychological safety is by building trust. Trust is a two-way street – you trust somebody and they trust you. Stress and fear both undermine trust.
Doug Conant, author and Chairman of the Kellogg Executive Leadership Institute, offers this advice: The way to build a high-trust culture is to make every workplace interaction a building block of trust in the organization, its leaders and in each other. Every person should say what they are going to do, and then do what they say they will do. This goes beyond the immediate team. In their 2017 The Origins of Human Pro-Sociality: A Test of Cultural Group Selection on Economic Data and in the Laboratory, Francois, Fujiwara and Van Ysperle show that when the internal teams band together against a common enemy, they exhibit more pro-social behavior.
A team at Google led by Julia Rozovsky found psychological safety was the most important underpinning factor in the performance of 180 different teams.
It is a simple and also profound idea. To build psychological safety in a team, leaders need to put trust ahead of performance. By putting away the stick and carrot, and recognizing and rewarding trust-worthy behavior, leaders can build a culture of dependability. By setting clear goals, leaders can foster a sense of progress. By forging a team against a common external enemy, a leader can give the work meaning. This unleashes the creativity, innovation and performance that leaders are expected to deliver. It improves the collaboration in teams and allows them to focus on the one thing the robots can’t do: build relationships with customers.
To read more insights on how financial services companies can leverage their workforce’s humanity,
Download and read Accenture’s Free of Fear report.
In my next blog post I will talk about how to lead change effectively.