When organizations investigate how risks turned into crises, many uncover silence as the culprit. Even competent experts all too often turn a blind eye to major issues out of fear. Concerns about backlash, such as career repercussions, can stifle top team members from speaking up.
A successful risk management system isn’t possible without psychological safety at work. For Governance, Risk and Compliance (GRC) leaders, a culture of trust can drive proactivity and team success. This foundation also supports employee well-being, stronger employee engagement and a more inclusive workplace where teams feel safe confronting interpersonal risks before they escalate.
What Is Psychological Safety at Work?
Physical safety is important in any workplace, but in a healthy organizational culture, workers should also feel safe mentally and emotionally. In a safe environment, team members feel comfortable sharing their opinions. People don’t face interpersonal risks when they ask questions, even when going against the norm. And mistakes are seen as learning lessons, not a reason for shame or punishment. This sense of team psychological safety reinforces trust in daily operations.
Key elements of psychological safety in the workplace include:
- Open communication: Employees can express ideas and concerns without judgment or retaliation. Strong communication openness strengthens trust and reduces hidden risks.
- Mutual support: Team members get trust and respect from their peers.
- Creative license: Calculated risks are welcome and seen as the foundation for learning and growth. These learning opportunities help teams build psychological flexibility, especially in environments where priorities shift quickly and Dynamic teaming is essential.
The Importance of Psychological Safety at Work
Every organization faces risk. Psychological safety empowers team members to address those risks before they grow, even when it means taking accountability for their own mistakes. This prevents defensiveness and data suppression for better risk management. Anomalies, near-misses and ethical gray areas rise in visibility.
From a governance perspective, psychological safety prevents blind spots and costly compliance failures. From an innovation standpoint, it creates the transparency and trust team members need to experiment wisely and strengthen learning behaviors across the organization.
Contributor safety can also support team performance and employee well-being. Team members who feel safe are 2.7 times happier and 2.1 times more motivated than their peers. This job satisfaction reduces intention to leave by up to 9%, improving organizational resilience and overall employee experience.
When Fear Silences Risk: Lessons From Real-World Failures
The news offers stark reminders of the risks when cultural suppression delays reporting or weakens decisions in a workplace.
Boeing 737 MAX Crashes
After two fatal crashes involving the 737 Max airplane, a Congressional inquiry revealed a “culture of concealment” at Boeing. Employees faced major pressure to cut costs. As a result, the company released a new flight control system with faulty features, and Boeing leaders failed to disclose known issues to their clients or the Federal Aviation Administration (FAA).
This case study shows how employees act when leaders expect issues to get swept under the rug. Skilled professionals rationalize risky decisions, leading to catastrophic outcomes.
BP Deepwater Horizon Oil Spill
In the weeks before an explosion that led to fatalities and millions of gallons of oil spilled, workers on BP’s offshore oil rig saw safety risks. Some voiced their concerns, but many ended up entering fake safety data due to fear tactics used by leaders. Later investigations showed that about 50% of employees felt they would face backlash for reporting risky actions.
Without psychological safety at work, transparency takes a hit. GRC leaders lose visibility into compliance gaps that are only seen by the frontline, including those tied to occupational health and safety.
Wells Fargo Fake Accounts Scandal
Between 2002 and 2016, about 30 Wells Fargo employees opened millions of new accounts without customer authorization. They used forged signatures, false pretenses and other tactics in the process. Ultimately, Wells Fargo was found to be pressuring team members to hit unrealistic sales goals. For instance, the bank reportedly had controlling sales leaders and regularly published performance scorecards.
Wells Fargo paid a penalty of $3 billion for this scandal, showing the high cost of silence in a high-pressure work environment.
How To Foster Psychological Safety at Work
Psychological safety is built through intentional habits and leadership behaviors. These practices help team members feel safe to speak up early and collaborate without fear.
1. Empower Structured Dissent and Early Intervention
If silence is dangerous, dissent is essential. But dissent doesn’t have to be chaotic or confrontational. Organizations can create formal mechanisms for a structured feedback culture:
- Anonymous reporting channels: Anonymity lowers the perceived risk of speaking up. This can help frontline and entry-level workers feel safe sharing sensitive concerns.
- Pre-mortem exercises: These planning sessions challenge teams to think about what can go wrong. Building risk identification into your work processes unlocks early intervention.
- Clear escalation paths: Organizations can document how issues move from staff to leadership teams. This streamlines action and keeps people accountable at every step.
Leaders can also play a key role in building challenger safety. By modeling respectful dissent and accountability, they normalize honesty over perfection and agreement.
2. Encourage Diverse Perspectives for Key Decisions
Showing that diverse viewpoints are welcome can build psychological safety over time. As more workers share their perspectives, blind spots decrease, improving risk control.
A few ways you can operationalize inclusion include:
- Building cross-functional teams for high-priority projects and risk reviews.
- Running focus groups to inform key decisions, inviting team members across the hierarchy to take part.
- Seeking feedback through regular surveys on company culture, business direction, and more.
When leaders take action on diverse responses, they show employees that they’re listening.
3. Design a Culture of Trust and Continuous Learning
A trust-based organizational culture is the foundation of psychological safety at work. According to Psychology Today, employees like to be trusted for their expertise.
In contrast, micromanagement erodes productivity. With someone breathing over their shoulder, people lose motivation to add value. Plus, they fear speaking out of line.
A fear-free culture first requires managers who grant autonomy and encourage learning behaviors. This initial layer of trust encourages workers to explore and propose solutions, even for issues that weren’t known. Employees also must know that they won’t get reprimanded when a fresh new idea falls short.
These practices can help build a culture of trust:
- Replace blame with curiosity. When issues arise, leaders focus on root cause analysis, not assigning blame. They ask questions, review metrics and treat losses as shared learning opportunities.
- Reward improvement as much as outcomes. Leaders can recognize employees for flagging risks early and reward them for adapting fast when market conditions change. Effective risk control should be as valued as hitting KPIs.
- Make reflection a routine practice. Regular retrospectives signal a commitment to ongoing learning opportunities and a healthy feedback loop. Leaders can show their openness to ideas in these sessions.
When you use these strategies to promote open conversation, you can support risk management and innovation all at once.
Strengthen Risk Management With a Multilayered Approach
Strong governance policies help keep your decisions in line with ethical and legal guidelines, but effective risk management comes from the bottom as well. Empowering the workforce can prevent crises earlier by giving everyone a voice.
With psychological safety at work, staff members feel free to contribute more diverse ideas and findings. They also ask questions that challenge the status quo, which may be the riskiest thing for your organization. Such transparency and communication openness are key to proactive, innovative problem-solving.
Success on the human side of risk management paves the path for adaptable GRC solutions. To keep your organization resilient, Onspring offers an AI-powered platform that further boosts visibility and meets dynamic compliance needs.
Watch our webinar on the future of AI in risk management to learn how cutting-edge tools can further support your risk control.
