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The ROI of Psychological Safety – Sage Advice: Episode 50

By August 12, 2019July 25th, 2020No Comments

Amy Edmondson’s research paved the way for building effective, high-performing teams by analyzing how people interact in complex social situations. In terms of on-the-job interactions, there are a number of variables that can positively or negatively affect the ROI of psychological safety everything from productivity to safety.

Her research into “psychological safety” spans more than a decade, and yet the importance of it is only now gaining traction. Part of the reason why is because, for many organizations, The ROI of psychological safety the indirect value doesn’t seem worth it – despite the fact that issues related to psychological safety cost large firms MILLIONS of dollars each year.

So how can you make a better case for rolling out programs that promote a culture of psychological safety? Can you even make a financial case for the return on investment (ROI)? Amy offers her perspective in this short interview.

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Amy Edmondson:           The short answer to the question of how do you calculate the ROI to psychological safety is you don’t. It’s very hard to identify things that didn’t happen. One of the most important outcomes of psychological safety is that people are speaking up with what they see and oftentimes really big failures are being averted. Some of those failures are business failures, the headlines that you don’t ever want to see about your company and others are human safety or dignity failures, where someone is subject to worker injury and so forth.

So, when there’s a more psychologically safe workplace, you are dramatically more likely to avoid some of those bad outcomes. Those will never show up on your income statement. The timeframes will vary enormously. I feel safe enough to point out a flaw on a vehicle before it hits the customer. That’s immediate. If I have a kind of a crazy idea that ultimately leads to a brand new product and product line 10 years from now that becomes a million dollar business, the ROI is going to show up 10 years from now and everything in between, but in a world that is volatile, uncertain, complex, and ambiguous, right? So, a VUCA world, you absolutely need people to speak up, full stop. It’s just a necessity.

So, psychological safety isn’t a magic bullet. It’s not a new tool. It’s the underpinning of all sorts of things that you really do want, right? You want innovation, you want teamwork, you want creativity, you want engagement. All of those things happen far more when you have psychological safety than when you don’t.

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