What's Driving the Demand for Psychological Safety?

Published:

January 9, 2023

Length:

50:43

Available On

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Show Notes
We're kicking  the new year off with a five part series on "What's Driving Demand for Psychological Safety." Today's episode will kick off the series and give us an overview of where we've been, where we are, and introduce the key drivers. In the following episodes of this series, Tim and Junior discuss exclusion and social injustice, and innovation, engagement and retention, mental health and wellness. Each of these paths lead back to the need and the demand for higher levels of psychological safety.


(0:02:16) The way we work has changed. The 2020s are the decade of culture and we are able to hold conversations about psychological safety that can be productive and actionable.

(03:35) The concept of psychological safety has been around since 1965 when Warren Bennis and Edgar Schein at MIT coined the term in their academic research. 

(18:41) A global survey conducted by SHRM shows that workplace culture is the difference between success and failure in a post pandemic world. A good workplace culture was more important than salary for job satisfaction. Wellbeing is up 147% in mentions in the share of job posts and the number one reason for attrition was toxic corporate culture.

(36:10) Introducing the drivers of psychological safety such as employee engagement, physical safety, growth and development, mental health and wellness, innovation and competitiveness.

 (40:24) Younger generations like GenZ are more sensitive to workplace culture than the generations before them. You cannot treat workplace culture the same as we have treated in the past and expect to succeed as a business in 2023.

Important Links
LinkedIn Global Talent Trends 2022 Report Key Findings
LinkedIn Global Talent Trends 2022 Report
MIT Sloan Management Review "Toxic Culture is Driving the Great Resignation"
Glassdoor "Culture over Cash? Multi-Country Survey Finds More Than Half of Employees Prioritize Workplace Culture Over Salary"
SHRM "Healthy Workplace Culture: The Cornerstone of All Business Objectives"
What is Psychological Safety?
The 4 Stages of Psychological Safety by Timothy R. Clark

 



Episode Transcript

0:00:02.5 Producer: Welcome back culture by design listeners. It's Freddy, one of the producers of the podcast. It's a new year and we're kicking things off with a five part series on what's driving demand for psychological safety. Today's episode will kick off the series and give us an overview of where we've been, where we are, and what's really driving demand. In the following episodes of this series, we'll talk about exclusion and social injustice, and innovation, engagement and retention, mental health and wellness. All of these paths lead back to the need and the demand for higher levels of psychological safety. You can find important links to this episode show notes at leaderfactor.com/podcast. Thanks again for listening. Enjoy today's episode on what's driving demand for psychological safety.

0:01:00.9 S1: Welcome back everyone to culture by design. I'm here with Dr. Tim Clark, and today we're going to be discussing what is causing the demand for psychological safety. Tim, how are you?

0:01:10.0 Tim: Hey, I'm doing great, but I was just going to say that's a big question that you just posed. So we're going to tackle that. That's a big question.

0:01:18.5 Tim: It is. I'm excited to dive into it. But let's give it a shot. Good. Yeah, let's do it.

0:01:24.0 Junior: The world is a different place today than it was just even a few years ago, and the 2020s are fertile ground for this conversation. Tim, I don't know even five years ago if we would be having this podcast episode, but here we are.

0:01:38.6 Tim: Yeah, I promise you that we would not be because psychological safety was a thing, but it was not a thing in circulation five years ago. Now, to a few people it was, and people that research in this area, people that care about this, people that care about culture, but it was kind of still an esoteric term that people didn't know about. And so here we are five years later, and it's a global term, and it's in circulation, and it continues to increase in... We just use the term everywhere all the time, and we're going to talk about why.

0:02:16.8 Junior: The environment's changed such that this conversation's viable now. It's productive now. 30 years ago, 20 years ago, perhaps even 10, the ground may not have been as favorable to the seed of psych safety. Now, we are seeing a handful of drivers that are not going away. We're going to talk about them. They include, but are not limited to, inclusion, engagement, retention, mental health and wellness, selection, customer experience. The list goes on. And we were talking just before the podcast started, when the book came out, till now, so that's two years, two and a half years, global search results for psych safety have increased almost 400%, which is pretty amazing. So more people are looking for psychological safety. They're looking to understand it. That demand has gone up, and we're going to try and unpack why. We're going to start in the past. If organizational behavior were a book, I'm thinking of it this way, let's say that that book's 400 pages, psychological safety would probably be on the last page, and it would probably be on the second half of the last page. That's how new this is, at least in share of attention. But as you mentioned, Tim, it was around, it was a little bit esoteric.

0:03:32.4 Junior: So it's been around since the 60s?

0:03:35.3 Tim: Yeah, 1965, when it first was, I guess, introduced formally to the academic research agenda by Warren Bennis and Edgar Schein, both at MIT at the time. It's funny though, Junior, we've done a little research and you can find two or three instances of the term psychological safety that go back to the 1940s. And all of those references or citations, they're in greasy old safety manuals. Yeah, literally greasy. They're literally greasy and they don't explain the term at all. I think they just put the word psychological with the word safety, recognizing that there was another domain of safety that was not physical, but there was no attempt to define the term. So that is interesting, but yes, formally it goes back to 1965. It is. That's right.

0:04:33.7 Junior: So 1965 is probably 10 years past mainstream smoking in the office, rigid hierarchies. So we come out of the 50s, we start talking about it in the 60s in an academic sense. 70s, we see more women in the workplace, dress codes loosen, we move 80s, 90s, cubicles, lower morale, big organizations making big cuts. That's a turning point that I want to call out. 90s I think is interesting. You have these big sprawling organizations, bigger than they'd ever been. And there was some distance between the top of those hierarchies and the bottom of those hierarchies. And so some of that became a little bit antagonistic in the 90s, the relationship between employees and their employers. We move into 2000s, you get tech startup culture, it's creating more competition for talent. There in the 2000s, we start what you call humanizing the workplace. And that happened, I guess we could say gradually and then suddenly to use someone else's language. But that's really how it's been. And now we're post pandemic. The pandemic exacerbated the challenges we had before, shed some light on them, it shifted our focus to them. It gave us some motivation to address them.

0:05:52.7 Junior: And now here we are. So we've come an interesting long way from the 50s. If you look at the last 70 years, and in the timeline of humanity, it's certainly the last page in the book. And we're in a really interesting place. And I think that that's important to call out. Because each of us has a responsibility to understand that, to ask the question, why? Because navigating the environment today requires a different toolkit than was required years ago. And if you don't adapt to the new environment that's before us, you're going to be left behind. So that's why we felt like this conversation was going to be so important today, is highlighting some of the data, which we're going to be sharing a lot of data today, about what the environment's like, and why the demand is as high as it is.

0:06:47.9 Tim: Junior, it makes me think of an example. I don't remember, and we could go back and research this, but when scientists came to the unequivocal conclusion that smoking causes cancer, think back on that. All right, but how did society respond to that? Did society line up behind that finding and say, fantastic, thank you for finding that out, and we embrace that finding? We're going to begin changing our behavior, our policies, our value systems? Is that the way society responded? I don't think so.

0:07:31.5 Junior: It's exactly how it happened. And then big tobacco decided to shut down the next day.

0:07:36.2 Tim: That's right. So think about that. It took years and years and years. So first we went into a prolonged period of denial. It's so interesting. So that's a great example of a scientific discovery, but then look at the way we adopt that. Look at the way that we embrace that. Look at the way, well, I guess I should say deny that, dismiss that. Basically we go through this process of denial and then finally there's some reluctant acknowledgement and then admission and then it's just this slow, amazing process. Well, why do I bring that up? Smoking causes cancer. Yes. Do you know what else is true? Fear causes damage. Fear causes damage in organizations to both people and to the organizations. That is an empirical finding and it's every bit as important and every bit as true as smoking causes cancer. Fear is a pathogen in organizations. It really is. And we now have the empirical results to show that if you remove fear, what do you replace it with? You replace it with psychological safety. And now we're able to see the cause and effect relationship between psychological safety and a whole bunch of outcomes, several of which you just mentioned, Junior.

0:09:12.0 Tim: So that's what this conversation is about.

0:09:14.0 Junior: The analogy is really interesting and I want to spend a little bit of time on it because there are some parallels that I think are appropriate to call out. The first, if you look at big tobacco, you have these two things at work. You have the consumer interface, the ground floor and you have the consumer behavior, but then you have the supplier behavior. So the consumers had become accustomed as part of the norm to smoke. They're consuming this product. The information changes. There's new light that's shed scientifically on the outcomes of smoking and there's still lag in smoking cessation. Even today, even today throughout the world, there's massive lag in the cessation. Yet there are still the moment that information comes out, massive incentives for big tobacco to continue producing in the exact same way that they were previously because they have a P&L to look at. And all of these incentives, they don't go away. And the same is true, I think, for psychological safety and for the fear that you're talking about. You have the, let's call it the customer interface. You have these employees on the front lines who have been accustomed to this.

0:10:30.3 Junior: There's new information. They're no longer tolerating it. However, the incentive structure that incentivized the fear in the first place does not come tumbling down immediately after it's exposed. It is incentivized to stay there for some of the reasons we've talked about in previous episodes. If you have people that feed on title and status, if you have incompetent leadership, those incentives will remain. Yet the information is now there and what we'll probably see, what's being borne out already, is that fear will no longer be tolerated the same way that cancer causing smoking will not be tolerated. And yet it will still be perpetuated over decades in certain pockets of the world and organizations. Right? I love the example.

0:11:18.3 Tim: Isn't that interesting, Junior? So as you said, we're at the beginning of this shift and this transformation, but it's going to take time. So the inflection point began with the research and the finding that fear causes damage, both personally and organizationally, and then the related research that shows that psychological safety leads to a series of productive outcomes, whether it's learning agility, whether it's resilience, whether it's innovation, whether it's engagement, whether it's mental health and wellness, whether it's the retaining of your best talent. We understand that now, but this process, we're just at the front end of the adoption curve for this process. And so leaders will continue to push the fear button. They will continue to lead based on the antique imperial model of leadership. They will continue to try to use fear as a proxy for leadership instead of really leading. This is going to take some time. The good news though, is that we have momentum. We have momentum behind the findings regarding psychological safety. And that's exciting. It is. It's really exciting.

0:12:46.5 Junior: Some of those findings are older than a couple of years. Historically, I guess on the timeline, they're not that old, but they predate a lot of the demand that exists. And so one of the things that I believe is true in this conversation is that it's not necessarily the empirical evidence itself that propels the conversation forward. And I think that the same was true with smoking. It takes a while for the narrative to change. And the farther down the adoption curve we get, the easier this becomes. But I think part of what has propelled this forward is transparency. I think that that transparency has come through technology. You and I were talking the other day and you said something that really hit me, which is light is the best disinfectant. Now, these organizations, some are toxic. Some pockets of organizations are toxic. And light or transparency can be the best disinfectant to go in and root out some of the fear and some of the sickness that lives inside pieces of organizations. And so we've seen that over the last few years. That's a trend that I wanted to call out. The internet has a very long memory.

0:14:11.7 Junior: And now that so much is recorded and publicized, I think it's forced organizations' hands. It's forced leaders' hands because they cannot get away with what they've been able to get away with previously. What do you think about that?

0:14:28.0 Tim: No, I think it's true. They're not able to get away with it. It's very interesting though, Junior. I'll just mention another example. So Thomas Kuhn wrote a book called The Structure of Scientific Revolutions. And it's fascinating because what is he talking about? He's talking about the social psychology of scientists. What do they do when someone discovers something new that makes the old theory obsolete? Do they all go run immediately and embrace the new evidence and the new theory? No, they don't. They follow this same pattern of denial. And then they go into this gradual process of testing, poking, prodding, and gradually adopting the new theory or actually the new truth that is borne out by all kinds of evidence. So it doesn't matter if we're talking about a scientific revolution or if we're talking about a revolution within organizations. Humans tend to respond in a very similar way. But as you say, something that may be accelerating that process is that employees can walk. They can walk away. They have the power to accelerate the adoption curve when it comes to psychological safety if they have options. And we saw this during the pandemic, didn't we?

0:16:02.2 Tim: We're going to continue to see this because psychological safety is directly linked to so many important outcomes. If it were just one outcome, such as innovation, that would probably be significant enough, but it's directly related to several other key outcomes that we've already mentioned. And so with the stakes being so high, I think it's going to accelerate the adoption and the normalization of psychological safety and the expectation of psychological safety. Junior, we've talked about before the fact that Gen Zers coming into the workforce, what's their attitude with respect to psychological safety? They see it as a term of employment, right? So we have forces at work in organizations and on leaders that are coming from several different angles. That's why I think that this process may be expedited, so to speak.

0:17:10.2 Junior: Well, and part of that being expedited is that Gen Z will move quicker than any generation before it when it comes to retention. And we've seen this in the data over the last five years is that Gen Z, more than any prior generation, will move out of an organization faster when they see that it doesn't align with their values. That's right. And another thing that you pointed out about the pandemic, which I think is compelling, is that now we have hybrid work in a way that we didn't before. I haven't thought this all the way through, but it would seem to me that pandemic increased the likelihood that you could work hybrid, right? Yeah, it did. Probably fair. If that's true, then it's more likely that you're able to find a job that allows for remote work than you were before because organizations have adopted this. So post pandemic, it's now easier for you to transition out of an organization and into another because you don't have to move from San Francisco to Chicago. You can stay on your couch and work for a different organization on Monday. And so I feel like those barriers coming down have increased the necessity for psychological safety because transitioning to an organization is easier than it ever has been before.

0:18:34.5 Tim: That's right.

0:18:35.1 Tim: As you say, Junior, it shifted power to the employee and that continues.

0:18:41.3 Junior: So let's talk a little bit about some of the data. I think that this will help frame some of the conversation. I'm going to list off a whole bunch of stats that come from some research that's been done, most of it in the last three years from several different organizations. Let's start off with this first one. 40% of all employees were thinking about leaving their jobs at the beginning of 2021. And as the year went on, people started quitting in unprecedented numbers. Between April and September 2021, more than 24 million American employees left their jobs. That's an all time record, 24 million between April and September. So if it's an all time record, we know that it's never happened to that extent before. So that would be a tally on the side of we're in a new place. Next, a global survey, culture survey of about 10,000 workers from 12 countries is done by SHRM this year, 2022, found unequivocally that quote, workplace culture will spell the difference between success and failure in a post pandemic world.

0:19:54.1 Tim: That's a pretty authoritative statement, isn't it?

0:19:56.5 Junior: That's a pretty authoritative statement. Like this is the difference maker. Exactly. And they're also calling out that inflection point of post pandemic between success and failure in a post pandemic world, workplace culture. And in that same report, SHRM shows globally 45% of workers have thought about leaving their current organization due to poor work cultures. That's almost half. Yeah, it is. Then we go to a glass door survey that pulled over 5000 people, United States, UK, France, Germany, 77% would quote, consider a company's culture before seeking a job there. Another 56% get this said a workplace culture, a good workplace culture was more important than salary for job satisfaction. And 73% said they wouldn't apply to a company unless its values aligned with their own personal values. Do you think it's reasonable that we would get this data in 1950?

0:21:00.3 Tim: Junior, these data, these studies, this is astonishing. It's unbelievable. It's unbelievable. We're not talking about going back to the 50s, just go back three years.

0:21:15.1 Tim: Just go back pre pandemic. And I don't think we would see anything close to what we're seeing now. These are astonishing findings about what people are valuing, how they're weighing different factors. For example, I mean, just think about the job interview and the evolution of the job interview. Remember how they used to teach us to prepare for a job interview. It was this audition experience and they trained us. Today that's been turned on its head. It's a two way audition and we have a job candidates coming in. They're interviewing the organization as the organization is interviewing them. And it's just become a very different experience. That's just one example.

0:22:11.4 Junior: I've even seen that in our own organization as we've grown the team over the last several years, several years ago, it felt much more like I was interviewing the candidate. And today, just anecdotally, it's my own experience. It feels much more like they're interviewing me, or at least it's more ping pong than it's been in the past regarding the types of questions that they're asking about company culture, about values, and about some of the things that in the research that we've yet to mention. So speaking of interviewing, here's one from LinkedIn. So LinkedIn did a study. There has been 147% increase in the share of job posts that mentioned wellbeing since 2019. Astonishing. 147% in three years. What does that tell us?

0:23:04.4 Tim: It didn't used to show up.

0:23:07.7 Junior: Yeah. No, it wasn't there. And if it was, it was a footnote.

0:23:12.3 Tim: It was very infrequent.

0:23:15.2 Junior: But now it's front and center. You see wellbeing up 147% in mentions in the share of job posts since 2019. That's incredible. If that's not enough to convince you that we're in a different place in 2022, let's go to this MIT Sloan research. This is an incredible study. So MIT says, let's look at the great resignation and try and figure out how we help leaders respond because this is unprecedented. They analyzed 34 million online employee profiles. That's a lot of profiles. To identify US workers in this case who left their employer for any reason, including quitting, retiring, or being laid off between April and September 2021. So same period as the SHRM report. The data show us the company level attrition rates for the culture 500, which is an amalgamation of companies that they put together. That's large, mainly for-profit companies that together employ, get this, nearly one quarter of the private sector workforce in the United States. That's a big population. So the number one reason for attrition across this period was toxic corporate culture. Toxic corporate culture.

0:24:37.3 Tim: That's number one. That's the number one driver.

0:24:39.5 Junior: The number one driver of attrition inside this sample. Now the next variable is three times less powerful in correlation. It's job security and reorganization. So job insecurity and reorganization was three times less powerful a variable than toxic corporate culture. Just going from number one to two.

0:25:04.0 Tim: It's all about culture. That's the hypothesis, but now it's been confirmed in the data.

0:25:11.8 Junior: It has. They say our analysis found that the leading elements contributing to toxic cultures include failure to promote diversity, equity, and inclusion, workers feeling disrespected, and unethical behavior. Fascinating. So let's go through those three really quickly. Failure to promote diversity, equity, and inclusion. We talk about this very frequently. We talk about diversity. We talk about inclusion. Workers feeling disrespected. That's fundamental. Change one, respect, and then unethical behavior. Of course, there can be no tolerance for that, but we've seen a lot of that. Toxic corporate culture coming in at number one. That tells me that as a leader today, I need to pay attention to this and I need to hedge against this. If I don't pay attention to this, I'm naive. I'm absolutely ignorant or I'm completely in denial.

0:26:10.6 Tim: Yeah. You'd have to be because if culture is the number one factor for retention, but it's not just retention, it's engagement.

0:26:18.6 Junior: Right? Oh yeah. It's action. It's everything.

0:26:22.3 Tim: It's everything. So you have to pay attention to this factor pretty much above the other factors. It's that important.

0:26:33.8 Junior: If someone were to ask, okay, what are the top five variables that lead to the attrition that we're talking about? These millions that are leaving. I probably would have put compensation in the top five. I definitely would have put it in the top 10, which leads into my next sentence, which is it's not in the top 10. Guess where compensation came in? 16. 16th place? 16th place. It was the 16th variable in terms of correlation that contributed to the attrition. That blows my mind. Yeah, that's incredible. Toxic culture was 10.1 times more powerful as a variable than compensation. 10 times. 10 times. If you think you have a culture problem and that you can fix with dollar signs, you're naive. You got to look at the data.

0:27:26.5 Tim: We have to understand the order of magnitude here. Toxic culture was not marginally more important. It was 10 times more important. You have to ruminate on that for a bit to really let it register. 10 times. It's incredible.

0:27:45.9 Junior: The more I've thought about this as I've gone through the data and just sat on it for a few days, it's amazing to me. It really does require that you sit with it and try and understand it. Because it's also, as I mentioned before, three times the next variable. It's three times number two. It is far ahead. If toxic corporate culture is weighted as a 10, the next variable is like a three. It's unbelievable.

0:28:15.8 Tim: That second variable is, as you said, job insecurity and reorganization, right? It's way down. It's way down.

0:28:27.0 Junior: We've talked a little bit about post-pandemic and some of the changes. I saw a quote from the CHRO of IBM that I really liked, Nicole Amaral. Here's the quote. Not since the Industrial Revolution have companies really had to think about work design, about what tasks get done and where do those tasks get done and when and how do you deconstruct work so that it's done in an optimal manner. The shift culturally and in the way that the work itself is done is drastically different than it was just several years ago and in this person's perspective, not since the Industrial Revolution. Part of the reason I call that out, even though it's slightly tangential, is that we're talking about something that's as important as the Industrial Revolution. We talk about the 2020s as the decade of culture and I truly believe that when we look back in 2040, 2070, we will look at this time like we do the Industrial Revolution. Now you may call that hyperbole, but if you look at the data, this is unprecedented. The way that power is shifting away from the tops of these rigid, archaic hierarchies and being distributed to the people, it's never happened in this manner before.

0:29:52.1 Junior: Technology is increasing that, globalization is increasing that, and I don't think that this is a wave that's going to be stopped.

0:30:00.3 Tim: Well, Junior, I want to make a comment though based on the quote from Lamereaux that you just shared. Let me go back to the quote. Not since the Industrial Revolution have companies really had to think about work design, about what tasks get done and where do these tasks get done and when and how do you deconstruct work so that it's done in an optimal manner. But hang on a second. We need to qualify this. Some people might be thinking, oh, wait a second. We're going back to the time and motion studies that Frederick Winslow Taylor used to do, right? Way, way back in the 50s. We're not talking about pure efficiency. We're talking about doing it in the context of humanizing the workforce and humanizing the workplace. How do we do it in that context based on meeting the basic human needs of human beings, right? Their need to be included, their need to learn and grow and develop mastery, their need to contribute and have some autonomy, their need to create and innovate and make things better. That's what we're talking about. This is not a throwback to those old time and motion studies. I just want to be clear on that.

0:31:31.1 Tim: That's not what he's saying, right? I think it's important to qualify that a little bit.

0:31:37.7 Junior: I do too. Let's move into some of the drivers. We've talked in a holistic sense, the demand. Let's point to some categories because we here at Leader Factor have a unique opportunity to talk to CHROs, DENI experts, learning and development people that come and are looking for help in these areas in culture and psychological safety. We get to hear a lot about the motivational profiles of these different people and the motivational profiles of the organizations they represent. It gives us unique insight into the drivers. Now at the beginning, I'd say two years ago, we broke these down into two buckets. We said there's a competitive force and there's a moral force. Those two things largely exist and those two buckets we can still put people in. There's been an increase in specificity. There's been an increase in the granularity with which they describe their motivation. Before let's say just two years ago, you would hear statements like, well, it's the right thing to do or we need to be competitive. Those were like 10,000 foot descriptors and they would say, well, our organization isn't as inclusive as it should be or all of the things that were happening inside the realm of social injustice, those were motivation.

0:33:16.3 Junior: But now they're coming to us and they're saying there were two items in our engagement survey that pointed to low psychological safety and we've seen 16% attrition in this piece of the business since that time. They're saying things like our selection is poor because we haven't factored in these variables of people's track record to promote psychological safety. They're coming with, as I said, more specificity and they're linking psychological safety to all of these different drivers and outcomes.

0:33:56.6 Tim: Well they're measuring those things, right Junior? They are. They come and they say, this is how we're doing and here's our trend line for this metric, whatever it is, it could be retention. They come and they can say, we're not doing well or we're getting worse. As you say, they're not coming with these throwaway comments, oh, we need to be more competitive or oh, we need to be more inclusive. Yeah, that's fine. But they come with the data and they know exactly where they're improving or where they're getting worse. It's a good point.

0:34:28.7 Junior: Well, part of the reason I mention it is for the sake of spotting a trend. Because of where we sit, we can spot the trends. Now two years ago when I had that conversation, I would need to make the link for the organization and say, okay, let's look at the causal chain of engagement. Engagement is a function of what? We would deconstruct it and we would eventually get to the solution and the answer, which is that psychological safety precedes engagement. Engagement is a function of psychological safety, but it would take a little bit of time to get there. What I'm saying now is that the trend is they're making that connection before our first conversation and they're doing that across a whole bunch of different areas. So when it comes to inclusion, they're no longer saying, hey, we have an inclusion problem and we have no idea where to start. They're saying, we have an inclusion problem and we think it has something to do with psychological safety. We're having an engagement problem and we think it has something to do with psychological safety. So the market is making this connection that psychological safety plays a role in all of these outcomes and they're no longer relying on our explanation and our ability to deconstruct it for them.

0:35:41.6 Junior: And in my opinion, that's an important trend.

0:35:44.9 Tim: Well, it's not a hypothesis anymore, Junior. They're coming with, they understand the cause and effect relationship. They did the root cause analysis. They know what the corrective action is, but the hard part then is, okay, how do we then elevate psychological safety? We know that it's the independent variable that leads to this outcome. We know we need to improve it. We need some help on that.

0:36:10.3 Junior: But they know what they need to do to a large extent, right? They've been able to accurately self-diagnose. So some of these drivers, let's go through them. Education, engagement, learning agility, physical safety, productivity, resilience, selection, retention, customer experience, growth and development, mental health and wellness, innovation and competitiveness. These are a few, not even all of the drivers that we've been able to recognize and call out specifically as reasons for the increase in demand for psychological safety. Now look at each one of those. It's incredible. You would usually in a traditional world attack each of these individually. But what we're finding is that the performance of each of these criteria is symptomatic of what's upstream and it's psychological safety lying at the heart of culture that then bleeds into every single one of these. Psychological safety as the heart of culture affects the people that you bring into the organization, your ability to retain them and your ability to engage them. Psychological safety bleeding into the customer experience, that's one that we're seeing more and more that we've talked about this ad nauseum in years past about the customer experience being a reflection of the employee experience.

0:37:43.0 Junior: You saw that, I mean that was flavor of the day for a while that CX equals EX, but that has to do with psychological safety. It's incredible this list.

0:37:53.2 Tim: Well, it makes me think and I think that hopefully everyone understands that with psychological safety, you get collateral benefits, right? Because psychological safety as an independent variable connects to all of these outcomes. If you don't have psychological safety, you're going to suffer collateral damage. One way or the other, you get collateral benefits or collateral damage. That is how important psychological safety is as a causal variable linked to all of these outcomes in the organization. Not to mention at an individual level where we talk about your mental health and wellbeing, your personal growth and development, your upward mobility potential, your engagement, all of the things that matter to you personally. We cannot escape the fact that it's going to be collateral benefit or collateral damage with psychological safety. That's the nature of the cause and effect relationships here.

0:38:55.5 Junior: I want to call out the generational impact that's going on across a whole bunch of these drivers. Gen Z, millennials, Gen Z more than any cohort prior is moving quicker. They're transitioning in and out of organizations at a faster pace. Mental health and wellness would not be a driver on this list a few years ago. Yet now, and the source of this is the global talent trends in 2022, which we'll link, 66% of Gen Z say that more investment in mental health will improve company culture. You may have a variety of thoughts and feelings about mental health and wellness. You have an entire generational cohort telling you, hey, over here, 66% of us think your culture will be better if you invest in mental health. Are you just going to disregard that? That's a dangerous thing to do. You're going to run out of people. You're going to run out of top talent. Because eventually these generations turn over. If you have any foresight at all, regardless of what you believe about these different drivers in isolation, you have to acknowledge the fact that there's a new generational cohort that's moving in that values different things th an the generation before it, than the generation before it.

0:40:20.0 Junior: You need to pay attention to these trends or you'll get stung.

0:40:24.7 Tim: Junior, I would add to that the fact that as we work with Gen Zers, I don't know how to describe this, but they seem to have a more fine tuned cultural sensibility. It's almost as if they possess different equipment than the prior generations. They're so alert. They're so attentive. They're so attuned to what's going on around them culturally. They just pick up everything and they interpret it. I don't see that sensibility. I don't see that same equipment in the older cohorts. Maybe because it was not part of their socialization. That's probably what it is.

0:41:17.2 Junior: I think it's the same equipment. The hardware is the same. It's just a software update.

0:41:22.1 Tim: That's it. Yeah, they have the same equipment and I understand, but you're right.

0:41:26.9 Junior: They're running a new OS. We might still be in Windows 95 and they're coming in Windows 10. Maybe that's a stupid analogy, but it makes sense in my head.

0:41:39.3 Tim: No, it's really true though.

0:41:40.8 Junior: Humans have always been able to recognize these things. We can smell intent. I think that that's been with us for a long time. However, the tolerance has gone way down for organizations and people that induce fear. The tolerance has gone way down for abuse. The tolerance across these hazard categories has gone way down. One of the things that I think is important to acknowledge is that it's gone down most with the top talent because they have more options than anyone else. If they have low tolerance and they see that, hey, over here, this organization that I'm looking at, it's pegging out the meter, right? The equipment that I have and I don't think that this is going to work out great. They're not going to go there. If they feel that or sense that in their own organization, they're going to leave. As we said before, the barriers are lower than they've ever been. Sure, the market's tightening up a little bit more. How much more important to keep your top talent? I don't know that this is ever going to go away. I think it's only going to become more poignant. It's going to become more acute for organizations.

0:42:58.3 Junior: I think that it's going to follow the same trend as smoking. I really like that analogy, is your denial of its effects will not prevent the effects.

0:43:13.3 Tim: Now, your denial doesn't change the truth.

0:43:13.2 Tim: No, it doesn't.

0:43:17.3 Junior: Eventually you will be met with the truth. That may be a short time. That may be a long time, but it is an inevitability. That's probably one of the points that I would hope to get across and something that I'm really trying to learn myself is that these tectonic shifts, you cannot deny them. You do so at your peril. If you look at this data and disregard it, turn a blind eye, it's not going to help you and it's not going to change what's actually happening. If you look at what the generational cohorts are saying, it's pretty clear. The types of things that they want to see inside organizations, you're looking at, what was that term that's increased 150% wellness? Those types of things are not going away. Just that terminology, mental health and wellness in just using that language.

0:44:15.5 Junior: We need to become fluent in that language as leaders if we're going to be effective. If we don't do that, it's a big risk.

0:44:26.2 Tim: It's a big liability. I like what you said, Junior. We all have the same equipment, but the Gen Zers are calibrated differently. I think about my experience in manufacturing early in my career. I think about the behavior that was normalized. I can barely even believe it today.

0:44:45.4 Junior: What did you think about it at the time?

0:44:47.6 Tim: All kinds of things. Harassment was normalized. Public shaming was normalized. Bullying was normalized. It's incredible. These different forms of exploitation were normalized. It was the normalization of deviation. It was normalized. What would happen is new people would come in. By the way, this always happens. You have an existing legacy culture. The new people come in, they adopt and then perpetuate the norms. Almost everyone does. That's exactly what happened. That's how those norms were able to be perpetuated over time, generation after generation. It's breathtaking for me to look back and see the norms that we had, the behavior that was normalized, that became acceptable, that we condoned. It's astonishing. This is actually the inflection point that we find ourselves at now is so exciting. That's why we framed the 2020s as the decade of culture. It truly is. But we're just at the beginning of the journey. Cultural safety, as we've said before, is the best proxy indicator that we have ever been able to find that reflects the overall health, strength, and vibrancy of a culture. We can really tell you how you're doing. It's an x-ray. It is so powerful and so accurate in explaining how a culture is doing.

0:46:23.4 Tim: How are people really interacting on the ground? We know. We can measure that now. It's amazing. It's a cool place to be.

0:46:33.8 Junior: The question that we started out with, what's causing the demand for psychological safety? We talked about a few of the answers to that question. We think that technology has played a big role. I think it's played an absolutely massive role. We are seeing the drivers of inclusion, engagement, learning agility, physical safety, resilience, retention, customer experience. All of these things are drivers for the demand in psychological safety. We're using, as employers and employees, we're using different language. We're talking about mental health and wellness. We talked about the pandemic absolutely shifting the way that we work. Now that we have more hybrid, more remote work, the barriers for employees to transition employers are lower than they have ever been. That's increasingly true for your top talent. So organizations are looking at retention, attraction, engagement through a different lens than they have in the past. All of these drivers are pointing to psychological safety. Psychological safety is a variable that when shifted affects everything around it, including all of those drivers. That's why we talk about it so much. If you could do one thing, if you had one lever to pull, this is where to spend time. At an individual level as leaders, we need to be open and we need to be humble when addressing the data and when looking at the organizational patterns, when looking at these things that are happening around us, it's our job to do that.

0:48:06.0 Junior: If we don't, we'll face the consequences of denial sooner or later. We have an entire generational cohort that we need to attract and engage, and they do work differently than we did work in the past. These are some things that we've talked about today. It's been an absolutely engaging conversation for me. It's been on my mind a lot, and I'm glad that we've had the chance to talk about it. Tim, what else?

0:48:30.8 Tim: One last point that I would leave listeners with, and that is that as you've heard our discussion today, hopefully it's triggered in you a sense of urgency at a personal level to increase your self-awareness. This is the implication, right? If psychological safety is really this important, then we need to know where we are. We need to understand our baseline. We need to understand the current state. What that means is that that translates into, I need to be more self-aware. That's what that translates into. I need to really understand where we are. I'm going to need some help in that because we've got some blind spots. It needs to be a collaborative effort to really understand where we are and where we need to go. I hope you feel a sense of urgency about elevating your own self-awareness coming out of this discussion.

0:49:22.9 Junior: Love it. Thank you, everyone, for your time and your attention. We appreciate your listenership very much. All of the data that we shared today, all of the studies, those are going to be linked in the show notes. Go read them for yourselves. Come to your own conclusions. To me, they're pretty compelling data. Have a wonderful week, and we will see you next episode. Thanks, everyone.

0:49:58.5 Producer: Hey, Culture by Design listeners, you made it to the end of today's episode. Thank you again for listening and for making culture something that you do by design and not by default. If you've enjoyed today's episode, please be so kind to leave us a review. It helps us reach a wider audience and accomplish our mission of influencing the world for good at scale. Today's episode show notes and other relevant resources related to today's topic can be found at leaderfactor.com/resources. And with that, we'll see you next episode.

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