The hidden drag on performance: why psychological safety is essential for high-performing teams

In our work with leadership teams, we often encounter a fundamental paradox: most leaders recognise the importance of psychological safety, yet few fully grasp the extent to which it impacts their teams.

A recent engagement with a European media company illustrated this perfectly. Ahead of our workshop, we gathered anonymous feedback from team members and shared their insights at the start of the session. Among the many revealing quotes, one stood out:

“When we fail, we look for who is to blame. This creates a fear of failure.”

When we displayed these quotes on the screen, the CEO glanced at them, nodding in interest—until realisation struck.

“This isn’t my organisation, is it?” he asked.

We had to break the news: yes, this was exactly how his team felt. He was stunned. He had no idea that his people felt unsafe speaking up, sharing ideas, or admitting mistakes.

This moment highlights one of the biggest challenges with psychological safety: its absence is often invisible. Left unaddressed, this hidden issue creates a significant drag on team performance, innovation, and overall business success.

What is psychological safety, and why does it matter?

Psychological safety is the degree to which people feel safe to take interpersonal risks at work—whether that means admitting a mistake, challenging a senior leader, asking for help, or proposing an unconventional idea.

At its core, psychological safety comes down to a simple mental calculation:

“If I speak up, will this be held against me?”

If the answer is yes, people stay silent. And when people stay silent:

• Problems go unspoken and unaddressed.
• Mistakes are hidden rather than learned from.
• Bold, creative ideas never see the light of day.
• Collaboration suffers because people hesitate to ask for help.

The result? Teams, functions, and networks that operate at a fraction of their potential.

Many of the world’s most successful organisations have recognised the power of psychological safety. Google’s famous Project Aristotle – a large-scale study into what makes high-performing teams – found that the single biggest predictor of team success was the level of psychological safety.

Pixar, one of the most consistently innovative companies in the world, has built its culture around psychological safety. Two of its founding principles reinforce this:

1. It must be safe for everyone to offer ideas.
2. Anyone can speak to anyone.

When organisations get psychological safety right, performance, creativity, and learning all accelerate. This is supported by MIT research, which demonstrated that teams with higher psychological safety outperform others by 20% in problem-solving.

But if most leaders understand its importance, why do so many teams still struggle with it?

The barriers to psychological safety

Most leaders don’t set out to create a culture of silence. In fact, many actively support psychological safety—in theory. The challenge is that, under day-to-day business pressures, certain leadership behaviours start to erode it.

When we think about what undermines psychological safety, we often picture extreme examples—bullying, public humiliation, toxic cultures. These behaviours are obvious and (hopefully) called out.

But the real danger lies in the smaller, subtler behaviours that, over time, chip away at a team’s willingness to speak up. These often emerge when leaders are under pressure and focused on short-term results:

• Issuing directives instead of inviting input
  – “Here’s what we’re doing” vs. “What are we missing?”
• Projecting confidence instead of acknowledging uncertainty:
  – “We need to get this right” vs. “Let’s learn as we go”
• Rushing through transactions instead of connecting with people:
  – “Let’s get straight into it” vs. “Before we start, how are you all?”
• Delivering blunt, in-the-moment criticism instead of coaching for development:
  – “This could have been better” vs. “What did you learn from this?”

These behaviours may feel efficient in the short term. But over time, they lead to teams that hesitate, hold back, and avoid risk. Leaders end up making all the decisions—and teams become passive, waiting for direction rather than thinking proactively.

The leadership self-awareness gap

A recent Harvard Business Review study of 3,600 leaders found that only 10-15% were self-aware. The challenge here is that even leaders who believe in the importance of psychological safety may not actually demonstrate the critical behaviours as much as they believe they do.

Under pressure, they default to the short-term behaviours outlined above—even though these behaviours are not fully aligned with their values or intentions. Crucially, they are also likely to miss the impact these behaviours have on their teams.

It isn’t just a lack of self-awareness that drives these more expedient, transactional behaviours. In our workshops, most leaders agree that these behaviours are simply easier. It requires less thought to share your opinion or get straight to business than to ask a great question or spend a few minutes connecting with others.

How leaders can build psychological safety

The good news for leaders is that building more psychological safety is not difficult—but it does require an intentional commitment to demonstrating behaviours that help to balance a short-term, more transactional approach.

Amy Edmondson, the researcher who coined the term “psychological safety,” highlights three key leadership behaviours:

1. Shift from execution to learning

Leaders must make it clear that challenges at work aren’t just about execution—they’re about learning. Instead of expecting perfection, they should reinforce that learning from failure is part of the process.

• “We’re figuring this out together.”
• “What can we learn from this?”

2. Ask more (and better) questions

Genuine curiosity is one of the most underutilised leadership skills. Too often, leaders ask leading questions that nudge people towards a pre-determined answer:

• “Don’t you think we should try…?”
• “Wouldn’t it be better if we…?”

True curiosity means asking open-ended questions with no agenda:

• “What do you think?”
• “What makes you say that?”
• “What could I be missing here?”

Even just asking one or two open-ended questions per meeting signals to your team that their voices matter.

3. Acknowledge your own fallibility

Leaders don’t have to be all-knowing. In fact, admitting when you’re unsure or have made a mistake builds trust.

• “I may be wrong about this, but…”
• “Here’s something that didn’t go well this week and what I learned.”

One simple yet powerful practice we’ve implemented with clients around the world is an Error Competition – where leaders start team meetings by sharing a recent failure and what they learned from it.

This isn’t about celebrating failure—it’s about reinforcing that failure is part of the learning process. And when leaders model this, teams follow. Instituting these practices for a major consulting client saw a 70% improvement in team performance over just 6-8 weeks.

Where will you start?

Psychological safety isn’t just about making people feel comfortable – it’s about unlocking performance, innovation, and resilience in teams. The most successful organisations invest in building it deliberately.

So, which of these leadership behaviours is your biggest stretch? Where could you start applying them today?

If you’re interested in learning more about how to foster psychological safety in your teams, get in touch to find out how we can help you start building these practices in your organisation.