Psychological safety and profit

I’m hosting a panel discussion at the up-coming CILIP conference in July on psychological safety. There’s no doubt that psychological safety makes an organisation a more pleasant, less anxiety-provoking place to work, but does it make law firms more profitable?

What is psychological safety?

As Dr Amy Edmondson says in “The Fearless Organisation”, “In psychologically safe environments, people believe that if they make a mistake or ask for help, others will not react badly. Candour is both allowed and expected. Psychological safety exists when people feel their workplace is an environment where they can speak up, offer ideas, and ask questions without fear of being punished or embarrassed.”

How does this candour improve knowledge sharing and innovation?

When employees feel safe to share their ideas, ask questions, and offer suggestions without fear, it encourages them to take risks and think creatively, creating a culture of learning, knowledge sharing and innovative approaches.

Early information about shortcomings nearly always mitigates the size and impact of future failures, and firms which encourage candid discussions about near misses and avoidable failures create an agile loop of continuous improvement. In “The Fearless Organisation” Dr Edmondson gives some fantastic examples of how shortcomings which weren’t addressed in Nokia, VW and Wells Fargo spiralled into huge issues.

How does psychological safety improve client experience and satisfaction?

As you can imagine, improved innovation levels and continuous improvement will always appeal to some clients, but this candour can also help to build strong, trusting relationships between lawyers and their clients, as lawyers are encouraged to communicate more openly, in a judgment-free way. Clients who feel heard, understood, and confident in the firm’s capabilities are more likely to provide repeat business, refer others, and contribute to the firm’s overall profitability.

How does psychological safety improve retention of talent and improve intra-firm relationships?

Psychological safety improves recruitment and retention of talent in a number of ways:

  • Individuals who feel supported, respected, and valued, are more likely to stay with their firm.
  • Employees who feel safe expressing their concerns and engaging in open dialogue, tend to resolve conflicts before they escalate, improving employee morale and reducing staff turnover.
  • Retaining talent not only avoids the costs associated with recruitment and knowledge loss, but also improves the likelihood the firm will be able to recruit the best talent.

What do you think? Do you work in a firm that aims to encourage candour and create a psychologically safe environment? If so, how do you think that it improves profitability? I’d love to hear from you in the comments.

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