The financial value of psychological safety in technology organizations
Overview
Technology organizations should care about growing a strong culture of psychological safety. Not only is it the right and just thing to do for employees, it also has financial implications for the organization itself.
Introduction
Network outages are expensive. A study by Gartner in 2014 found that the average cost of network downtime is $5600 per minute. A more recent study, by the Ponemon Institute in 2016, put the figure at nearly $9000 per minute. Of course, that figure is somewhat dependent on factors such as organization size and sector. For smaller organizations, the figure is much lower - estimated to be in the region of $137 to $427 per minute. But even at the very lowest end of that scale, that means that an outage that lasts just an hour would cost over $8000!
It won’t come as any surprise to learn that technology organizations that are considered to be ‘high-performing’ suffer from fewer failures in production than lower-performing organizations. What is more, when they do suffer a failure, they will recover from it and restore services to their users much more quickly.
Organizational culture is directly related to performance
According to the 2022 Accelerate State of DevOps Report, published by Google Cloud’s DevOps Research and Assessment Team (DORA), high performers have a change failure rate of between just 0%-15%. (Change failure rate is the percentage of changes to production or released to users that result in a degraded service and subsequently require remediation.) High performers’ average time to restore service is typically less than one day. For low-performing organizations, those figures are a change failure rate of 46%-60% and an average time to restore service of between one week and one month!
What might be more surprising to learn is that research conducted by DORA over many years for previous State of DevOps reports (in particular the report published all the way back in 2014), and also for the book ‘Accelerate’, shows the direct correlation between high performing technology organizations and a culture of psychological safety. The authors used questions based on the Westrum typology of organizational culture, which is focused on the flow of information throughout an organization, to measure culture. The data they collected showed that a culture of psychological safety (a ‘generative’ organization in Westrum’s typology) predicts software delivery performance, organizational performance, and employee satisfaction. Conversely, a culture of blame and fear (which Westrum labels as ‘pathological’) is negatively correlated with deployment pain.
Empowering people to use their voices (and their brains)
The term ‘psychological safety’ was coined by organizational behavior scientist and Harvard professor, Dr Amy Edmondson. She describes psychological safety as ‘the belief that one will not be punished or humiliated for speaking up with ideas, questions, concerns, or mistakes’.
When people feel psychologically safe in their teams and workplaces they feel comfortable to be open and honest, and to participate and contribute wholeheartedly: they can ask questions when they don’t understand something, admit mistakes when something goes wrong, suggest ideas for improvements, challenge others’ ideas if they disagree, and raise concerns when something doesn’t feel quite right.
Of course, when people don’t feel psychologically safe, the opposite will be true. They won’t speak up when they have an idea how to do something better, they won’t ask questions when they don’t understand something, they will be afraid to say when they have made a mistake or even seen that something is wrong - for fear of being blamed, and they’ll be unable to say ‘No’ to requests or decisions that come from ‘above’.
Psychological safety is the presence of positives and the absence of negatives
In technology organizations, the behavior that arises from people not feeling psychologically safe can result in a variety of very undesirable outcomes. Bugs being released into production, more frequent outages - resulting in a loss of revenue and reputation, not learning from outages because people are afraid to be honest about their actions and decisions as they are afraid of being blamed. On the other hand, technology organizations that foster a strong culture of psychological safety will have teams who feel able to move fast and experiment, try new ideas and be innovative, push the boundaries.
In 2012, Google carried out their own research project, called Project Aristotle, with the aim of discovering what were the attributes of high-performing teams at Google. They studied 180 teams, looking at many different aspects of each team’s performance and of the individuals that comprised each team. What they found was that the single most important attribute of the highest performing teams was a culture of psychological safety.
The research from DORA shows that, for technology organizations, psychological safety is a double whammy. An absence of psychological safety will contribute to poor software delivery performance, deployment pain, and employee burnout. On the other hand, the presence of psychological safety will contribute to improved software delivery performance, organizational performance, and job satisfaction. It’s double or quits.
A culture of psychological safety must be nurtured
It’s clear that to be a successful and high-performing technology organization, psychological safety is an essential ingredient, not a ‘nice-to-have’. It is also not a ‘happy accident’ - something that an organization just happens to have, or it doesn’t. A culture of psychological safety must be deliberately created, fostered, and maintained.
In her book, ‘The Fearless Organization’, Amy Edmondson sets out what she calls a ‘leaders’ toolkit’ for creating a ‘fearless organization’, i.e. one which is psychologically safe. She describes the behaviors and actions that leaders will need to carry out in order to build psychological safety in their organization. These include setting expectations around failure, demonstrating situational humility, inviting participation from people at all levels in the organization, listening and responding productively.
In ‘Sooner Safer Happier: Antipatterns and Patterns for Business Agility’, Jon Smart includes both a pattern and an antipattern relating to psychological safety. He describes how creating a culture of psychological safety can act as a tailwind for an organization, helping to create a culture in which people feel free to experiment and innovate, to fail intelligently, and to learn quickly. He also describes how neglecting it can act as a headwind, making people afraid to speak out to report problems or to suggest ideas, and so hampering the organization’s efforts to be effective and successful. Similar to Edmondson’s ‘leaders’ toolkit’, these patterns are included in the chapter called, ‘Leadership Will Make It or Break It’.
It’s down to leaders to set the tone and create the conditions in which psychological safety can exist within their organization and teams. How they behave themselves, how they listen and respond when people do speak up, the organizational behavior they publicly celebrate and reward (or censure) all contribute to the environment in which psychological safety can flourish or not.
Summary
Leaders of technology organizations need to recognize and understand the importance of psychological safety and of the key role it has in driving organizational performance. Research by Google and DORA shows that a culture of psychological safety is directly linked to high-performing teams and improved software delivery performance. That means fewer changes to production resulting in error or failure. It also means, when failures do occur, being able to recover from them much faster. When every outage could be costing your organization as much as $9000 per minute, ignoring psychological safety could prove very costly indeed!
