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Beyond impacting individual mental health, psychological safety is a pivotal factor that influences both performance and overall success within a company.

Is putting together the best people who can do a job enough to ensure your startup will be successful? Ironically, even top-tier talent might not deliver optimally if the following conditions are not present: 

  • Team members can freely ask questions

  • Everybody in a startup openly expresses their opinion

  • The team is not afraid to take risks

  • Mistakes are accepted and viewed as a learning experience

Besides advanced skills and entrepreneurial attitudes, startup teams are strengthened by psychological safety. The more their sense of security and trust increases, the higher the company's overall performance climbs.

In this article, we will reveal the factors behind the concept of psychological safety, analyze why they matter, and offer a formula for anticipating them.  

A Group Level Phenomenon

The term psychological safety was introduced by Harvard Business School professor Amy C. Edmondson, who is also the author of the book The Fearless Organization. Her simple definition states: '’Psychological safety is a belief that one will not be punished or humiliated for speaking up with ideas, questions, concerns or mistakes and that the team is safe for interpersonal risk-taking.’’

Later  research by Jessica Barhydt concluded that different people impact psychological safety differently: ‘’Individuals with strong personal identities contributed positively to psychological safety, while those looking for external validation were seen as negatively impacting the climate of psychological safety.’’

Although psychological safety is an individual quality, it can only be observed in a team, affecting both the person experiencing it and the group they belong to. The biggest danger for a team member feeling uncertain in an organization is that they might never fulfill their potential in this given setting. 

As a result, the productivity and the zeal of the whole company would be negatively affected, and there’s a high probability that other team members will follow their example and hide their true agenda as well. Apparently, Edmonson has determined that people who work together most often have similar levels of psychological safety.

How Psychological Safety Plays Out Within Startups

Ultimately, a startup allows more freedom of expression than a corporation with a complex structure and strict hierarchy. A startup environment almost immediately embodies psychological safety, or the lack of it, due to the small size of teams, especially in the initial stages. 

In the very beginning, there might be solely the co-founders, and the relationship between them would reflect on the company’s culture. If the co-founding team is respectful and exhibits diverse traits, that will set the tone for the next hires.

In an open-source research by Naimeesha Pulugurtha published by the International Research Journal of Modernization in Engineering Technology and Science, she investigates the power that inclusive leadership has for fostering psychological safety: ‘’Leaders may encourage creativity, information sharing, and collaboration by creating an inclusive workplace. These efforts yield corporate gains and a tech industry edge.’’

Furthermore, a startup's first hires learn on the go and wear many hats, which requires fast adapting and a readiness to constantly acquire new skills. Thus, open communication without restraints is crucial for stimulating innovative thinking. 

Benefits and Misconceptions 

After examining the damage the absence of psychological safety can cause, let’s explore the miracles that happen whenever it exists in the team.

In 2021, Accenture pulled data from various studies to illustrate the perks that naturally appear whenever employees feel at ease to speak up and take action: 

  • 27% reduction in turnover

  • 76% more engagement

  • 50% more productivity

  • 74% less stress

  • 29% more life satisfaction

  • 57% of workers more likely to collaborate

  • 26% greater skills preparedness since workers learn at a faster rate when they feel psychologically safe

  • 67% higher probability that workers will apply a newly learned skill on the job

Nevertheless, to bear the fruits of such an advantageous team state of mind, startup founders need to take charge. The most common misconception around psychological safety is that it means being nice and extra tolerant all the time, making everyone around comfortable. In fact, this type of outlook can cause the opposite effect and create complacency, which is the last thing a startup wants to do. 

Therefore, the responsibility falls back on leadership and the ability of startup founders to establish adequate support. Following a comprehensive survey, McKinsey identified four types of leadership - authoritative, consultative, supportive, and challenging. All of them contribute to developing a healthy work climate, including the challenging one, which, in fact has one of the most vital functions - to provoke creativity, empower others to make work-related changes, and motivate them to learn and improve.

What traits to look for to build a ‘psychologically safe’ team

As we already mentioned, there are three main factors that influence the level of psychological safety within a team: the personality types, the leadership style, and the dynamics within a team.

At Founder Institute, we have tested over 175, 000 early-stage startup founders who have applied to our accelerator program. Throughout our evaluation process, we have found out that when it comes to team composition, it’s incredibly important to recognize individual psychological characteristics and match them with other complementary traits. 

Thanks to our DNA assessment tool based on social science, we’ve isolated 26 entrepreneurship dimensions correlating to a startup’s success. Our data proves that healthy teams where psychological safety is promoted, possess high levels of 8 of these 26 traits:

  • High Trust - the confidence that you won’t be judged or taken advantage of
  • High Emotional Control - the ability to control your emotions 
  • High Innovation - the capacity to turn new information into an original solution
  • High Creativity - the ability to generate new ideas and solve problems in a unique way
  • High Collaboration - an inclination to form partnerships and work in a team
  • High Autonomy - the feeling of being free and responsible for your own life
  • High-Risk Tolerance - the willingness to take risks in exchange for possible reward
  • High Social Skills - the ability to relate and interact with others in a positive way

Finally, if not all of these characteristics are present within a startup, don’t panic! Just as leadership evolves with time, psychological traits can be developed. All that's needed is a willingness to turn shortages into a thirst for knowledge.

Want to know more about your psychological traits and those of your team? FI’s DNA test is now open to the public. 

Learn more about how you can use the Entrepreneur DNA Test as an individual or an organization

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The Founder Institute is the world’s most proven network to turn ideas into fundable startups, and startups into global businesses. Since 2009, our highly-structured accelerator programs have helped entrepreneurs raised over $1.75BN in funding across over 200 cities worldwide.

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