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The Cost of Poor Leadership in Australia
The Cost of Poor Leadership in AustraliaEarlier this year,…
The modern workplace faces a silent crisis. Despite growing awareness around mental health and inclusive cultures, a 2024 McKinsey survey revealed that only 26% of employees believe they work in a psychologically safe environment. This statistic represents millions of workers who feel unable to speak up, share ideas, or admit mistakes without fear of negative consequences.

Psychological safety is the foundation upon which effective teams, innovation, and organisational resilience are built. When employees feel safe to be themselves and share openly, organisations can tap into their full potential and become more adaptable.
For leaders committed to developing leadership capabilities that drive real change, embedding psychological safety across all organisational levels requires intentional strategy and sustained effort.
Leaders set the tone for psychological safety through their own behaviour. When senior leaders admit their mistakes, ask for help, and acknowledge what they don’t know, they create permission for others to do the same. This isn’t about appearing weak, it’s about demonstrating strength through authenticity.
Ask genuine questions during presentations rather than making statements. When someone brings up a concern, respond with curiosity before offering solutions. These small actions signal that learning and growth matter more than perfection.
Psychological safety flourishes when there are clear, consistent channels for employees to contribute ideas and raise concerns. Establish regular one-to-ones, team retrospectives, and skip-level meetings where the explicit purpose is to listen and learn.
While fostering an environment where open, day-to-day feedback is encouraged is vital for building trust and adaptability within teams, it is equally important to create intentional, dedicated opportunities for more structured input. By complementing casual feedback with formalised sessions, organisations can ensure that all voices are heard and more complex or sensitive matters are addressed with the attention they deserve.
How leaders respond in moments of truth determines whether psychological safety takes root or withers. When someone raises a concern, points out an error, or suggests an alternative approach, the leader’s response becomes a teaching moment for the entire team.
Thank people specifically for their input, even when it’s uncomfortable to hear. Ask follow-up questions to understand their perspective fully. When you need to disagree, focus on the idea rather than the person. Most importantly, follow through on commitments made during these conversations. This builds trust that speaking up leads to meaningful action.

Before developing leadership capabilities through training, organisations need to understand their current state. Conduct anonymous surveys, focus groups, and 360-degree feedback sessions to identify where psychological safety exists and where it’s lacking.
This baseline data gained from these assessments informs targeted interventions and provides a benchmark for measuring progress over time.
Effective leadership development training includes specific modules on creating psychological safety. These sessions should combine theoretical understanding with practical skill development. Focus on active listening techniques, constructive feedback delivery, conflict resolution, and inclusive meeting facilitation.
Role-playing exercises are particularly valuable, allowing leaders to practice difficult conversations in a safe environment. Include scenarios specific to your industry and organisational challenges to maximise relevance and impact.
Establish coaching relationships, peer mentoring programs, and regular check-ins to support leaders as they implement new approaches. Create learning groups where managers can share challenges and solutions with colleagues facing similar situations.
Consider appointing psychological safety champions at different levels of the organisation. These individuals receive advanced training and serve as resources for their teams whilst modelling best practices in their daily interactions.
Research consistently demonstrates that psychologically safe teams outperform their counterparts across multiple dimensions. Google’s Project Aristotle identified psychological safety as the single most important factor distinguishing high-performing teams from the rest.
When employees feel safe to contribute, organisations benefit from increased innovation, faster problem-solving, and greater adaptability to change. Effective teams emerge naturally when members can build on each other’s ideas without fear of criticism or blame.
Perhaps most critically for organisational resilience, psychologically safe environments enable early identification and resolution of problems. When employees feel comfortable raising concerns, small issues don’t escalate into major crises. This early warning system becomes invaluable during periods of uncertainty or rapid change.
Teams with high psychological safety also demonstrate better learning from failures, more effective knowledge sharing, and higher levels of employee engagement and retention. The compound effect of these benefits creates sustainable competitive advantages that are difficult for competitors to replicate.
Psychological safety is an ongoing commitment that requires consistent attention and reinforcement. The leaders who succeed in building truly safe workplaces understand that this work happens through countless small interactions rather than grand gestures.
Start with yourself. Examine your own responses to feedback, mistakes, and challenging questions. Then expand your focus to your immediate team before scaling these approaches across the broader organisation. Building psychological safety takes time, but with a solid leadership development plan, the investment leads to better performance, greater innovation, and stronger organisational resilience.
