Psychological safety—the shared belief that team members can take interpersonal risks without fear of negative consequences—stands as an essential foundation for organizational success. For boards of directors, establishing and maintaining psychological safety isn't merely a cultural nicety but a governance imperative with direct impact on organizational performance, innovation, and risk management.
Boards establish the tone and behavioural standards that cascade throughout the organization. Research confirms that psychological safety begins at the top, with directors modeling and reinforcing the behaviours they expect to see throughout the enterprise.
The Australian Commission on Safety and Quality in Health Care emphasizes that "it is the role of the organization's Governing body or Board to set culture and model behavioral standards from the top, supporting the organization's purpose and strategy." Directors must ask not just "what do we do" but "how do we do it?"
This responsibility has taken on new urgency. With nearly two million people dying annually from workplace risk factors (WHO/ILO Report, 2021), boards must play a more central role in creating safer workplaces—both physically and psychologically.
Effective boards employ several evidence-based approaches to foster psychological safety:
1. Implementing Closed Loop Management Systems
Psychological safety requires continuous attention rather than periodic initiatives. Leading boards implement what Sadek (2024) calls "Closed Loop Management Systems" that provide frameworks for maintaining "always-on" psychological safety. These systems incorporate regular assessment, feedback mechanisms, and accountability measures.
2. Modeling Vulnerability Through Feedback-Sharing
When board chairs and directors share feedback they've received about their own performance, they normalize vulnerability throughout the organization. Coutifaris and Grant (2021) found that leaders who shared criticism they had received created enduring improvements in psychological safety—without jeopardizing their reputations as effective and competent leaders.
This practice "normalized and crystallized vulnerability as leaders made a public commitment to keep sharing and employees reciprocated, which opened the door for more actionable feedback, greater accountability, and ongoing practices that allowed psychological safety to endure."
3. Establishing Clear Performance Metrics
Boards increasingly recognize that psychological safety must be measured to be managed. This includes:
Monitoring safety key performance indicators (KPIs),
Including these KPIs in CEO compensation contracts,
Regular assessment of workplace culture through employee feedback systems.
These metrics send a powerful signal that psychological safety is a strategic priority, not merely a human resources initiative.
4. Addressing Boardroom Dynamics First
Psychological safety must exist within the board itself before it can be effectively fostered throughout the organization. Veltrop (2020) highlights "the importance of psychological safety as a key mechanism explaining why participative board chairs appear so effective in dealing with board-CEO cognitive conflict."
When directors experience psychological safety in their own deliberations, they can more authentically champion it throughout the enterprise.
When boards prioritize psychological safety, the benefits extend far beyond compliance.
Enhanced Performance and Innovation
Psychologically safe environments foster the conditions for innovation and performance improvement. Sadek (2024) emphasizes that psychological safety leads to "improved team performance, a culture of learning, innovation, and enhanced company performance."
Better Risk Management
In psychologically safe environments, employees are more likely to speak up about potential risks before they become crises. This early warning system helps boards fulfill their risk oversight responsibilities by identifying and addressing key risks early, avoiding costly oversights.
Improved Collaboration and Decision Quality
Open communication and constructive dialogue flourish in psychologically safe environments. As Nijhuis notes, "A high level of psychological safety results in prosocial behavior, as well as job satisfaction, open communication and high performance."
To fulfill their responsibility for psychological safety, boards should:
Conduct Regular Self-Assessment: Evaluate psychological safety within the board itself using structured assessment tools.
Establish Clear Reporting Mechanisms: Ensure confidential channels exist for employees to raise concerns about psychological safety.
Develop Director Competence: Von Thiele, Schwarz and Lornudd (2021) note that "specific occupational health and safety competence among board members is uncommon, but developing it is one way of ensuring boards understand their role in employee health and well-being."
Promote Open Communication Initiatives: Support structured programs that foster transparent dialogue and trust, enhancing psychological safety across the organization.
Monitor Leading Indicators: Track metrics that predict psychological safety issues before they manifest as performance problems or compliance violations.
Final Thoughts
The board's responsibility for psychological safety is both a governance obligation and a strategic opportunity. By establishing the conditions where employees can speak up, take risks, and contribute fully without fear, directors fulfill their duty of care while positioning their organizations for sustained success.
In an era of increasing complexity and rapid change, psychological safety isn't optional—it's essential. And it begins in the boardroom, with directors who understand that how decisions are made is as important as what decisions are made.