Dwindling Psychological Safety Risks Hurting Businesses In Q4 And 2026

The revision to U.S. jobs numbers issued in early September validates the fears of many workers who were already experiencing record levels of burnout and internalizing our climate’s strong focus on efficiency. Deeply mistrustful of their leaders and afraid of being let go in today’s weak labor market, they are focused squarely on the most basic elements of their jobs rather than offering candid suggestions and taking risks, all to avoid any forthcoming layoffs.

These behaviors often stem from a lack of psychological safety, a term that refers to a shared belief among individuals that they can ask questions, take risks, express opinions and admit errors, all without fear of negative consequences. Research has consistently shown the positive impact of workplace psychological safety, not just on employee wellbeing, but on organizations’ revenue and profitability.

Alternatively, a lack of psychological safety is not just bad for employees, but stands to jeopardize the performance of companies and teams. Without it, people are less likely to report mistakes, step up to improve areas that need work, offer new ideas and take calculated risks. Essentially, they become the equivalent of “yes men” merely going along to get along or only giving leaders exactly what they ask for.

Organizations can’t afford to allow this workplace mentality in today’s unprecedented environment, especially as AI-related forces continue to disrupt the economy. They need and should value the real-time insight and candor of team members at every organizational level as a means of optimizing all available opportunities. This is especially true in situations that demand high levels of performance and thus have the potential of generating employee anxiety. Examples of such scenarios span healthcare companies navigating industry inflection points and private equity-backed organizations looking to rapidly scale.

Leaders can break down this barrier to success by fostering psychological safety as a means of reaching their most important goals, both in Q4 and all through 2026. To do so, they should look beyond one-off programs and, instead, work toward establishing proven structural enablers of psychological safety, namely:

• Consistent standards. Organizations that set and uphold clear, consistent standards that apply to their entire workforce demonstrate that there is no room for favoritism. This level playing field is a key element that helps people feel safe to take risks.
  
  

• Space for humility. Employees feel empowered to step up with proactive ideas and necessary corrections when leaders are honest enough to admit when they don’t have the answer. This sense of humility makes it possible for teams to do their very best work, capturing the knowledge and strengths of every individual.
  
  

• Two-way transparency. Though increasingly included in organizations’ listed values, transparency only fosters psychological safety when leaders make clear that team members can also be transparent with them, sharing hard-to-hear insights and feedback.
  
  

• Comfort with (fast) failure. Meaningful innovation is all but impossible without failure, requiring that organizations celebrate successes and embrace the growth opportunities that come with flops. This encourages people to take risks, which can be mitigated by modeling “fast failures”  and rapid iterations based on calculated bets.
  
  

• Team member appreciation. Recognition continues to go a long way in promoting cultures where people, respectfully, speak truth to power. Notably, public recognition of individuals who bring up tough issues and put a voice to known but unspoken truths reinforces this quality as a virtue across organizations.

Because psychological safety is a feature of group environments that is highly influenced by direct supervisors, it’s common for organizations that otherwise excel in fostering psychological safety to contain individual teams that don’t. Too often, these teams are working on high-stakes projects and can thus benefit most from this cultural attribute. This reality illustrates the strategic benefit of organizations investing in leadership development, helping those serving in key positions adopt and model the behaviors needed to improve their entire team’s impact.

Employees hold vast amounts of knowledge about how to help drive their companies’ success and growth. But every negative economic news story and unsettling internal development makes them more afraid to share what they know. Leaders that can counter this influence, encouraging team members to speak up, make suggestions and report mistakes will position their organizations for much greater success, despite the headwinds, now and in the year to come.