‍0:00:05.6 Freddy: Welcome back, Culture by Design listeners, it's Freddy, one of the producers of the podcast. In today's episode, we are going to talk about violations of psychological safety and their costs. Today's episode is about the costs. What happens when you don't have psychological safety, and how does it affect the bottom line? Tim and Junior will get specific and share some of the research behind the need for psychological safety. You can't fully understand these costs and not walk away with a renewed conviction to foster an environment of psychological safety. I hope this episode gives you more data and more business cases to use as you bring psychological safety to your teams. As always, links to this episode and show notes can be found at leaderfactor.com/podcast. If you enjoy today's episode, please leave us a review or share it with a friend. It helps us fulfill the leader factor mission of influencing the world for good at scale. Thanks again for listening. Enjoy today's episode on the violations of psychological safety and their costs.

0:01:07.6 Junior: Welcome back everyone, to Culture By Design. My name's Junior. I'm here with Dr. Tim Clark, and today we'll be discussing violations of psychological safety and their costs. Tim, how you doing? 

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0:01:22.8 Tim Clark: I'm doing great, Junior. How you doing today? 

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0:01:25.8 Junior: I'm doing really well. We've had a lot of requests for this topic. We talk about this a lot in workshops and prior train the trainer certifications, and this seems to be one of the points that people like to focus on the most, and so I think it deserves an episode.

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0:01:40.4 TC: Yeah, I agree. Unfortunately, psychological safety is not always there, or the level that we wish for is not always there, and that has consequences. And so we're gonna talk about those consequences and where they go and what the impact is and what the results are. So, look forward to the episode.

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0:01:56.1 Junior: Yeah. So the consequences, as Tim said, they've received a lot of attention, at least as far as we're concerned over the last few years probably because we're all human and all humans experience this. We talk a lot about our aspiration to have psychological safety. As Tim said, we don't talk too much about the reality of not having it, at least in a lot of detail. So, to open up today's episode, I'd like to ask everyone a few questions, and I'd like you to answer these personally. Have you ever felt excluded in a social setting? Have you ever been afraid to ask a question? Have you ever remained silent when you knew the answer to a problem? Have you ever had someone steal credit for something you did? Have you ever been ignored in a discussion? Have you ever been rudely interrupted in a meeting? Have you ever felt that you were the target of a negative stereotype? Have you ever faced retaliation for challenging the status quo? Have you ever had a boss who asked for feedback but didn't really want the feedback? Have you ever been publicly shamed or made fun of? Have you ever been punished for making an honest mistake? Have you ever been made to feel inferior? Those are the questions. When was the last time one of these happened to you? Tim, have these happened to you? 

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0:03:06.7 TC: They have, and I think they've happened to all of us, at least some of these, if not all of these. And that's the interesting thing. This is why this is universally applicable to all of us. Now, what's I think more significant or maybe even more surprising is the frequency with which these events, these encounters happen. You wanna tell us about that, Junior.

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0:03:34.0 Junior: Yeah, we did a really interesting survey, a big employee group across multiple organizations. And what did they tell us? 60% of employees said that at least one of these had happened to them during the prior. What do you think the time period is? You think it's a week or a month? 24 hours.

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0:03:51.2 TC: Amazing.

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0:03:54.8 Junior: 60% of people said that one of these had happened to them during the prior 24 hours. So if 60% said that it happened within the last day, then certainly it's happened at least once to all of us, and it happens more frequently than we would probably like to admit. So the frequency is something that is startling. And if you go back through those questions, we'll put those in the show notes again, I think that that's important that you can reference those. You'll see just how frequently those things happen.

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0:04:23.0 TC: Yeah, it's pretty amazing, Junior. I wanna build on this, a little bit and read a little bit from the four stages of psychological safety, just a couple of paragraphs that I think are appropriate and build on this. Think of a time when you were embarrassed, marginalized, or otherwise rejected in a social setting, right? That's what we're talking about. A teacher ignored your question. A boss criticized your idea. A co-worker mocked your English pronunciation, A casting director ridiculed your audition. A coach yelled at you for making an unforced error. Your team ditched you and went to lunch. We're referring to times when you were deprived of psychological safety. Do you remember those wounding experiences? They're sticky because they sting. Do those occasions influence your behavior? When we're snubbed, ignored, silenced, brushed off, ostracized or humiliated, when we're bullied, harassed or shamed, when we're scorned passed over or neglected, those experiences are not neutral events.

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0:05:38.5 TC: They're demoralizing, lead to alienation and activate the pain centers of the brain. They crush confidence and leave us in resentful, stupefied silence. In fact, sometimes the fear of these things can be more debilitating than the actual thing. Isn't that interesting? You worry about it more, the possibility that it might happen than the actual thing. Clearly, how we feel influences what we think and do. So I think what we're trying to do Junior here is we're trying to understand the full impact of these kinds of experiences. And because of the frequency, we may think, well, they're... It's normalized behavior. It happens so often, it's not a big deal. Shake it off. I think we often respond that way. But what we're going to learn in this episode is that the impact is deep. It can be pervasive and it can last a long time. So it can be very debilitating.

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0:06:39.5 Junior: I think there may be a tendency to approach this topic, as you mentioned, with, Well, that's just life.

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0:06:46.5 TC: Yeah.

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0:06:49.0 Junior: That's just life. That's just part of your experience. So deal with it.

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0:06:55.3 TC: Yeah.

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0:06:58.5 Junior: And push aside the rest of the conversation that we're going to have today on those grounds. Now, this is just part of the human experience. Everyone has to deal with this, so it is what it is. But what we'll find today is that that response is not good enough. It doesn't get us where we need to go. It doesn't appropriately address the realities. It doesn't appropriately consider the downside risk and the consequences. And what I've seen over time is that those who are most keen to dismiss this topic on those grounds that they're normalized, it's part of natural human behavior, are also the ones who most want performance. And they'll say, we're going to achieve the performance we're going after by ignoring all of this interplay, by ignoring all of the social interaction. And we're just going to get to work. And it's shortsighted. And I think that we'll put together a pretty compelling case by the end of today's conversation. So if you find yourself leaning into that camp at all, please listen and pay attention. Ask yourself some of these questions and really, really wrestle with some of the logic that we're going to go through today. Tim, you've got a quote from William James. Yeah.

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0:08:09.8 TC: Yeah. I wanna share this because I think it's relevant as well. William James, the father of American psychology, he said this, he said, no more fiendish punishment could be devised, were such a thing physically possible, than that one should be turned loose in society and remain absolutely unnoticed by all the members thereof, if not one turned around when we entered, answered when we spoke or minded what we did. But if every person we met cut us dead and acted as if we were non-existent things, a kind of rage and impotent despair would before well up in us from which the cruelest bodily torture would be a relief. Well, that's a long way of saying what, that we are relational and biologically driven beings to connect. We have this biological, social, emotional, even spiritual impulse and drive to connect, we're relational creatures. And he's saying, if you went out into society and everyone ignored you, there could be no more cruel punishment than that.

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0:09:24.8 TC: Isn't that amazing? It's incredibly painful. And junior, when you ask these questions at the outset, you were asking them from the perspective of being on the receiving end of these acts of punished vulnerability, the receiving end. How about thinking about it from the perspective of being on the giving end? Because we've also done that too. If we do some introspection, we realize that we've been on the giving end of some of these acts of punish vulnerability. And this is where we need to be very honest with ourselves as we reflect on the way that we interact and not be dismissive and not try to rationalize and justify or say it's normalized behavior. It's not a big deal, shake it off, right? It's easy to do that.

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0:10:12.3 Junior: I think that if you look back a few chapters in your life, all of us probably have some scars from being on the receiving end of punished vulnerability when we were younger. And those hang with you. And I think that if we're honest enough, we can peel back a few layers, go back a few years, and identify some of those instances that still hang with us, and some of them may still shape some of our behavior. So I think if we're really honest about that, it will not be hard to find some of those instances. And I think that that's proof that this is real. I think that it's proof that that social interaction, the way that people treat us, the way that we either interact healthily or pathologically with the environment, makes a difference. You can't just shrug it aside and say that it doesn't matter. So here is the sequence through which this happens. So we interact as humans. It's impossible to be a human on this planet and not interact with anyone. So anytime humans interact, which is all the time, cultures are created. So how often is culture created? Constantly, because there's constant interaction. And this is anytime. This is at work, this is at home, school, play, shopping, anywhere there are other humans, cultures are being created as we interact. And Tim, how quickly can a culture form.

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0:11:41.5 TC: Instantaneously, instantaneously? This is such an interesting thing. And for listeners, please think about this. When you put humans together and they don't know each other and they've never interacted before, as soon as they begin to interact, the norms begin to form instantaneously. Now, here's a very interesting thing that we understand about culture formation, norms form faster than relationships. Let me say that again. And it may sound, it may seem a little counterintuitive. Norms form faster than relationships. When you bring people together, they start interacting and those patterns start to emerge immediately. Sometimes the relationships take a while, sometimes they never take shape, but the norms do.

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0:12:36.6 TC: So isn't that interesting? So social integration can be based on some norms, but without the formation of really meaningful and deep relationships. So I think that's really interesting and also extremely important to understand because think about your experience as you go through a day. You're probably going to interact with some people you don't know, and those interactions will most likely be short and transactional interactions. You'll also be interacting with people that you do know and that you have long established relationships with. For example, perhaps people at work or home or school or in other social settings. But isn't it interesting that in every case there are norms and sometimes you've got a relationship that goes with and sometimes you don't.

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0:13:35.7 Junior: Those norms are the basis of the culture. Those patterns, they form the culture, they do that instantaneously.

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0:13:39.1 TC: Yes.

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0:13:43.3 Junior: And it's important to acknowledge that cultural quality runs along a spectrum from pathology to health. So not all cultures are created equal. Not all of them are healthy. Not all of them are pathological, but those norms that form the patterns that we observe, the patterns that we engage in will determine the cultural health. And that's a really important thing to understand. It's not just culture as this ever present, same quality all the time thing. It can be good or bad. That's where psychological safety comes into play. Psychological safety in our view is the heart of culture, focusing on the way that we interact. Psychological safety, we define as a culture of rewarded vulnerability. So where rewarded vulnerability characterizes the way we interact, we would say that that's a blue zone.

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0:14:33.9 Junior: It's high psychological safety. And then a psychologically unsafe environment is a culture of punished vulnerability. So that is truly the most fundamental mechanism by which we can predict or create cultural health is by rewarding vulnerability. And if we want an unsafe, unhealthy culture, punish vulnerability, the difference between saying, hey, that's a really good question, I'm glad you brought that up, and that's a dumb question, why would you ever ask that? The way we respond to that act of vulnerability will start to determine the patterns. And as those patterns emerge, we get the cultural health or lack of cultural health that we're looking for. And that's going to determine all of the complications that we're going to discuss today.

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0:15:18.7 TC: Well, Junior, let's add one thing to the definition of psychological safety, which is that it is a function of two things. Number one, respect and number two, permission. So that level of psychological safety, whatever it may be, it lives at the intersection of those two dimensions. And so we can see that if the respect is low and the permission is low, then the nature of the interaction between two or more people, it turns into an interaction characterized by punish vulnerability. And often people are just seeking utility through that interaction. I just want to get what I want. I want what I want, right? But they're not valuing the person, the person is a means not an end. That's where we get things backwards. As soon as we're seeking utility above valuing the person, we start to get into trouble. And we start to sow the seeds of division because we are looking on each other as a means rather than an end. It's all about utility.

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0:16:24.9 Junior: So today we're talking about violations of psychological safety and their costs. So what happens when a culture's characterized by punished vulnerability, and I would add even dismissed vulnerability. It's not just that you're going after someone when they're being vulnerable, you can even just shrug it off and dismiss it. And that has its own consequences. And most of these are going to be unintended. It's not that we're deliberately punishing vulnerability in hopes of achieving some of these consequences. No, no, no. We want to avoid these. At least most normal people would like to avoid some of the costs that we're talking about. It's just that, well, we're going after utility and maybe we shrug off some of the personal impact and we move forward. We dismiss it, we're ignorant to it. But nonetheless, those consequences are there and some of them are very, very dangerous.

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0:17:15.2 Junior: So the first line of consequences that we wanna look at come from Christine Porath's work in Workplace Incivility. So if you look at what workplace incivility is, a lot of it has to do with punished vulnerability. So we want to go through some of her stats, and then what we want to do is go through some of our own findings as we've worked with organizations and many, many, many cultures and leaders. So the cost of punished vulnerability, workplace incivility. Let me read some stats to just set the stage, and then we'll go on to a few more categories. So when vulnerability is punished, 48% of people intentionally decrease their work effort, 47% intentionally decrease their time spent at work, 38% intentionally decrease the quality of their work, 80% lost work time worrying about the incident. Think about that, 80% lost work time worrying about the incident after the fact. That one's interesting to me.

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0:18:18.3 TC: Yeah.

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0:18:24.8 Junior: 63% lost time avoiding the offender, 66% said that their performance declined, 78% said that their commitment to the organization declined. 12% said that they left their job because of the uncivil treatment, and 25% admitted to taking their frustrations out on customers. So we'll dive into a few of these categories, but how about those numbers.

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0:18:43.0 TC: Junior, talk about impact, it's incredible. 48% intentionally decrease their work effort. That's a major blow to productivity. Let's see. Oh, here's one. Yeah, you just mentioned, 38% intentionally decreased the quality of their work intentionally. That's incredible. So there's the hit to quality, 25% admit to taking their frustration out on customers.

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0:19:11.5 Junior: That's huge.

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0:19:13.2 TC: That's unbelievable. So you can see that the path of unintended consequences goes all the way to the customer. And so it's quite interesting, these are kind of first-order consequences, but if we follow those first-order consequences to second-order, third-order, by the time you reach terminal impact, the ultimate impact, which is business impact to the business. The adverse consequences are staggering, we can't even measure those because they fan out into a number of outcomes.

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0:19:47.8 Junior: So hopefully those got our attention a little bit. We'll link those in the show notes as well. So here's a broad category that we wanna talk about that we think is particularly important as it comes to costs and violations of psychological safety. We're seeing this over and over and over again. And it's this, you bleed out your best talent. An environment that fosters psychological safety, is very quickly becoming a requirement for top performers. And these people, these A players understand the type of environment that you need to have in order for them to do their best work. To do their best work, to learn, to be challenged to progress. And those types of employees will not tolerate unsafe environments where they can't contribute meaningfully, they can't make things better, they can't challenge the status quo, they can't ask penetrating questions.

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0:20:44.5 Junior: So think about bleeding out talent and then think about the type of talent that you're bleeding out. Who's leaving? Who's leaving the organization? Those who have options. Who has options? The most valuable, the most valuable employees, the highest skilled are those who have options and who are going to leave. So here's a study for you done by LinkedIn, 70% of employees who leave their jobs do so because they don't feel valued or respected.

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0:21:16.7 Junior: This suggests that a culture of punished vulnerability can lead to higher turnover rates, especially among top performers. So Tim, react to this one for a moment, bleeding out your best talent. What do you think about this one, as a cost? 

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0:21:30.8 TC: Well, yeah, I just follow the logic that you just laid out, who goes first? Your best talent because they expect psychological safety as a term of employment, it's table stakes, they have come to contribute, they have come to learn, they've come to develop, they've come to find new opportunities to grow. So they've come with all of those expectations. And that's appropriate. Did you expect that they would come with other expectations? What did we expect? And so if they find then an environment that is dysfunctional, if it's toxic, if it doesn't respect them, if it doesn't give them appropriate permission and autonomy and support, then why would they hang around if they're talented people and they want to contribute, and they want to grow and develop. It doesn't make sense for them to stay.

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0:22:35.1 TC: And so ultimately, the conditions that prevail in your organization, that's the responsibility of the leaders. And that's not something that you can delegate or abdicate to somebody else. I think if we think about this, just a moment's reflection helps us understand that there's no surprise in this. But sometimes we are very slow and reluctant to respond to this issue, or we're in a state of denial or blame or excuse about this, but there's no surprise in this.

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0:23:09.2 Junior: I think that bad turnover here is one of the most dangerous lead indicators for an organization. Because if you look at building bench, if you look at your leadership pipeline, and you see that those A players are leaving the organization, what's going to happen two, three, four cycles down the road? Those who are being pushed into managerial positions will be less equipped, there'll probably be less performant than those who have just left the organization, and so you can see over time just how dangerous this is. How important it is to retain those top employees. Because if we don't, it puts the organization in a very vulnerable place down the road.

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0:23:51.7 TC: Yeah. Now, Junior, here's an exercise... Let me just go through this. Here's an exercise that you can do for listeners. If you're wondering about your organization, and if you're suffering from this pattern of bleeding out top talent, what you do is you track your attrition for a period of time. And then you go through and you classify every person that you lost and you classify them as a regrettable loss or a non-regrettable loss. You've gotta understand the ratio. Some attrition, you want to capture some people when they leave. That's okay. It's not a big loss, so it's a non-regrettable loss. But some people walk out the door and you don't want them to go. That's a regrettable loss. So you need to get the ratio of regrettable to non-regrettable loss and track that over time. That's gonna tell you a lot.

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0:24:49.7 Junior: It is, and do your exit interviews? 

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0:24:52.5 TC: Yes.

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0:24:52.6 Junior: Okay. Next, failure to innovate. This is a cost to violations of psychological safety. A study by the Corporate Executive Board found that companies with a strong culture of psychological safety are 4.5 times more likely to be innovative than companies with weak culture. They suggest that when employees feel safe to take risks when they share their ideas. They're more likely to come up with new and innovative solutions. So what's interesting about these costs that we're gonna talk about today, and it strikes me as I'm talking about this one, is that the logic is very straight forward. These are not mysterious consequences. And if we are ignorant to these, it's because we are not looking at all and we're deliberately looking away. Because here's the logic, what is innovation? Innovation by definition is a deviation from the status quo.

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0:25:46.8 Junior: Innovation's fueled by what? By ideas, by risk taking. So without an environment of rewarded vulnerability, teams won't take risks. And teams that don't take risks or push boundaries will never innovate at rates fast enough to stay relevant because today's environment is so turbulent. So if we don't get a deviation from the status quo by definition, we will not get innovation. Right? 

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0:26:14.7 TC: Right. And so who's going to challenge the status quo if the conditions are not there to reward that behavior. Most people are not going to just muscle through the fear and do that. They need conditions that will reward that kind of constructive descent, pushing against the status quo, engaging in divergent thinking. That behavior has to be rewarded on a consistent basis, otherwise you can't really expect it as a norm, right? How could you expect it as a norm if it's routinely punished? That doesn't make sense. But as you say Junior, there's nothing mysterious about the cause and effect relationship here. And yet organizations desperately need to create incubators of innovation, but off times they're not paying attention to the cultural conditions that prevail. But there's no other way to get there.

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0:27:12.9 Junior: Well, I would also say that one of the ways that I see organizations get hung up is they look at innovation as an individual activity, attributable all the way back to just a single person. That this person is an innovator, this person had an idea. We need to get people to come here that have the ideas, instead of looking at innovation as a systematic outcome, as something that's produced by the organization because of its patterns and systems. And I think that that's a really important distinction. Because if you expect, We just gotta wait to get the right person that's gonna come with the ideas, you may get that, you may be waiting a really long time. Is it possible instead of waiting for that to create a system that will produce the innovation almost regardless of the talent that you put into it, and I think that the answer is yes. You can get systematic predictable innovation by putting average talent into the right system. I think it's mostly cultural because what are the inputs that we need for innovation? We need ideas, questions, criticism and divergent thinking. So did some people just have that and some people don't have that? No.

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0:28:30.0 Junior: Those things are either encouraged or discouraged by the environment. Now, some people may have more aptitude when it comes to asking penetrating questions or thinking divergently. But if you don't have psychological safety, what do you have? You have fear to some degree. Does fear produce ideas, questions, criticism and divergent thinking? No, absolutely not. It ices all of those things. It breaks the feedback loop, right? 

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0:28:56.3 TC: Yeah, it does. It breaks the feedback loop, it freezes people's discretionary effort, it triggers their self-sensory and instinct, they move from a performance response to a fear response. Junior, I wanted to come back to what you said, The best way to do this is to look at innovation as a system. So in that context, with that in mind, here's a question that we can all ask. And you can use like a scale that goes from one to 10. What level of intellectual friction does your system, your overall system of innovation tolerate? This is really a barometer. This will help peg the level of innovation that you can generate. Because this is the all important raw material that we use to innovate intellectual friction. So what level of intellectual friction does your system accommodate, nurture, reward, right? Just ask that question. Are you at five? Are you at a three? Are you at a seven? What level does your system tolerate, accommodate? This is a great question to ask at a systems perspective. This is the fuel that we use to solve difficult problems, create breakthroughs, come to new solutions. The intellectual friction is that all important raw material.

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0:30:31.7 Junior: So there's the cost, failure to innovate. I would argue that every single one of our organizations relies on innovation to some degree, especially over a long enough time horizon. You ignore that one, you're in for it. Here's the next one, Hostile Work Environment. Cultures of punish vulnerability can very quickly turn hostile, and there are very significant liabilities and exposure that we incur as organizations that comes with hostile work environments. We can't ignore these things. Harassment, bullying, public shaming. These have become normalized in many organizations, and the risks are not just to productivity and quality and innovation, but also legal risk. And this is something that I think people are paying attention to more and more, but has largely been dismissed in the past just because of how normalized it had become.

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0:31:30.8 Junior: Here are a few categories of risk. Just to put these on the table, occupational health and safety risk. Have you ever thought about that as it pertains to psychological safety? A study by the National Institute for Occupational Safety and Health, found that workplace stress can lead to a number of health problems, including heart disease, stroke and depression. Why am I saying this? Cultures of punished vulnerability can have a negative impact on employee health and well-being in a really fundamental way. Not just, Oh, it's all in your head. It's just some small psychological things. No, no. There are studies that are coming out that are showing serious health complications due to punish vulnerability. I think that that's really interesting. You can't just ignore that. Then we have the category of human right violations. Tort claims, you could be sued for tortious liability for psychological harm that people experience in the workplace. And we were finding this. If the employer should have known or failed to take reasonable steps to stop the psychological harm, they're liable. What is the average workplace bullying suit cost? Like $120,000.

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0:32:41.7 Junior: Look at the nine-figure settlements that have been happening over just the last few years. They're huge, hundreds of millions of dollars in settlements for things that have been... I don't know if covered up is the right word, but certainly supported to some degree for decades. And so some of these patterns are being brought to light that have been normalized in the past, that are no longer tolerated to the same degree.

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0:33:10.1 TC: Right, right. That's very true, Junior.

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0:33:13.7 Junior: The next one is a study by the Equal Employment Opportunity Commission. And I'm just gonna throw this one out there, food for thought. 75% of workplace harassment complaints are filed by women. This suggests that cultures of punish vulnerability can be particularly harmful to women and other marginalized groups. So that's a statistic, 75%. What are we going to do about that? 

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0:33:37.7 TC: Yeah, we can't ignore that data.

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0:33:39.0 Junior: You can't ignore the data, that just is the data. And so we need to figure out what to do with that. We can say, Whatever, and we can dismiss it. Or we can say, You know what, there's something to that. Maybe that's something that should affect our behavior, maybe that's something that should affect our approach individually and institutionally. Are we contributing to that? Is there something that we can do to help ameliorate some of that? So really interesting things, and I think it's important to come to terms with some of these statistics, stare them in the face and see if there's something that we should do about them.

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0:34:15.2 TC: Right. And we're not gonna have a big discussion right now, Junior on the gender gap here. But as you say, the dataset right there is pretty clear.

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0:34:26.5 Junior: Yeah. And I think at the end of the day, what we're saying is that a lot of this data exists and it's up to us to be informed, and it's up to us to decide what we're going to do about that. Now these are massive issues that play different pieces of the world, different pieces of society, different institutions, different industries, but there are things that we can do to help. And at the basic level, what I find a lot of comfort in is the understanding that at the very least, I'm in charge of my own behavior. I'm going out into the world, I'm interacting with people every day, and what can I do at an individual level to do my part to have a healthy interaction.

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0:35:12.5 TC: Yeah, I just wanna make one more comment, that is... And I appreciate you saying that because the natural progression of leadership goes through three domains. First you lead yourself, then you learn how to lead a team. And then you scale your influence and your impact and you learn how to lead a business or a significant part of a business, but where did it all begin? It began with yourself, leading yourself. So the fundamental, the beginning of leadership is to hold yourself accountable. This is where it all begins, and as you say, Junior, we are each responsible for our own behavior, this is it. So that locus of control. The internal and intrinsic motivation, this is where everything begins. The control environment ultimately is not going to be able to create a culture of rewarded vulnerability. We have to make personal individual decisions to interact with each other that way. That's where that comes from, that cannot be imposed from the outside. It doesn't work that way.

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0:36:29.3 Junior: Yeah. I think there's a tangent we could go on and perhaps it deserves another episode. But I think that it's worth calling out promotion criteria. So you mentioned lead self, lead team, lead the business. If people don't have a track record of creating psychological safety, interacting in a healthy way at the individual level, and then at the team level. There is no scenario in which they should be promoted to higher levels of management.

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0:36:55.0 TC: That's very true.

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0:36:56.0 Junior: If they do not have track record, then that is not something that will be able to move healthily through the organization. So just a little call out there. Here's the next one. Poor customer experience. Employee experience equals customer experience, you've probably seen that. It was flavor of the day for a while, you probably saw that a lot, EX equals CX. And it's still true, even though we don't hear about it as much as we did...

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0:37:23.0 TC: Still true.

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0:37:24.7 Junior: A few years ago. Yeah.

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0:37:25.3 TC: Yeah, it's still true.

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0:37:27.5 Junior: We're seeing that, I think now more than ever, and we've moved from an agrarian to a product and to a service economy. We're increasingly moving down the line to an experience economy. And employees represent our brands. They represent each organization's brand promise. And that brand promise for every institution is tested every day.

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0:37:53.0 Junior: And for some organizations it's thousands of times a day. Psychological safety dictates the employee experience, which dictates the customer experience. So again, this is not mysterious logic. Very straightforward. So here are a couple stats for you. A study by the Society for Human Resource Management found that companies with a strong employee experience have 31% lower turnover rates and 28% higher customer satisfaction scores than companies with a weak employee experience. A study by the Aberdeen Group found that companies with a strong employee experience are 60% more likely to be profitable than companies with a weak EX. And obviously that comes down to the customer experience. So you can see there's the train of logic, psychological safety, employee experience, customer experience.

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0:38:44.3 TC: It's very true, Junior. And think about organizations that are interacting with their customers constantly. Think about a retail environment, for example, and the hundreds, if not thousands of interactions that take place every day. Well, those employees are reacting and responding to the level of psychological safety they feel internally in the organization. And they are projecting that, expressing that, manifesting that to a large extent to customers. It's a direct line of sight, cause and effect relationship that goes straight to the customer. Now, in other industries, it's maybe not as quite as straightforward, and you don't see it out in the open as you might in a retail environment. But the same logic hold's true.

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0:39:39.2 Junior: Here's the next one, low velocity decision making. We've got this one and one more. Low psychological safety makes the necessary discussion for analysis, for decision making, shallow and slow. Here's what happens. You get one of two things, an echo chamber in which the homogenization of thought gives you a flawed decision. Two, you conduct what seems to be endless rounds of discussion in pursuit of consensus. If you fall into one of these two patterns, this can lead to chronic indecisiveness. So Tim, tell us about low velocity decision making and how you see this play out in organizations.

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0:40:21.1 TC: Well, let's understand decision making. Decision making is a process in which we go through analysis. We identify options, we identify the relative merits of different courses of action. And then at the end of that process, we make a decision. We pick an option, we pick a course of action, and we take it. Well, that entire process is a social process, that entire process, the analysis and the ability to synthesize all of that data, discuss it, look at the relative merits, and then pick a course of action. That's all a social process. So if psychological safety is not there, it shuts that down. Psychological safety becomes the lubricating oil for that process. If you don't have psychological safety, it's as if you threw sand into the gearbox, it's not going to function.

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0:41:23.6 TC: And so then, as you said, Junior, that can lead to endless rounds of discussion where you're not getting there because the quality of the discussion is compromised or you're not having the discussion at all. You've reached impasse, you've come to loggerheads. That can lead to this chronic indecisiveness that you talked about. So think about that direct relationship between psychological safety and the velocity of your decision making. It's very clear, isn't it? 

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0:41:53.1 Junior: That's very clear. I think that this is one of the most dangerous of anything that we've talked about today, because this affects all of the others, low velocity decision making. Think about that six months out. Think about that a year out. If your decision making velocity was 50% slower than a competing organization, a competing team, what consequences will that have? Huge. Absolutely huge. And I think there's something to be said about high velocity decision making and the ratio of good decisions that we make. You can overcome a lot of poor decision making by having high velocity decision making and making more good decisions. So if you make seven decisions and six of them are good, maybe the seventh is really gonna hurt you. If you're moving so fast that you make 77 decisions and you've got five bad ones in there, chances are you're moving quick enough, you're adaptable enough that you're gonna be able to pivot out of those bad decisions fast and you won't incur as much damage. And so there's something to be said about that. Again, another conversation for another day, but something that's been on my mind.

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0:43:09.9 TC: Let me add one more thing to decision making.

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0:43:12.0 Junior: Please.

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0:43:16.3 TC: On our team, we talk about one-way doors and two-way doors, right? As far as decision making goes. A one-way door is a decision where you go through that door and you cannot come back through that door. You can't come back. It's a decision that puts you on a certain path and you can't do it again. There's a permanence to that decision. A two-way door is, you try something, it may not work, you come back, you try something else, it may not work, you try something else, okay, that's fine. You have the ability to iterate, try things, try again. But for one way decisions. Here's another benefit of psychological safety. It keeps you safe. It allows you to do the most thoroughgoing analysis and assessment of risk.

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0:44:03.7 TC: Because everyone is helping everyone. Everyone is aware of the stakes, everyone is aware of the permanent nature of the decision. Everyone is trying to make sure that we make the right call. So we're keeping each other safe. We're managing risk together. We're looking at this thing from every angle. We're looking at contingencies, we're looking at the different risk factors that exist. We're helping each other. So think about that when it comes to a one-way decision where you can't come back, you go and then you are on your course and you've gotta deal and live with the consequences.

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0:44:50.2 Junior: I'm so glad you brought that up. And I mean that's something that you can very easily take into the rest of your day, the rest of your week. We'll ask that question on the front end of a decision pretty frequently. What does everyone think one-way or two-way door? Well, if the consensus is that it's a one-way door, we know from the get-go that we need to be a little bit more analytical, we need to give it a little bit more attention, we can be a little bit more haphazard. If it's a two-way door, we can move a little bit faster and not be as spooked by the outcome. Okay, last one. Learned helplessness, and certainly not least, a lack of psychological safety can induce conformity, passivity and learned helplessness that lowers the bar of performance. So this one I think affects the rest as well.

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0:45:37.8 Junior: When it comes to discretionary effort, when it comes to motivation, when it comes to initiative, you beat that out of people by punishing their vulnerability, eventually they're not gonna come back with that discretionary effort. One day they're gonna say, you know what? That's enough, right? I've been vulnerable in the past. I've learned predictably what will happen the next time I do it. So I'm just gonna stay here. I'm going to retreat, I'm going to be quiet, I'm going to do the bare minimum. I'm going to do what is required. And you know, if I can't figure it out, I'll just stay here and be helpless. I'm not going to make any moves. Take any risks, ask any questions because I have an idea of what the outcome will be if I do.

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0:46:19.5 TC: That's right.

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0:46:20.1 Junior: What do you think about this one, Tim? 

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0:46:23.2 TC: Incredibly dangerous. You've been conditioned to resign. You've been conditioned to be passive. You've been conditioned to wait to be told what to do. Unbelievably dangerous in organizations. You're not encouraged to take ownership and you're not encouraged to apply your critical thinking skills. So think about what that does. Think about how that handicaps the organization. The long-term consequences of that are staggering. But we see this, right? Learned helplessness is a pathology that afflicts many, many organizations, and it is the result. It is a cultural outcome. That's what it is. It's a cultural outcome. You can have all of the right structure, process, systems, roles and responsibilities, technology, policies and procedures. You can have all of that and it can be flawless. But if you don't have psychological safety as an enabling condition, if there's still pervasive fear, then you're going to induce learned helplessness and you're going to pay a heavy price because people are not helping you, right? They are in a state of defense, they are on their heels, they are managing their own personal risk. They are waiting. That's the posture that people take. So it's not collaborative, it's not teamwork. The cost is, you can't even measure the cost.

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0:47:57.8 Junior: So what do we do? What do we do about these things? These are the costs that we want to avoid. And there are some things that we can do to avoid them, to make sure we don't fall into these holes and incur these types of consequences with our organization. So at the individual level, we'll run through a few things at the team, at the organization, and then we'll conclude. At the individual level, what are we doing? The very basic mechanism is that we're going to model and reward vulnerability. How do we do that? We talked about it in the last episode, so go check that one out, the Live Model, look, identify, validate, encourage. Look for acts of vulnerability that are happening around you. Someone asks a question, someone challenges the status quo. Identify that as an act of vulnerability, validate it, and then encourage that behavior again.

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0:48:47.1 Junior: If you do that, people around you will engage with you differently. The norms will change, the patterns will change, and they'll see, okay, when I'm around this person, my vulnerability is consistently rewarded. So what do you think they'll do with their next idea? Will they keep it close to the chest? Will they share it with you? They'll be more likely to share it with you. And then look at what that will do to your innovation. The divergent thinking that you'll get, the feedback that you'll get, the risks that you'll become aware of when you're considering a certain course of action. That's the most powerful thing that we can do. So how do you do that? What are some things that you can start with? We just released a brand new version of our behavioral guide. We'll put a link to it in the show notes. This has 130 some odd behaviors, acts of vulnerability that you can both model and reward. It's newly revised and categorized along with a whole bunch of new stuff for individual contributors. We have behaviors that are manager specific labeled. You've gotta go check it out. Many of you have probably seen the original behavioral guide. This version I think is a significant upgrade. And the first one was really good. So that's saying something. Tim, any comments at the individual level for what we can do to model and reward vulnerability? 

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0:50:03.6 TC: Well, as you said, Junior, the new behavioral guide classifies behaviors as appropriate for the individual contributor, the manager, or the entire team. And this new classification will be extremely helpful for individual contributors. So jump into that. You'll see that there's so much that you can do. You are a cultural architect. Even though you don't have positional power, even though you don't have a formal managerial role, there's much that you can do. So I think that this resource will be helpful.

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0:50:37.8 Junior: Just for context, that original behavioral guide, I think is the most downloaded resource of our entire website of all time. So go check out the new one. It's worth it. Tim, measure. We can't stress this enough. Measure where you are today. You need to figure out where you are today so that you can make goals for where you want to get tomorrow and next month and next quarter or next year. Measure where you are today. And then it's that same mechanism, model and reward vulnerability. This is especially important if you have positional power. So at the team level, you now have a different responsibility if you are a manager. And this is something that becomes incredibly important as you're trying to scale your influence, you have to work in some sense against your role. And we've been having this conversation over the last few episodes as kind of a theme, but lead self, lead team, lead the business.

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0:51:32.7 Junior: As you go on that journey, as a leader, you need to take into account how your position might be working against you. People will interact with you differently. You need to hedge against that positional difference and encourage people to come, encourage people to come with their questions, their feedback, their comments, so that you can get those things that we want. The innovation and the high performing teams. Now for the organization, we've got measure. Once again, we do this all the time with organizations, very big organizations. And Tim, I'd be interested if you could just spend a second talking about the way that psychological safety could be, should be approached at the institutional level all the way up to mission, vision, values, institutional buy-in and alignment. You've been working with executive teams using a culture canvas. So just how high up should this start? Where should this live in the organization? What's its relationship to an executive team? 

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0:52:36.1 TC: Ideally, it starts at the very top Junior with the CEO and the executive team because as we like to say, we have a choice. Every organization has a choice in the way that it approaches culture. It can approach it by design or by default. And by design, it means that we're gonna be very intentional about designing the attributes of culture that we want in the organization. And so we use a culture canvas template to do culture by design, to define elements of culture that have to become mutually reinforcing to work together, to create that overall environment that we're trying to nurture. That needs to be a systematic process. And often we need a tool, we need a process to guide us in doing that. That's where the culture canvas comes in.

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0:53:30.5 Junior: So for any of you who want to measure, go ahead and look in the show notes, we'll have a link to the four stages, Culture diagnostic. That's the diagnostic instrument that we use to assess team's level of psychological safety and provide insight into how they can get better. So let's summarize today's conversation. Psychological safety is a culture of rewarded vulnerability. It's absence is a culture of punished vulnerability and punished vulnerability negatively affects the following things, talent attraction and retention, innovation, work environment, and our legal liability, the customer experience, the velocity of our decision making and learned helplessness among others. Those are just six that we talked about today. So if you want to avoid these costs individually and institutionally, it's necessary that we reward vulnerability using the LIVE Model. So diagnose where you are, use the LIVE Model to reward vulnerability, and you will be on your way. And you won't have to worry as much about these costs, these violations of psychological safety. Tim, any final thoughts? 

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0:54:37.1 TC: Yeah, just one final thought, and that is that clearly we've come to the place where we now understand through data that psychological safety is core business. It represents core business because it directly links to a number of crucial outcomes in the organization. So frame it that way. It is core business.

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0:55:00.4 Junior: Love it. Well, thank you everyone for your time, your attention. If you need help with any of the things that we talked today, both individually or institutionally, let us know. That's what we do as an organization. We help organizations like yours embody these principles and become better. We appreciate your listenership very much. We're thankful for the work that you do in the world, in your organizations, and we're here to support you. And just remember, as a concluding thought from me, that some of these issues can seem big, they can seem gargantuan, they can seem institutional and societal, governmental. They seem really big, but they all boil down to the interactions that we have with other people day to day. So as you go throughout your day today, as you talk to your Uber driver, as you check out at a retail store, as you talk to a friend or a coworker, look for those acts of vulnerability and reward those. Your relationships will improve.

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0:55:55.4 Junior: So everyone, we appreciate your likes, your reviews, your shares. If you found value in today's episode, please share it with someone you think might find it valuable as well. Take care. We will see you next week. Bye-bye.

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‍0:56:15.2 Freddy: Hey, Culture by Design listeners, this is the end of today's episode. You can find all the important links from today's episode at leaderfactor.com/podcast. And if you've found today's episode helpful and useful in any way, please share with a friend and leave a review. If you'd like to learn more about LeaderFactor and what we do, then please visit us at leaderfactor.com. Lastly, if you'd like to give any feedback to the Culture by Design podcast or even request a topic from Tim and Junior, then reach out to us at info@leaderfactor.com or find and tag us on LinkedIn. Thanks again for listening and making culture something you do by design, not by default.