What if you rewarded your team for sharing their biggest failure of the month? It sounds counterintuitive — but it is one of the most powerful things a manager can do to build psychological safety. Psychological safety is the shared belief among team members that they can express themselves freely, take risks without fear of punishment and ask questions without feeling judged. It is not a soft concept or a management buzzword. It is the foundation on which high-performing teams are built.
When team members feel genuinely safe to share their ideas, concerns and mistakes, it leads to better collaboration, more innovation and faster problem-solving. When they do not, creativity shrinks, communication breaks down and problems get hidden until they become crises. As a manager, creating psychological safety in your team is one of the highest-leverage things you can do.
Why psychological safety matters: the cost of getting it wrong
The consequences of a psychologically unsafe environment can extend well beyond a team's day-to-day performance. One of the most striking real-world examples is Volkswagen's emissions scandal of 2015, in which the company was caught using illegal software to cheat emissions tests. Investigations into the scandal revealed a culture of secrecy and fear — one where employees were afraid to speak up about serious concerns, let alone challenge decisions made by senior leaders.
"We must have a climate in the future where problems are not hidden but can be openly discussed with superiors. We need a culture in which it is necessary and permissible to argue with your superior about the best course of action."
— Bernd Osterloh, former Chairman of the Volkswagen Works Council, following the dieselgate scandal
This is an extreme example, but the principle applies at every level. When people feel unsafe to raise concerns, problems go unaddressed until they become far more costly to fix. And psychological safety at company level starts with psychological safety inside individual teams — which means it starts with you.
How to assess the current level of psychological safety in your team
Before you can improve psychological safety, you need to understand where you currently stand. The most revealing question you can ask yourself is simple: how often does someone from your team voluntarily share a mistake or failure with you? If the honest answer is rarely or never, there is meaningful work to be done.
Beyond that initial question, here are three practical ways to assess your team's psychological safety:
Run anonymous surveys
Conduct a short anonymous survey that asks team members about their comfort levels, willingness to speak up and perception of how feedback is received. You can embed this into an existing company engagement survey or create a simple dedicated one for your team. The anonymity is important — people will not tell you what they actually think if they fear being identified.
Observe participation in team settings
Pay attention to who speaks and who stays silent in team meetings. Look for non-verbal signals too — body language, hesitation, people waiting to see how others react before contributing. Low or uneven participation is one of the clearest indicators of low psychological safety. If the same two or three people dominate every conversation, that is worth examining.
Have one-to-one conversations
Individual conversations can surface things that never come up in a group setting. Ask open questions about how people experience the team dynamic and whether they feel comfortable raising concerns. One important caveat: if psychological safety is genuinely low, some people will not be candid even in a private conversation with their manager. Treat what you hear as one data point among several, not the complete picture.
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Once you have a sense of where your team stands, you can begin implementing strategies to create a more psychologically safe environment. These are not one-off initiatives — they are habits and norms that need to be consistently modelled and reinforced over time.
Set clear norms and lead by example
Establish explicit expectations around how people treat each other — mutual respect, active listening, openness to different perspectives. Then model those behaviours yourself. Admit your own mistakes openly. Ask for feedback and respond to it graciously. When people see their manager doing these things, it becomes far easier for them to do the same.
At the start of a new team or project, co-create a short set of team norms with your team — agree together on how you will communicate, how you will handle disagreement and what "good" looks like. Norms that the team helped create are far more likely to be respected than those handed down from above.
Create genuine space for open communication
Build regular and varied opportunities for people to share their thoughts — both formally in team meetings and informally in day-to-day interactions. In team meetings, consider using structured turn-taking to ensure quieter voices are heard, not just the most confident ones. Make it explicitly clear that all contributions are welcome, and then demonstrate that through how you respond to them.
Try a simple "round the room" check-in at the start of your team meetings — one sentence from each person on how they are feeling or what is on their mind. It takes three minutes and dramatically increases the likelihood that quieter team members will contribute during the rest of the session.
Listen actively and follow through
When someone speaks up, they are taking a social risk. How you respond in that moment either reinforces or undermines psychological safety. Actively listen — do not interrupt, do not immediately problem-solve, do not minimise what has been shared. A simple "no interruptions" rule during team discussions can have a surprisingly significant impact. Then follow through: if someone raises a concern, make sure they see that it was heard and that something happened as a result.
After someone raises an issue or idea, close the loop explicitly. Even a brief "I wanted to come back to what you raised last week — here's what I did with it" signals that speaking up is worth the effort. Without this, people quickly learn that voicing concerns leads nowhere.
Normalise mistakes and make learning visible
One of the most powerful shifts a manager can make is to treat mistakes as learning opportunities rather than failures to be punished. Acknowledge your own errors openly. When a team member makes a mistake, focus the conversation on what can be learned rather than who is to blame.
At LeadWise, we take this a step further: every month, each team member shares their biggest learning — which is to say, their most significant mistake or misjudgement — with the whole team. We then nominate someone to receive the "Best Learning Award" in recognition of their honesty and the value their experience brings to the whole team. It sounds unusual, but it fundamentally changes the relationship a team has with failure.
You do not have to start with a formal award. Simply start by sharing one of your own recent mistakes in a team meeting and discussing what you learned from it. Done genuinely, this single act does more to build psychological safety than almost any other intervention.
Celebrate successes as a team
Alongside normalising failure, make a habit of recognising success — and doing so in a team setting, not just in private. Public recognition serves two purposes: it acknowledges the individual's contribution and it signals to the wider team what good looks like and what the team values. Both are important for building a culture where people feel motivated to do their best work.
Keep recognition specific. "Great job this week" lands very differently from "I wanted to call out how you handled that difficult client conversation on Tuesday — the way you stayed calm and found a solution was exactly what we needed." Specific recognition is more meaningful and more instructive for the rest of the team.
The bottom line
Psychological safety is not a luxury or a nice-to-have. It is the condition that makes everything else in a team work — honest feedback, genuine collaboration, creative problem-solving and the kind of trust that allows people to do their best work.
Building it takes time and consistency. It is built in small moments: how you respond when someone raises a concern, whether you follow through on what was discussed, how you handle a mistake — yours or someone else's. But the return on that investment, in team performance, engagement and resilience, is substantial.
As a manager, you are the single biggest influence on whether your team feels psychologically safe. That is both a significant responsibility and a genuine opportunity.