Fraud Talk: Why Psychological Safety is Pivotal for Ethical Company Cultures

During the 2021 ACFE Fraud Conference Canada, the founder of Sheriff Consulting, Garth Sheriff, CPA, discussed the importance of psychological safety for ethical decision making – and how the lack of it in an organization can lead to disaster.

In the excerpt below from episode 114, Garth begins to tell us about a research study that questions if psychological safety impacts a company’s culture, and how so. Download the full transcript in PDF form or listen to the episode at the bottom of this post.

Garth Sheriff: The question is, what is psychological safety? The reason I really enjoy this term and I like exploring this is that psychological safety is a research-based organizational psychology/behavior-based term that comes from some prominent researchers. It was first brought into my perception and my understanding with an article from The New York Times, what Google learned from its quest to build a perfect team.

Google worked in a lot of teams. What they wanted to figure out was that when teams change projects or change personnel, their performance changes. Some teams that were high-performing, you just change one aspect of the team dynamic. All of a sudden, the team goes to low-performing. They wanted to use a lot of existing research to figure out what is the magic ingredient that regardless of who the team members are, the project will keep teams performing at a high level.

They did not find that magic ingredient. Otherwise, I would tell you, but what they did find was correlation. One of the items they found a correlation and a big one was psychological safety. This brought the work of Dr. Amy Edmondson, whose work is the key work for psychological safety, into prominence because that article was a very popular article. It went around to many different spaces.

The term “psychological safety” became this buzzword, this interesting concept, especially for those that are analytical thinkers because it’s supported by research. I’m showing a hospital floor here because Dr. Amy Edmondson’s work really started off in a hospital. That’s where her research base was. In terms of looking at the dynamics between teams, she had an inventory of what she think would be attributes of high-performing teams and attributes of low-performing teams.

This was through her research and she wanted to go and experiment to see if these attributes held true. She thought the best place to look at this is a place where there’s clear hierarchical divisions, doctors and nurses. She went into ER rooms across different hospitals in the United States and looked at the relationships between doctors and nurses. What she wanted to see as any researcher was that her hypothesis was true, that doctors and nurses that were high-performing would have more of the attributes on her list ticked off.

Listen to the podcast to hear more about Dr. Amy Edmondson’s study and the surprising results.

Download the transcript SOURCE: ACFE Insights – A Publication of the Association of Certified Fraud Examiners