Psychological Safety, The Prerequisite for Modernisation

If people can’t tell you the truth, your dashboards will lie for them.

So now you finally have what most leaders think they need: a system. And yet… the system still doesn’t show the truth. Numbers look “clean”. Reports look “reasonable”. Problems show up late. Bad news arrives only when it becomes a fire.

This is where many leaders get fooled. They look at the dashboard and think, “Great, we’re improving.” And then reality punches them. A shipment fails. A customer escalates. A vendor refuses. Cash gets stuck. Quality blows up. The issue is not your tool. The issue is fear.

Which Seat?

• Inherited seat: people fear disappointing you, so they hide issues until they’re unavoidable.

• Hired seat: people fear you’ll judge them, so they show you what looks good.

• Promoted seat: people fear the relationship has changed, so they become careful and political.

Different seats. Same outcome: silence.

Doctor-Patient Problem

Think about a doctor. The doctor can be brilliant. The hospital can be world-class. The tests can be advanced. But if the patient hides symptoms, the diagnosis will be wrong. Not because the doctor is bad. Because the input is false.

That’s what modernisation looks like without psychological safety. You can buy software. You can design processes. You can set up dashboards. But if people can’t tell you the truth, your “data” will become polite fiction. And you’ll make confident decisions on top of fiction.

What Is Safety?

People hear “psychological safety” and imagine a soft HR concept. It’s not soft. It’s operational. Amy Edmondson, who researched this deeply, describes it simply: a climate where people feel safe to speak up, admit mistakes, ask questions, and raise bad news without being punished or humiliated.

In MSME language, it means:

• “If I report a problem, I won’t be insulted.”

• “If I admit a mistake, I won’t be made a permanent example.”

• “If I raise a risk early, I won’t be told I’m negative.”

• “If I tell the truth, I won’t lose my standing.”

If those beliefs don’t exist, people will still “cooperate” but it will be theatre.

Hidden Blocker

Low-data firms don’t naturally produce truth. They produce stories. Why? Because stories protect people. A late dispatch becomes: “customer changed plan”A defect becomes: “labour issue”A missed purchase becomes: “vendor problem”A cash delay becomes: “accounts is slow”

Each story may contain some truth. But the function of the story is usually protection.

So when you introduce digitisation, something changes: Now the story has to match a number. And if the number can expose someone, the system will do the only thing it knows:

It will manage the number.

That’s how dashboards become lies. Not because people are dishonest by nature.Because honesty has become unsafe.

The Signs

Bad news comes late, always.

• Meetings are full of explanations, not facts.

• “No issues” is the most common update.

• Problems are discovered by customers, not internally.

• People speak more in corridors than in review meetings.

• Everyone looks busy, but nothing is owned.

If you see these signs, your modernisation effort is at risk. Because the system will look healthy until it breaks.

Most leaders don’t wake up and say, “Let me create fear.”

They kill safety through small habits:

• Sarcasm in meetings

• Public scolding

• Reacting emotionally to bad news

• Asking “who did this?” before asking “why did this happen?”

• Using pilot data for appraisal

• Praising only “good numbers” and punishing messy truths

One harsh moment teaches the room a long lesson. After that, people stop volunteering reality. They start managing perception.

Field Test

Pick one recent failure. Not the biggest scandal. A real, medium-sized problem. Gather the involved people for 30–45 minutes. Then follow three rules:

1. Start with the line: “This is not a blame meeting. This is a learning meeting.”

   And mean it.

2. Ask only these questions:

   • What happened, in sequence?

   • Where did the handoff break?

   • What made the wrong action feel reasonable at the time?

   • What one change reduces the chance of repeat?

3. No names, no insults, no ‘how can you’

   If someone makes it personal, you bring it back to the process and the moment.

Now the most important part: Track whether people volunteer issues unprompted in the next two weeks. That is the real signal. If people start bringing small problems early, safety is rising. If they stay silent and “all good”, your system is still running on fear.

(The writer is a Chartered Accountant based in Thane. Views personal.)