Psychological safety for accounting firms

Accounting firms and charities from across the sector discuss how they are fostering psychological safety within the workplace. Kris Cooper, Thematic Reporter, GlobalData discusses.

With psychological safety becoming an increasingly important consideration, firms across accounting have been implementing a variety of mechanisms from management training to regular inclusion talks to improve their performance in the area. 

Psychological safety, essentially the trust an individual has in those around them to respect them, is valuable for worker wellbeing, but it can help to tackle accounting’s talent crisis by helping firms to retain employees. 

Candice Eaton Gaul, diversity and inclusion leader at accountancy and professional services giant RSM tells International Accounting Bulletin: “Psychological safety has progressively become an essential element in collaborative and inclusive organisations, and a key element to risk mitigation and the harnessing of business opportunity.” 

Insights from across the profession point to a need to cultivate company cultures to allow employees to learn from mistakes, alongside accepting management ensuring the creation of an environment in which employees can be their authentic selves.

Candice Eaton Gaul

Diversity and inclusion leader, RSM

What is psychological safety?

Psychological safety can be manifested as the security an individual feels when contributing within a workplace, to make mistakes or to exist comfortably as their authentic self.

Eaton Gaul adds: “Psychological safety in the workplace is a shared expectation where individuals believe they will not be embarrassed, rejected, or punished by their colleagues for asking questions, challenging norms, sharing ideas, providing feedback, and asking for assistance “ 

For Paul Guess, a mental wellbeing expert at occupational charity caba, the concept very much centres on the freedom an individual has to be their authentic self. 

Paul Guess

A mental wellbeing expert at occupational charity, caba

“If you don't have this idea of psychological safety, then you are very much editing yourself,” he says. “You are trying to present an impression that you think other people want to see. So, it is the underlying conditions required to be authentic. Without that authenticity without that sense of psychological safety, you aren't presenting the sort of thing that you've been brought on board to do.”

If there is a lack of psychological safety in a workplace, employees feel less empowered to contribute and organisations can suffer as a result.

Sue Warman

Chief People Officer at AICPA & CIMA

Sue Warman, Chief People Officer at AICPA & CIMA explains: “When psychological safety is absent, employees will stick to what is safe. They will avoid coming forward with contributions in meetings and workshops, avoid taking risks, including being innovative, and avoid flagging up concerns, particularly if these are in opposition to more senior staff.

“The result is the risk of groupthink and an inability to be proactive or respond quickly to changes in the profession.”

Why is psychological safety important for accounting firms to foster?

Guess notes that psychological safety is especially important in the accounting profession due to the high-pressure environment and the high standards necessary for audits. “Accountancy is an extremely high stress working environment where the demand for accuracy is exceptional,” he says. “You know the slightest mistake could have huge ramifications, so you are much more under pressure from a fear of failure. It's high demand and it's quite competitive.”

Recent research conducted by caba found that 55% of accountants were suffering from stress and burnout compared with 41% of employees in other industries, while four in five (79%) accountants believe that stress and poor mental health are a problem within the industry.

Due to this quality of the accounting industry, it is then paramount that accounting firms take this seriously to allow the talent they do have to flourish and do their best.

Louise Sayers is audit partner and head of people and culture for BDO’s audit practice. She explains that the culture of an audit firm needs to drive consistent high-quality auditing, and notes that auditors’ work “is fundamental to the success of the business world and society, enabling decisions based on transparent financial reporting, that is trusted.” 

Louise Sayers

Audit partner and head of people and culture, BDO

Of the importance of psychological safety within that realm, she says: “Creating an audit culture which promotes openness, ethical behaviour, collaboration and allows constructive challenge is therefore crucial to ensuring auditors can deliver on this purpose. An audit culture which has a strong sense of psychological safety allows auditors to be themselves, while focusing on ensuring their work is of the highest quality.”

Hilary Haynes, global head of leadership development and diversity, equity and inclusion at Grant Thornton International, meanwhile, is clear about the value of psychological safety for workplace retention.

“When people feel that they can be themselves at work, present new ways of thinking, ask questions, and speak up about concerns or mistakes, they will be more likely to stay and grow with a workplace,” she explains.

“If you have two teams – one that has reported errors and one that has no reported errors – which would you prefer to do your audit? Possibly the one with no reported errors. Okay so, if you know that the members of the team that has no reported errors don’t feel safe to speak up – which team would you prefer to do your audit?”

As accounting firms keep pace with the evolving technological environment and begin to use new technologies while building out different arms of service offerings, innovation becomes an increasingly desirable quality in the workplace. For Haynes, there is a link between psychological safety and innovation.

“A psychologically safe environment is an incubator of innovation,” she explains. “Without psychological safety, you will have a diverse group of people acting like a homogeneous group, instead of bringing their diverse perspectives, backgrounds, and ideas to the table, which drive innovation.”

What mechanisms can be put in place to begin to foster psychological safety?

Among the mechanisms that can help foster psychological safety are open communication channels, a culture of regular feedback, encouraging leadership to demonstrate vulnerability and humility and an understanding of how different cultural experiences impact individual perceptions of psychological safety.  

Warman explains that firms need to, “Make it not only safe to make mistakes but make it clear that mistakes are an important part of how we learn and innovate. When mistakes are made, focus on what needs to be done differently next time, rather than who did what wrong.” 

“Invite people to contribute their thoughts and ideas, making sure that fewer senior employees are given the floor first. When making decisions, acknowledge those considerations that have been rejected, so that people feel their opinions are valued.” 

For Hayley Broughton-McKinna, training director at mental health training provider PMAC, a change of perspective can help to foster psychological safety. 

Hayley Broughton-McKinna

Training director at mental health training provider PMAC

“Every behaviour and every outcome can always be looked at differently,” she says. “Impulsivity can be considered as creativity or spontaneity. A failed attempt means we have learned something about our process that we hadn't predicted. Looking for the strengths of individuals and the value in unsuccessful attempts or even in making mistakes can be a simple way for leaders to begin to foster psychological safety.”

Whose responsibility is it to cultivate psychological safety within a firm?

While Warman believes that everyone has a responsibility for cultivating psychological safety, she comments: “Leaders have a responsibility to set the tone and lead by example, ensuring to call out inappropriate behaviour rather than ignoring it.” 

This is a view shared by Chen, who says: “In the short term to ensure that there is a strong focus on embedding an understanding and culture of psychological safety, the leaders of the business need to be the ones to cultivate psychological safety. The ‘tone at the top’ has a significant impact on fostering a psychologically safe environment at all levels.“

Despite the responsibility of management to foster a culture of psychological safety, cultivating it can go both ways.

“It has to be coming from management and does need employee engagement,” comments Guess. “And it's kind of a double-edged sword of that because your employee needs to feel safe in order to push back. So having this open cyclical communication, being able to go to a manager and say I've had this idea and knowing that they have listened. Maybe it won't be acted upon, but it certainly hasn't just been ignored.”

Broughton-McKinna adds: “Acknowledging your own fallibility as leaders is also important, as this models taking accountability for your mistakes, normalises them and demonstrates that mistakes can also provide value.” 

How are accounting businesses cultivating psychological safety in the workplace?

AICPA and CIMA, which were together recognised as one of the UK’s best workplaces in consulting and professional services in 2023, have spent time building inclusion through HR processes and regular conversation series, such as TED Talk Tuesdays and Conversations That Matter, aimed at boosting awareness and inclusion. The organisation also provides training to managers that emphasises the importance of creating a safe space for employees to learn and contribute. 

Warman explains: “Our leadership development is focused on the thinking abilities required for a VUCA [Volatile, Uncertain, Complex and Ambiguous] world, with compassionate leadership emphasised. We’ve launched this new approach this year and look forward to seeing the results of our leaders gaining new insights into how they can create a supportive and collaborative environment that drives success whilst keeping employee wellbeing and psychological safety firmly in mind.” 

BDO, meanwhile, has “ensured we have clarity over our focus on quality, our desired culture and set out clear audit-specific behaviour expectations,” according to Chen. 

“We also have many different audit support teams available for our auditors to consult with whether on a technical issue, methodology issue, ethics challenge or for wider advice and guidance,” she says, adding that partners and directors receive specific training on psychological safety from experts, ensuring leaders understand the neuropsychology and the various stages involved. 

GTIL, meanwhile, created an e-learning module which explains the concept of psychological safety and the first steps in building such an environment. While the course is aimed at leaders in firms, it's appropriate for all employees to take part in. 

Alongside this, GTIL asks member firms to measure psychological safety in their workplaces annually and measure their psychological safety index (PSI) with guidance provided by GTIL on this. Haynes emphasised how many member firms have training initiatives and workshops with a particular focus on the topic, in conjunction with the utilisation of apps such as the workplace wellbeing platform Unmind.  

Similarly, Eaton Gaul explains that psychological safety is a consistent element in RSM’s diversity and inclusion initiatives.  

“At a global level, we support member firms in fostering psychological safety and inclusion in many different ways,” she says. “One recent example was a month-long training sprint offered to the global HR community on the neuroscience behind connection and communication. The lasting effects of this programme can already be seen in subtle shifts in processes and procedures to get the most benefit from formal and informal interaction.” 

“Psychological safety is personal, so immediately setting expectations for behaviour in everyday interaction can be more powerful than developing a long-term plan with a big budget.”