Building psychological safety in uncertain times 

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Against an increasingly turbulent[1] and uncertain[2] backdrop, psychological safety has become a critical factor for businesses concerned with the health of their organizational culture. 
Professor Amy Edmonson of Harvard Business School defines psychological safety as:
A belief that one will not be punished or humiliated for speaking up with ideas, concerns or mistakes, and that the team is safe for interpersonal risk-taking.[3]
Adverse events that lead to widespread uncertainty, such as the COVID-19 pandemic, natural disasters, wars and financial crises, harm productivity in the long run.[4] In the absence of a psychologically safe environment, individuals who feel insecure about their jobs or the future of their organization turn inward and avoid raising their voice. Individual creativity, innovation and productivity suffer. Unethical behavior or unfair practices go unchecked. Uncertainty also ultimately drives talent away. On the flip side (and unsurprisingly), excitement for and belief in the company's future is closely linked to employee engagement.

As uncertainty rises, so does the need for psychological safety

Mercer’s most recent normative data shows a 10-percentage point increase in the number of global engagement surveys asking whether employees feel they can express views and opinions without fear of negative consequences.[5] Employers see value in tracking this sentiment, particularly in the context of an uncertain global backdrop, such as:

  • A changing macroeconomic or geopolitical backdrop (e.g., changing political regimes, economic disruption or policy changes), which can cause concern (or at the very least, distraction) for employees.
  • The state of the labor market (e.g., employment rates, widespread layoffs) causing anxiety surrounding job security and financial resilience. News (or rumors) of restructures or industry-wide layoffs can foster fear. Employees may lack the confidence to ask questions or raise concerns.
  • The rise of artificial intelligence (AI) is changing the demand for certain skills, jobs and the very nature of work itself. One in three employees have concerns about the rise of AI and its impact on humanity. One in four say that AI is creating job uncertainty.[6]

In a volatile global environment, all eyes are on protecting the business and boosting growth. As a result, employers risk shifting their focus away from employee experience (EX). The signs are already there: Enhancing the EX/employee value proposition (EVP) has already fallen from the number-one HR people priority in 2024 to second place in 2025.[7] With budgets under scrutiny, EX investment must inevitably become more targeted to realize higher return on investment.

Why is psychological safety so important during uncertain times?

Building psychological safety is essential for:

  • 1. An inclusive culture

    Psychological safety is a prerequisite for an inclusive environment, as it means employees feel secure in themselves. This benefits retention; employees who can be their authentic selves at work are five times more likely to be satisfied with no intent to leave.[8] Managers play a key role in cultivating a sense of belonging to address employee insecurities and strengthen team connections.

  •

    2. Organizational innovation

    For innovation to succeed, employees must feel safe to experiment, ideate and face potential failure. With executives’ 2025 business priorities including augmenting systems and processes with AI (54%) and expanding their business footprint (38%), fresh thinking is desperately needed.

  •

    3. Risk readiness

    For employees to act appropriately regarding difficult decisions or new risks, they must feel able to voice concerns or escalate issues without fear of backlash. Organizations are well on the way to improving risk resilience; 76% of HR leaders believe their organizations have integrated risk awareness into their DNA.[9]

  •

    4. Sustainable talent management

    Organizations that put employees first in times of crisis have a better chance of retaining critical talent. Failing to build psychological safety sets businesses up for a fall once the job market recovers; critical talent will quit, leaving the employer without the skills they need to bounce back.

Organizations with a culture of psychological safety "benefit from increased productivity and may be at lower risk for loss of knowledge and collaboration because their employees will remain engaged".[10]

Using employee listening to build psychological safety

Employee uncertainty intensifies the need for effective employee listening strategies. Understanding employee behavior and sentiment can help organizations navigate uncertainty and drive investment where it matters most.  

Eighty-four percent of executives plan to ask everyone to focus on efficiency to deliver more with less this year, underscoring the need for HR to be a driver of growth.[11] Yet only one-third of HR view employee listening as a strategic lever for achieving business results.[12] If HR is not using listening strategically, how can employees trust that their voices are heard?

Thankfully, advancements in AI and technology should allow organizations to understand employees on a deeper level for greater impact. Such advancements include:

  • Online digital focus groups for anonymous, AI-driven, real-time feedback
  • AI-driven employee prompts to understand the reasons behind their survey responses
  • AI to interpret open-text survey responses (for theming, sentiment and data segmentation)
  • Using trade-off (conjoint) surveys (to understand what is most critical to employees and what program changes can be made while driving cost-savings)

These tools help organizations zero in on where investment is needed. One such area includes improving people managers’ skills—HR's number-one people priority.[13] Strengthening the employee-employer relationship benefits talent retention, a key focus for employers against today’s business backdrop.

83% of executives are more concerned about retaining current talent (over attracting new talent) in the current business environment.
Mercer’s 2025 Executive Outlook Study

Three ways to promote psychological safety in the workplace

Cost containment is squeezing many organizations. If you can only take one action each, focus in these areas:
  1. Business leaders
    Find strength in vulnerability. Being open about your struggles gives permission for people without your authority to do the same. This style of open, authentic leadership builds trust and empathy, which guard against uncertainty.
  2. HR
    You can spend less and still create a fair EX. Focus spending where it matters most to employees as part of a holistic EVP, backed by fair pay practices and meritocracy. A fair, relevant EVP strengthens trust, promotes transparency and ultimately protects the bottom line.   
  3. People managers
    When you can’t be certain, be honest. The long-term impact of macro trends is difficult to ascertain. Instead, focus on bringing clarity to your teams’ day-to-day work. Increase communication to address concerns, anxieties, or negativity that may be rumbling under the surface.
A psychologically safe culture fosters  employee trust and engagement, helping organizations to weather the storm. To meet growth targets in an uncertain global environment, tune into employee sentiment and use the insights to drive targeted investment to influence innovation and productivity. 
About the author(s)
Marieke van Raaij

Regional Employee Engagement Solutions Leader, Mercer

Adam Pressman

Regional Engagement Solutions Leader

Katerina Psychopaida

Practice Lead, Employee Experience Solutions, Europe + UK&I, Mercer

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