Why Continuous Improvement Requires Psychological Safety

March 21, 2022 by

Continuous improvement is a widely known quality management concept used by numerous organizations in the insurance industry. It’s an essential mindset for insurance companies who aim to continuously enhance their operations. In my work, it’s job No. 1.

Through my work as a head of underwriting innovation, I have learned that continuous improvement can occur only if teams work in an environment of psychological safety.

Psychological safety, a concept based on the work of Harvard Business School Professor Amy Edmondson, is “a belief that one will not be punished or humiliated for speaking up with ideas, questions, concerns or mistakes.” Put another way: Every employee faces a “fear hurdle” as they run the daily work race. Psychological safety can lower or eliminate it.

Psychological safety is essential to organizations that value innovation and want to create a culture of continuous improvement. Dr. Edmondson’s research came to my attention at a point when I was frustrated with my inability to coach my teams into actively pointing out opportunities for improvement. My ambition was to empower people to give open, honest feedback about challenges that may not have been clear to their managers.

Psychological safety as a prerequisite to innovation.

Even with SCOR’s emphasis on agile work processes, we would go months living with inefficiencies that could have been resolved quickly if those issues had been brought into the open and freely discussed.

After reading Dr. Edmondson’s book, “The Fearless Organization,” I realized the psychological safety to bring out these obstacles on our teams needed development. Team members feared they might be blamed for problems, worried that managers might take constructive feedback as personal criticism, and felt unsure if they had their leaders’ trust.

This was a powerful revelation to me.

Is this concept really important when the industry faces so many other challenges? Extremely, especially when you consider that insurance companies, like any industry where knowledge work is important, thrive when innovative ideas come from all levels. Leaders need to prioritize psychological safety explicitly if innovation is important to them. They can be either the greatest champion of psychological safety or its greatest impediment.

“Permission to fail,” “permission to speak up” and “diversity” often come up when discussing psychological safety, how to achieve it and what outcomes may result by increasing it. The concept that failure may be acceptable in certain situations is a complex one, and part of establishing psychological safety is making sure everyone has the same expectations about where there is permission to fail and where there isn’t.

Many insurance organizations value diversity. But a diverse workforce where employees don’t feel like they belong or can speak up won’t be able to fully realize the benefits of their diversity. Psychological safety helps create a foundation of belonging for all individuals in an organization.

What can an organization do to promote psychological safety?

Psychological safety doesn’t come from a single meeting or a workshop. It requires a cultural shift in the way leaders empower others. At SCOR, beginning in 2019, leaders brought the elements of “The Fearless Organization” book forward for discussion as a concept and then implemented them in practice.

One example of how psychological safety has made a difference in our business is an underwriting process that requires us to “rescore” business by running the past six months of activity through our technology platform to compare the reality of the business with the expectation created during underwriting. This rescore required manual interventions that took up to three days. It was inefficient, and it frustrated those running the process. Yet, our team didn’t feel empowered to openly discuss how tedious the manual interventions were. Once they got comfortable that it was OK to talk about this, we reduced the time for rescores to just four hours.

Awareness of psychological safety has created a slow but steady virtuous cycle across the organization. Much of the change has come from evaluating managers on how they foster and participate in a culture of psychological safety and continuous improvement. This is vital to setting the stage for innovation and achieving meaningful organizational improvements.

Mele is senior vice president of Underwriting Innovation for SCOR Global Life Americas, which reinsures $1.9 trillion of in-force life insurance as measured by death benefit amount.