Weekend Reading: The Tension Between "Accountability" and "Psychological Safety"

By: Stephen J. Scott , Founder & CEO of Starling

This piece first appeared in Starling Insights' newsletter on March 1, 2024. If you are interested in receiving our thrice-weekly newsletter, among many other benefits, please consider signing up as a Member of Starling Insights.

In a poignant article published in Asterisk Magazine last month, writer Kyra Dempsey looks back upon the crash of USAir Flight 1493 on February 1, 1991. On a clear evening, the Boeing 737 collided with a small commuter plane while landing at Los Angeles International Airport (LAX). All told, 35 lives were lost.

In the immediate aftermath, the air traffic controller who had cleared Flight 1493 to land, Robin Wascher, realized her grave mistake: she had allowed the plane to land on the same runway on which she had instructed a commuter plane to hold, only minutes earlier. Her oversight, she realized, had led to the deaths of 35 passengers and crew.

In a moment of extraordinary courage, Wascher brought this information to the attention of her superiors, taking full ownership of what had occurred. And this is where the story truly begins.

A subsequent investigation highlighted the real problem: the fact that a single mistake by an air traffic controller could result in such a tragedy. This indicated the existence of a catastrophic systems failure. One which permitted for inevitable distractions, visibility challenges, and small deficiencies in the airport’s safety systems to combine such that a small human error could trigger a wholesale disaster.

The system, that is, had failed Wascher as well as the victims of the crash. Throughout the National Transportation Safety Board’s (NTSB) hearings into the incident, Wascher provided a faithful and honest recounting of the events that led up to the collision. Ultimately, she faced no punishment, and no one was charged with a crime.

Wascher’s willingness to speak up openly about her mistake, and what had led up to it, was instrumental. Not only did it allow investigators to understand the delicate situation that had prevailed moments before and after the crash, it also enabled the NTSB to identify the changes that would be necessary if similar system failures were to be avoided in the future.

This story has far-reaching implications for the way we manage conduct risks in organizations of any sort.

In recent years, a number of the world’s leading financial markets have adopted a regulatory standard that emphasizes “individual accountability” for poor risk governance outcomes. Rather than focusing solely on the employees who are actively engaged or complicit in misconduct (acts of commission), some regulators now look to hold managers and supervisors to account for having allowed such behavior to take place at all (acts of omission).

Accountability is seen as a way to ensure that leaders actively take ownership of what happens on their watch. Too often, however, such accountability operates as a system of blame, aimed at redressing a general perception that too many senior managers have escaped responsibility for misconduct scandals. Some, for example, have argued that the low number of enforcement actions undertaken by the UK’s Financial Conduct Authority (FCA), pursuant to that country’s Senior Managers and Certification Regime (SMCR), should be seen as a sign of failure.

But this view would be at odds with the learnings from the USAir Flight 1493 disaster. Reflecting on that incident, one might speculate as to whether changes to safety systems and protocols would have been as successful had Wascher — and her superiors — faced personal penalties under an accountability regime. Would Wascher have been as open and cooperative had she been threatened with career-ending or life-altering consequences? Or would such an approach have discouraged others from admitting their mistakes in the future, thereby hindering investigations and delaying necessary reforms?

Even as many banking sector regulators are championing greater individual accountability, many are also calling on firms to establish cultures that foster ‘psychological safety’ and successfully encourage ‘speak-up’ or ‘challenge’ behaviors. Harvard Business School Professor Amy Edmondson (a Starling advisor) defines psychological safety in her book, The Fearless Organization, as a climate in which people “feel comfortable sharing concerns and mistakes without fear of embarrassment or retribution.”

Psychological safety has been widely celebrated since it was demonstrated to reduce errors and improve outcomes in a variety of settings. When employees feel safe to speak up and raise issues with one another, as well as their managers, it allows problems to be addressed more quickly and also encourages greater idea-sharing and innovation. Such an environment was necessary for creating the conditions that supported reform in the wake of the Flight 1493 crash.

But few regulators calling for psychological safety seem to acknowledge that this may conflict with their concurrent efforts to assert greater accountability. When used as a system of blame, accountability regimes may inadvertently undo the very conditions necessary for psychological safety to flourish.

A more profitable approach would assert accountability for failure to establish and sustain workplace cultures high in psychological safety. Under such conditions, mistakes — even ones that lead to disaster — are treated as an opportunity for learning and improvement. What we really desire is that managers are held accountable for creating environments in which inevitable mistakes and failures are addressed openly, quickly, and with lasting improvements to systems and processes.

There are clear cases of egregious misconduct, where individuals should expect to be held accountable for deliberate wrongdoing. But without sufficient nuance, assertions of individual accountability throw a wet blanket over efforts to promote psychological safety. As we navigate the complexities of managing modern organizations, finding the right balance between these two principles will be key to ensuring safety and accountability while maximizing innovation and performance.

What are your thoughts on how we may strike this balance most effectively?