How do organizations encourage people to speak up about ethical breaches, whether inadvertent or deliberate? Why do some employees choose to remain silent when others report misconduct? In a world of increased scrutiny for corporations of all types, it is more essential than ever that when misconduct happens or difficult problems arise, there is a strong ethical climate for surfacing information so that leaders can respond quickly and appropriately. An environment in which employees feel comfortable reporting such issues is also vital to preventing future misconduct.

As part of an unprecedented global study on workplace ethics, we analyzed the perceptions of those who report misconduct against those of “silent bystanders.” This helped us better understand both the drivers and derailers of speaking up — and revealed insights into how leaders and compliance officers can encourage employees to make such reports.

Although our work has an obvious relationship to whistleblowing, in the context of psychological safety and ethics, we make an important distinction between external whistleblowing and those who speak up about perceived misconduct at work. By reporting illegal or unethical activity to external authorities, whistleblowers play a vital role. Moreover, it is likely that they felt their concerns could not be expressed, heard, and addressed internally. We posit that a healthy organizational culture is one in which speaking up and listening go hand in hand and thereby reinforce ethical standards. If concerns are expressed, changes can be made in a timely way.

Thankfully, there are a number of things organizations can do to make it more likely that people will speak up when they observe unethical behaviors. Our research discovered that psychological safety in this context is essential. Psychological safety, a phenomenon studied extensively by coauthor Amy C. Edmondson, is defined as “a shared belief held by members of a team that the team is safe for interpersonal risk-taking” — or, put another way, that “we can say what we think” or “be ourselves around here.”1 Today, a number of global organizations recognize the importance of this concept.2 While previous corporate studies, like Project Aristotle at Google and the Art of Teamwork at Microsoft, demonstrate the importance of psychological safety for team effectiveness, team performance, and creativity, little research has investigated the role of psychological safety in workplace ethics.3

At the beginning of 2021, with the support of the Novartis CEO and its chief ethics, risk, and compliance officer, the company launched an initiative to study psychological safety and ethical behavior. Drawing from published social science research, the ethics, risk, and compliance team created a survey to measure psychological constructs and behaviors related to ethics. (See “The Research.”) The survey was completed by more than 38,000 employees in over 100 countries who held positions at various levels in the organizational hierarchy. This provided a unique opportunity to study psychological safety in a diverse sample on a global scale in relation to other psychological and behavioral constructs associated with workplace ethics. The results of our research demonstrate that psychological safety forms an integral part of the ethical climate of an organization.

The Role of Psychological Safety

While many people said that they spoke up after witnessing perceived unethical behavior, a substantial minority said that they did not speak up. Among the survey respondents who perceived unethical behavior last year, some reported it to a “speak-up hotline,” a human resources officer, or their line manager, while others admitted that they felt comfortable sharing it only with their friends or family or kept it to themselves.

Among employees who had observed unethical behaviors during the prior year, we found that those who felt less psychologically safe were significantly less likely to report those behaviors via channels where organizational leaders might act on them. (See “Reporting Channels and Psychological Safety.”) Those who felt the most psychologically safe were most likely to have reported the misconduct they observed. This held true even after taking into account a range of other psychological factors that could influence incident reporting, such as perceived levels of organizational justice, fairness, and trust. Psychological safety is therefore important for more than just team effectiveness and well-being; it may also be critical for forming strong ethical cultures where employees feel comfortable speaking up.