Exploring psychological safety experiences of investment banking employees in hybrid work environments

Abstract

The global shift to hybrid working, combining remote and onsite work, has been widely adopted by investment banking institutions in South Africa. While this model provides employees with ample benefits, including increased flexibility, autonomy, and work-life balance, it also presents challenges like a potential decrease in team cohesion and spontaneous collaboration, which leads to more complex employee management. As the workplace continues to evolve, psychological safety has become a crucial construct in organisations. Psychological safety is defined as the shared belief that an environment allows individuals to take interpersonal risks, such as asking questions, sharing concerns, or voicing ideas, without fear of punishment or humiliation. As a collective experience, psychological safety creates a workplace climate marked by trust, open communication, innovation, and collaboration. Leaders support psychological safety through active listening, encouraging dialogue, and maintaining transparency, all of which help build a secure environment for employees. The investment banking sector is known for its high-pressure, fast-paced, and high-stakes environment, which frequently causes significant stress and anxiety among employees. With a strong reliance on collaboration, cross-functional teams, strict deadlines, and rapid decisions, psychological safety becomes essential. In this inherently risk-averse environment, psychological safety is key to managing risks, supporting innovation, and achieving long-term success. This study was anchored in the Social Exchange Theory (SET), which interprets workplace behaviour through the principle of reciprocal exchanges of resources and the expectation of mutual benefit. Centring on the principle of reciprocity, where trust and positive action from one party are typically returned by another, the research explored how interactions among colleagues, leaders and the wider environment influence psychological safety. This exploration began with a comprehensive literature review. While studies of psychological safety in hybrid working remain limited, existing research underscores that positive interactions are critical for psychological safety, fostering behaviours like speaking up, knowledge sharing, and collaboration. Secondly, in the exploration of psychological safety experiences, the study adopted a qualitative research approach guided by the interpretive social construction paradigm to explore the subjective experiences of employees. Using a descriptive research design, data were collected through virtual semi-structured interviews with 11 participants from South African investment banking institutions operating within hybrid work models, and analysed using an inductive thematic analysis approach, meaning making. This study identified four main themes detailing how psychological safety is experienced within this context. The Flexibility-Trust Dynamic theme highlights that the autonomy to decide when and where to work positively influences psychological safety by fostering a feeling of trust from leaders. While a lack of trust leads to reduced psychological safety and sometimes results in the productivity paradox. Secondly, the Leadership Approaches and Psychological Safety theme illustrates the importance of management style in fostering psychological safety, with leaders who demonstrate supportive and inclusive behaviours enhancing psychological safety, while inherent hierarchical dynamics were linked to compromised psychological safety and a hesitancy to speak up. Third, Relationships and Team Culture highlights the fundamental role of interpersonal connections in fostering psychological safety. The study found that strong relationships with colleagues and leaders, and a supportive team culture, are factors that contribute to psychological safety experiences. Conversely, the reduction in spontaneous interactions and team bonding may have negative effects on the sense of belonging and psychological safety. Finally, the study concluded that psychological safety is influenced by factors beyond policy and leadership. The identification of the Organisational and Environmental Factors theme highlighted that participants view generational, experiential, gender, and parenting dynamics as influencing psychological safety experience. In conclusion, the study offered practical recommendations for organisations, leaders, and people practitioners, such as Human Resources (HR) and Industrial and Organisational Psychologists (IOPs), to implement in order to foster psychological safety.