
Credit: Adobe Stock/Nopadon.
Performance management is perhaps the most frequent touchpoint for unsafe psychological interactions between employees and organizational systems. Some traditional performance management approaches inadvertently undermine psychological safety through fear-based evaluations, punitive feedback practices and competitive ranking systems.
Performance management conversations and processes profoundly impact employee psychological well-being. When conducted poorly, they can create anxiety, erode trust, damage self-esteem and contribute to workplace stress and mental health challenges. Conversely, performance management enhances employee engagement, growth and organizational effectiveness when aligned with psychological safety principles.
A psychologically safe performance management approach recognizes that optimal performance emerges when employees feel safe to take risks, admit mistakes, ask questions, speak up and seek help. It shifts the focus from judgment and ranking to development and support, creating conditions where employees can thrive while maintaining clear expectations and accountability for individual goals and fulfilling the organization’s performance and behavioural standards.
A psychologically safe performance management policy serves multiple essential functions. It establishes performance conversations as opportunities for growth rather than judgment events to be feared and creates consistent approaches that reduce bias and promote fairness across the workforce. It balances individual accountability with team psychological safety, ensures performance challenges are addressed constructively without psychological harm and integrates psychological safety considerations into all aspects of the performance management cycle.
Essential components of a psychologically safe performance management policy include:
- A statement of performance management philosophy and principles: The policy should establish performance management as a collaborative process focused on employee growth, development and well-being, and organizational success. Core principles should include a growth mindset with fair and unbiased evaluation practices, regular communication (instead of annual “surprises”) and maintaining individual dignity throughout all interactions. Performance management should be established as a partnership between employees and managers for mutual success. Performance conversations can be challenging and deliver facts an employee may not want to hear. This is OK, provided the tone is professional, respectful and focused on learning and accountability.
- Manager training and development requirements: The policy should describe the training that will be provided for all leaders (managers, supervisors) and must include psychological safety principles for building trusted relationships with reports. Also critical are effective two-way feedback techniques that promote learning and accountability, bias recognition and mitigation, complex conversation skills (including active listening and empathy), conflict resolution skills, different learning styles, goal-setting approaches, coaching skills and inclusion and cultural competency for diverse teams. The policy should lay out ongoing professional development requirements and mentoring support for new managers and ensure managers and employees are trained in technology to facilitate performance management.
- Goal-setting and performance planning process: The policy should be clear that performance results are a shared responsibility and that collaborative approaches will be used where leaders and employees define goals and development plans. It should include regular check-ins to ensure supports are in place, goal progress is reviewed, and adjustments are made based on changing circumstances. Beyond organizational performance goals, personal developmental goal-setting conversations must be facilitated in a psychologically safe manner so employees are provided space and opportunities to voice concerns. They must be allowed to ask questions, push back when unsure, and work with their leader to feel they own their goals and performance plan and have their leader’s support.
- Ongoing feedback and communication framework: The policy should ensure that expectations for regular performance conversations will occur beyond formal reviews. Feedback should be timely, specific, balanced and focused on behaviour and outcomes rather than personal characteristics to be most effective. It should provide guidelines for positive recognition and constructive feedback that promote growth and address performance concerns early and collaboratively. Two-way communication where employees feel safe giving feedback to managers should be encouraged. Leaders should know the safe and respectful policy for managing performance to ensure they understand they will be measured by how they correct or challenge employee performance.
- Formal performance annual review meeting. While regular reviews are essential, there is still a place for a broad yearly review that provides a capstone summary of the past 12 months. The policy should include meeting guidance for structured preparation time for reflection, information gathering and discussion. Reviews should be collaborative discussions with active employee participation, which will take longer than standard practices of workers being talked at. Organizations should strive to develop sessions that allow for honest reflection without fear. There should never be surprises when an employee walks into their annual review meeting. They should know how they are doing against organizational and individual performance goals.
- Addressing performance challenges constructively. Challenges should be framed as development opportunities because behavioural issues must be dealt with quickly by leaders and not put on a list to be addressed later. Performance management involves managing the environment and dealing with behavioural issues as they arise. However, when performance issues regarding approach, results or attitude are to be addressed, the conversation should focus on improvement to identify barriers and opportunities, provide resources and create collaborative action plans. The policy should include guidance for involving HR or support resources, and developmental performance improvement plans should have timelines, goals and regular check-ins.
- Recognition and reward systems: Recognition is a significant psychosocial factor, so the policy should include recognition for individual achievement and team psychological safety. Peer recognition programs for team success contributions can contribute to psychological safety. However, reward systems should not create unhealthy competition or undermine team cohesion while celebrating individual success.
- Managing performance-related stress, barriers and mental health. The policy should establish protocols for recognizing when performance challenges relate to neurodivergence, mental health, workplace stressors or other well-being factors. It should have guidelines for appropriate inquiry without overstepping boundaries (our series discussed duty to inquire here). It should be inclusive and consider different cultural, language and neurological factors influencing employees’ stress levels and impacting their performance. The policy must ensure human rights are addressed and leaders know they are partially responsible for creating the conditions and opportunities for employees to thrive.
- Performance management technology and tools. The policy should ensure that performance management technology platforms align with psychological safety principles through system design. They should promote collaboration over command-and-control or competition actions and provide for regular communication over annual or surprise events. Training for managers and employees on using tools in a psychologically safe way should be addressed. Regardless of how much new technology can streamline work, it does not replace the human connection and empathy in performance conversations. People need people to reach their potential, which happens only through trusted relationships.
- Performance management process evaluation. The policy should define metrics such as completion rates, anonymous feedback on processes and focus groups to ensure it drives desired behaviours to evaluate the formal performance review process. The policy should define what “good” looks like and ensure a Plan-Do-Check-Act framework facilitates continuous improvement.
Implementation considerations
Implementing a psychologically safe performance management policy may require significant organizational commitment and cultural change. Organizations must invest in leadership training and development, recognizing that traditional command-and-control management approaches are fundamentally incompatible with psychological safety principles. This training should be ongoing rather than one-time, with regular skill refreshers, peer learning opportunities and coaching support.
Ensure the policy includes a Plan-Do-Check-Act framework for reviewing how ongoing implementation and practice meet its expectations and evaluating how the time and energy put into performance management is obtaining the desired output. Ensuring employees view performance management as positive and enhancing their experience versus a compliance check-the-box activity is critical.
Leadership modelling is essential for successful implementation. Organizations should establish support systems for leaders and employees during the transition to a psychologically safe performance management policy. This might include peer mentoring programs, training and development (e.g., communications, emotional intelligence), regular check-ins with HR, anonymous tip lines and access to proactive coaching resources and forums for sharing best practices and challenges.
Perhaps more important than any policies discussed so far, senior leaders must demonstrate psychologically safe performance management practices in their interactions, showing vulnerability when appropriate, admitting mistakes, asking for feedback and prioritizing employee development over blame assignment. Their behaviour sets the tone for the organization and signals whether psychological safety is valued.
When employees experience psychologically safe performance conversations, they begin to trust that the organization cares about them as people, while also caring about their development and their well-being. This trust extends beyond performance management to other aspects of their work experience, creating positive ripple effects throughout the organization.
Want to learn more about psychological health and safety? Register for our Psychologically Safe Workplaces Summit on June 25, 2025.
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