This PhD research investigates the role of psychological safety in the relationship between leadership and employee wellbeing, and aims to advance our understanding of how leaders can foster a psychologically safe climate and enhance wellbeing in formal hierarchical work contexts. This research explores how psychological safety improves employees’ desire to continue working in high-demand, high-stress workplaces and to provide deeper insight into employee turnover and retention in the context of New Zealand legal practice. Psychological safety is defined as a belief among team members who respect and trust each other that they are safe to take interpersonal risks, make mistakes, and address issues without fear of being rejected by their leader and fellow team members. Law firms often have a formal hierarchical structure, which is characterised by significant power differences and control mechanisms that can prevent employees from raising concerns with their leaders about issues in the workplace. The present research contributes to legal practice by highlighting the important role that leaders play in hierarchical workplaces where turnover is high, particularly among early career women, and where many lawyers suffer from poor wellbeing.

Three empirical studies were conducted with two data collections. A quantitative survey approach was used for data collection in the first study and interviews were conducted for the second and third studies. Survey results show that psychological safety is a mechanism through which leadership influences employee wellbeing (Study 1). Leaders who develop high-quality relationships with employees by displaying vulnerability and through role modelling capabilities and emotional regulation skills; who address wellbeing issues fairly and promptly; and who provide regular and timely feedback, help to improve perceptions of psychological safety and employee wellbeing (Study 2). When leaders provide employees with access to resilience-enabling resources, while fostering a climate of psychological safety, this contributes to a greater desire to continue working in high-demand roles, particularly for women (Study 3). This study uncovered gendered differences connected to strategies for coping with high workload and stress, as well as differing views on the factors that influence lawyers to leave legal practice.

The research presented in this thesis has multidisciplinary applications and demonstrates that when leaders behave in a way that counteracts the barriers brought on by formal hierarchical structures, perceptions of psychological safety will improve and positively influence employee wellbeing and retention. To reduce dysfunctional turnover, leaders should focus on supporting employee resilience, while developing a learning culture where employees feel comfortable voicing their concerns and ideas without the fear of retribution.