‍

I remember being on a consulting team for a top 10 bank that was making major changes to its commercial lending platform. For decades, lending decisions were made locally. A banker in a small town could approve a deal based on relationships, gut instinct, and creating their own terms. That approach worked when the bank was smaller, but as it grew, so did the risks and the regulations. The next right step was to centralize the process.

On paper, it made perfect sense. But across towns and conversations, the questions started. What happens to my role? Will my experience still matter? What will my clients think? Can I adapt? Underneath it all was the same concern: What am I going to lose?

The system wasn't the real problem. Fear was.

Instead of embracing the new process, employees hesitated. Some resisted. Others disengaged. What could have been a smooth transition turned into a drawn-out and costly challenge. Fear slowed everything down.

Why Employee Fear Spreads Through Organizations

This isn't just about banks. Workplace fear silently drains organizations every day. Gallup estimates disengaged employees costs US businesses nearly $1 trillion annually. Much of that employee disengagement comes from fear: fear of speaking up, fear of taking risks, fear of being wrong. And this fear doesn't just affect the workplace. It seeps into livelihoods, families, and the way people view their own potential.

Here's the truth: fear itself isn't the enemy. Fear is normal. Our bodies react the same way to a car swerving into our lane as they do to sharing a bold idea in a meeting. Sweaty palms. Racing heart. Tight shoulders. One scenario is life or death. The other is simply uncomfortable. Yet both can shut people down in the same way.

The Hidden Cost of Fear in Change Management

After analyzing more than 75,000 written fears, I've seen how vague fears keep people stuck. "I'm afraid of failure." "I'm afraid I won't be good enough." But when you name the exact action fear is blocking ("I'm afraid to challenge this new process because I don't want to be labeled as difficult"), it suddenly becomes manageable.

I call this step TRACE, part of the Fear Intelligence™ framework. It's about being specific instead of staying stuck.

The hidden cost of workplace fear isn't just lost revenue. It's the innovation that never gets shared. It's the leaders who stay quiet even though their ideas could move the organization forward. It's the energy that gets drained in meetings where people are thinking but not speaking.. A VitalSmarts study found that employees who avoid difficult conversations cost their organizations thousands of dollars each year in lost productivity and project delays.

When Teams Learn to Fear Less

The flip side is powerful. When teams learn to engage with fear instead of ignoring it, they move faster, take smarter risks, and bounce back quicker when things don't go as planned.McKinsey research on psychological safety shows that when leaders intentionally build environments where employees feel safe to speak up, performance and innovation rise significantly

At your next meeting, try this. Ask your team what action they're avoiding because of fear. Then ask what small step they could take anyway. You might be surprised at how quickly the energy shifts once fear is named out loud.

That bank eventually made its transition, but it took longer and cost more than it had to. The truth is, every organization is paying a hidden fear tax. The question is whether you'll keep paying it or turn fear into the spark that drives progress.

References

McFeely, S., & Wigert, B. (2019, March 13). This fixable problem costs U.S. businesses $1 trillion. Gallup. https://www.gallup.com/workplace/247391/fixable-problem-costs-businesses-trillion.aspx

VitalSmarts. (2016). Costly conversations: Why the way employees communicate will make or break your bottom line [Press release]. https://www.vitalsmarts.com/press/2016/12/costly-conversations-why-the-way-employees-communicate-will-make-or-break-your-bottom-line/

De Smet, A., Rubenstein, K., Schrah, G., & Vierow, M. (2021, February 11). Psychological safety and the critical role of leadership development. McKinsey & Company. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/psychological-safety-and-the-critical-role-of-leadership-development