As is often the case in so many tales of unchecked power and influence PWC Australia has unwittingly created it’s own downfall, just like the Emperor in Hans Christian Andersen’s story about The Emperor’s New Clothes. The review conducted by Ziggy Switkowski into the governance, culture and accountability at PWC Australia makes clear links between the unchecked power of the CEO and the unethical and ultimately self-destructive behaviour of leaders of PWC Australia.

Switkowski concluded that a number of factors contributed to PWC’s self-destructive behaviour including: the CEOs were elected by the senior partners in a presidential style election and functionally reported to no-one, resulting in unchecked power; PWC had an over focus on positive results and a lack of self reflection or examination of undesirable outcomes; and there was an over emphasis on positive collegiate relationships, which functionally suppressed diversity of expressed opinion and debate.

It is useful to unpack some of these points further through the lens of psychological safety.

Speaking with Candour  

A key tenet of psychological safety is having a voice; the ability to be able to speak candidly. On the face of it, in 2020 the CEO had established a process to listen to the voices of PWC. He established The People’s Council which was composed of staff representatives from across the firm, to whom the CEO extended “an open invitation” for all staff to speak up about issues and propose solutions. In 2022 when a staff survey asked the representatives on The People’s Council about speaking up, they reported that not only did they have a voice, but that they felt a responsibility to speak up and propose solutions. However, it is worth wondering how likely it would be that such a group could ever feel safe to name the problem of senior partners acting far outside of the company’s ethics and standards of behaviour? And how much more unlikely it would be that they could propose the solutions which have since played out: that the CEO resign; the board be restructured; or that the Federal Police investigate the firm’s behaviour? Switkowski concluded that the staff had the freedom to speak up but it seems only about ‘safe’ issues. Switkowski said that the CEO had failed to establish the conditions in which staff were able to “challenge the status quo”, as there was a general understanding that such an action would be unsafe, an end to one’s career progression in PWC. It seems that the threat was implicitly known but not explicitly spoken.

Mission Impossible

It is difficult in overtly positive environments to visualise where the threat lies. Threat is much easier to identify when it is linked to anger, as was the case in Volkswagen’s infamous fall from grace some years ago. You may recall Volkswagen’s fraudulent engineering of their diesel vehicles to fake emissions output whenever the vehicles detected they were in a lab environment under evaluation. A number of the analyses of the scandal focused on the behaviour of the global CEO of Volkswagen who was renowned for his relentless perfectionistic standards, and for his volatile anger. The CEO had set the goal for Volkswagen to be the number one seller in the USA, but to achieve this they had to produce clean diesel cars. Low emissions had seemed ‘mission impossible’ from the start but no one on the management team had the courage to tell the CEO. It was as if no-one had ever read Hans Christian Andersen’s fable about the Emperor’s New Clothes.

Who is fooling who?

In this fable the emperor, who is known for his love of lavish clothing, is duped into appearing naked in front of his subjects by swindlers who pose as weavers of a cloth so exclusive as to be visible only to the intellectually elite. The swindlers charm the emperor and are enthusiastically effusive about his acumen to judge fine clothing. The swindlers are soon hired by the emperor to make him a wardrobe of magnificent clothes. The emperor’s subjects who monitor the weaving of the exclusive cloth are quickly faced with a dilemma: the looms are clearly empty and no cloth is being woven but if they speak up, they not only risk looking foolish themselves, but they will make the emperor appear even more foolish. The fable tells us that our fears of an angry emperor go much deeper than his anger. Speaking up risks the threat of shame, exclusion and humiliation. The silence at PWC may well have developed in the presence of threats such as these. However, in stark contrast the CEO’s of PWC were described as positive, with a focus on rewards, achievement and a collegiate environment.

It seems likely that PWC started with the very best of intentions to create a supportive environment with a positive rapport between staff at all levels, but over time the positivity became the driver of silencing mono-culture. When ideas and behaviours gain momentum in a dominant culture, the interpersonal control takes place within the minds of all of the group members. Just like the emperor’s subjects, the fear of negative consequences leads us to doubt our own senses, and to rationalise our decisions to stay silent. When this happens, the psychological control is hidden by the negation and self silencing of those who fear negative consequences. The groundwork is then set, just as it was in the fable, wherein all that the swindlers asked was that the emperor’s subjects and the townsfolk said nothing. To add to the effect, self silencing becomes quite seductive in an atmosphere of positivity where there are high rewards for adherence to the dominant narrative.

The Bad News; It’s Universal

Now please don’t misunderstand this commentary. Where do I position myself? Well if we look at the tale of the Emperor’s New Clothes, the emperor’s subjects and the townsfolk were swept up in their own need to fit within their community. All of them feared the shame of looking foolish and losing the emperor’s favour. In the end, it was a child who did not understand the rules at play, who called out publicly that the emperor was wearing no clothes at all. If I had been a staff member at PWC, as an adult with my own fears and frailties, I expect I too would have most likely been swept up into adhering to the rules of the dominant culture, and had I been a member of the People’s Council, I suspect I too would not have spoken out. My commentary is not about PWC, but about the universal underlying frailty of the human psyche; we are all vulnerable to unchecked power, we all share a dread of shame and the need for social acceptance.

When faced with the challenge of speaking out against our leaders or our peers, we all wish to be thought of as clever and knowledgeable, while also greatly fearing looking foolish. Many of us play it safe and stay silent to avoid the heavy risk of shame. But the more we kick the can of shame down the road, ultimately the more naked and exposed we become to the shame of being foolish.

Solutions?

What are the solutions? For an organisation to be healthy and thrive it needs to recurrently develop culture which is direct and empathic, and keeps both power and shame in check. Ray Dalio, the founder of the highly successful firm Bridgewater, believes that developing a healthy organisation’s culture starts with senior leaders modelling and fostering an atmosphere in which power, consensus and group thinking are actively challenged through debate and transparency. The psychological safety literature recurrently finds that in people-based systems there is an inevitability of mistakes and errors, but that organisational health can be found through leaders setting the expectation that mistakes can be a source of learning and improvement.

Brene Brown in her work on courage, repeatedly emphasises the need for open and authentic relationships at work which support and dissolve the divisions of difference, and the shame of owning or naming mistakes and failure.

Optimal Minds has a highly experienced team of consultants who aid individuals and workplaces to deepen the psychological safety of their organisation. We can help you enrich the processes through which you engage with your team and aid you in the development of individual practices so that your business thrives through authentic relationships with your staff.

Written by Dr Ian Cameron, Psychologist and Consultant
Updated 27th September 2026